<PAGE>
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
February 3, 1998
US Airways Group, Inc.
(Commission file number: 1-8444)
and
US Airways, Inc.
(Commission file number: 1-8442)
(Exact names of registrants as specified in their charters)
Delaware US Airways Group, Inc. 54-1194634
(State of incorporation US Airways, Inc. 53-0218143
of both registrants) (I.R.S. Employer Identification Nos.)
US Airways Group, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-5306
(Registrant's telephone number, including area code)
US Airways, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-7000
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
As detailed in the attached exhibits, US Airways Group, Inc.
(the "Company") has announced certain actions the Company is
undertaking in an effort to increase shareholder value and
released information related to the upcoming launch of a new low-
cost product called "MetroJet."
Item 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99.1 US Airways Group, Inc. (US Airways Group or the
"Company") news release dated February 3, 1998
announcing that the Company's board of directors
has authorized the repurchase of up to $500 million
of the Company's outstanding common stock, the
redemption of the last of the Company's outstanding
preferred stock issuances and the retirement of
certain debt obligations as part of a wide-ranging
plan to enhance shareholder value.
99.2 US Airways Group news release dated February 4, 1998
which included information related to the upcoming
launch of a new low cost product called, "MetroJet."
MetroJet will commence operations on June 1, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned hereunto duly authorized.
US Airways Group, Inc. (REGISTRANT)
Date: February 4, 1998 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
US Airways, Inc. (REGISTRANT)
Date: February 4, 1998 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
<PAGE>
Exhibit 99.1
US AIRWAYS TO REPURCHASE STOCK, RETIRE DEBT,
REDEEM ALL OUTSTANDING PREFERRED STOCK
ARLINGTON, Va., Feb. 3, 1998 -- US Airways Group, Inc. said
today that its board of directors has authorized the repurchase
of up to $500 million in stock, the redemption of the last of the
company's outstanding preferred shares and the retirement of
certain debt obligations as part of a wide-ranging plan to
enhance shareholder value.
"US Airways has made enormous strides in the past two years
in its operational and financial performance. With approximately
$2 billion in cash on hand, we now are in a position to take
steps to underscore our focus on both shareholder value and
improving our balance sheet," said US Airways Chairman Stephen M.
Wolf.
Included in the stock repurchase and debt rationalization
program are:
* The repurchase from time to time in open market and
privately negotiated transactions of up to $500 million of the
company's common stock, which closed today on the New York Stock
Exchange at $62.125 per share.
* The previously announced repurchase of 2.3 million shares
of common stock, to be effected from time to time in the open
market or privately negotiated transactions. This earlier program
was authorized in connection with the agreement with the Air Line
Pilots Association to issue options on 2.3 million common shares
in 1998 to its members. This repurchase program is in addition to
the $500 million repurchase program announced today.
* The call for redemption of $358 million in Series H
convertible preferred stock currently held by affiliates of
Berkshire Hathaway Inc. The stock, which is
--more--
US Airways to Repurchase Stock
Page 2
Feb. 3, 1998
mandatorily redeemable on August 7, 1999, is convertible into
9.24 million shares of US Airways common stock at a conversion
price of $38.74 per share. This step will save the company $33
million in preferred dividends on an annualized basis.
* Retirement of $379.2 million in debt obligations, including
the $300 million 10% Senior Notes and $79.2 million secured debt.
Annual interest expense associated with this debt is
<PAGE>
approximately $37 million. There will be a one-time extraordinary
expense of $15 million associated with premiums paid for debt
retirement.
* "When this process is completed, US Airways will have
reduced its debt and preferred stock since May of 1997 by $1.35
billion and reduced its annual dividend and interest expense by
approximately $115.9 million on an annualized basis, including
the effect of earlier series of preferred stock retired during
the past year," Wolf said.
"Warren Buffett has been a respected shareholder for a
number of years -- and we are pleased that he has received
appropriate value for his patience," Wolf added.
Taking into account the stock repurchase and debt
rationalization program, US Airways estimates that by the end of
1998 it will have significantly more than $1 billion in cash,
assuming a full $500 million share repurchase.
Wolf and US Airways President Rakesh Gangwal are expected to
outline these stock and debt measures to the Society of Airline
Analysts in New York on Wednesday morning, along with an overview
of US Airways' prospects and plans for 1998.
Among other items, they are expected to tell the analysts
that capacity for 1998 is expected to be down by about 2.4
percent while unit costs are expected to increase about 2.0
percent as compared to 1997. They also are expected to project
operating income, based on the company's current forecast for the
full year 1998, higher than that for 1997.
--more--
US Airways to Repurchase Stock
Page 3
Feb. 3, 1998
For the near term, they are expected to say that capacity
for the first quarter will be down by 5 percent and that unit
costs will be up about 3 percent to 3.5 percent, as compared to
the same quarter of 1997.
In outlining US Airways' fleet projections, they are
expected to tell the analysts that the fleet at the end of 1998
will total 384, including six new Airbus aircraft and the
retirement of 10 aircraft. At the end of 1999, the fleet is
projected at 391 aircraft, including 20 more new Airbus aircraft
and the retirement of 13 additional aircraft. In the year 2000,
the fleet total is projected at 411, including 32 more new Airbus
aircraft and the retirement of 12 additional aircraft.
US Airways has an agreement with Airbus for 124 firm
<PAGE>
deliveries of A319, A320 and A321 aircraft. In addition, the
company has options and orders to be reconfirmed, bringing the
total order to up to 400 aircraft. US Airways also is expected to
announce a decision on new widebody aircraft for its
transatlantic service in the near future. Aircraft under
consideration include the Airbus A330 and the Boeing 777.
Certain of the information contained in this news release
should be considered "forward-looking information," which is
subject to a number of risks and uncertainties. The preparation
of forward-looking information requires the use of estimates of
future revenues, expenses, activity levels and economic and
market conditions, many of which are outside the company's
control. Among the specific factors that could cause actual
results to differ materially from those set forth in the forward-
looking information are the following: economic conditions, labor
costs, aviation fuel costs, competitive pressures on pricing
particularly from lower-cost competitors, weather conditions,
government legislation, consumer perceptions of the company's
product, demand for air transportation in the markets in which
the company operates and risks listed from time to time in the
company's reports to the U. S. Securities and Exchange
Commission. Other factors and assumptions not identified above
also were involved in the preparation of this forward-looking
information, and the failure of such other factors and
assumptions to be realized also may cause actual results to
differ materially from those in this release. The company assumes
no obligation to update such estimates to reflect actual results,
changes in assumptions or changes in other factors affecting such
estimates.
-30-
NUMBER: 3363
(this space intentionally left blank)
<PAGE>
Exhibit 99.2
US AIRWAYS SETS JUNE 1 LAUNCH FOR METROJET,
OUTLINES PLANS FOR STOCK REPURCHASE, DEBT REDUCTION
NEW YORK, N.Y., Feb. 4, 1998 -- US Airways will launch its
new low-cost competitive response -- MetroJet -- on June 1 with
service between Baltimore and Cleveland; Providence, R.I.; Fort
Lauderdale, Fla., and Manchester, N.H. Destinations and frequency
of service are expected to increase monthly, Stephen M. Wolf,
US Airways chairman and chief executive officer, and Rakesh
Gangwal, US Airways president and chief operating officer, told
the Society of Airline Analysts today.
Wolf also outlined US Airways' plans to repurchase as much
as $500 million in stock in addition to the 2.3 million share
repurchase program announced earlier and plans to call for the
redemption of the last of the company's outstanding preferred
stock and to retire debt.
"After two years of careful analysis and preparation, US
Airways will move on a number of fronts during 1998 to
rationalize its route structure, its financial structure, its
fleet structure and its organizational structure," Wolf told the
analysts. "This will be the most important year in the history of
the company in strategic terms as we put in place a
comprehensive, fundamental platform for growth and market
position."
"In a short time, customers will speak of `taking MetroJet'
to Florida and other destinations just as easily as business
travelers in the Northeast today speak of `taking the Shuttle' to
New York or Washington or Boston. Similarly, Envoy Class soon
will become the mark of excellence for transatlantic air travel,"
Wolf said.
Wolf and Gangwal touched upon several topics in their
remarks to the analysts:
--more--
US Airways To Launch MetroJet
Page 2
Feb. 4, 1998
MetroJet
- --------
US Airways' low-cost competitive response, to be named
MetroJet, will begin operations on June 1 with five aircraft
flying Baltimore-Cleveland, Baltimore-Providence, Baltimore-Fort
Lauderdale and Baltimore-Manchester. MetroJet will use 737-200
aircraft and can expand to a total of 54 planes in the initial
<PAGE>
launch phase. Gangwal said the system could be operating about 20
aircraft by the end of 1998.
"The employee team planning MetroJet has done an enormous
amount of work in a short time and this work is vital to the
future of US Airways. There is a large customer base for quality,
convenient service at a more modest price and MetroJet will be an
aggressive competitor in this market," Gangwal said.
The fuselage of MetroJet aircraft will be painted red on top
and grey on the bottom, with blue and white stripes. The blue
tail will carry the familiar US Airways stylized version of the
nation's flag.
Gangwal said that further schedule and reservations details,
pricing and service patterns will be announced shortly.
Stock Repurchase, Debt Reduction
- --------------------------------
The company said the repurchase of up to $500 million in US
Airways' common stock would occur from time to time in open
market or privately negotiated transactions. This stock
repurchase program is in addition to the previously announced
program to repurchase 2.3 million shares in connection with the
recent agreement with the Air Line Pilots Association under which
the union is to provide 2.3 million options to its members during
1998.
In addition, the company said it plans to call for the
redemption of $358 million in Series H preferred stock -- the
last of US Airways' preferred shares outstanding -- and to retire
$379.2 million in debt, including the $300 million 10% Senior
Notes and $79.2 million in secured debt obligations. There will
be a $15 million extraordinary expense associated with the
premiums paid for debt retirement.
--more--
US Airways To Launch MetroJet
Page 3
Feb. 4, 1998
It was noted that affiliates of Berkshire Hathaway Inc. have
the option of converting their Series H preferred shares into
9.24 million shares of US Airways common stock.
With the redemption of the Series H preferred, US Airways
will have no preferred stock outstanding. Between the elimination
of preferred stock and other debt reduction measures, the company
will have reduced its debt and preferred stock by $1.35 billion
since May of 1997, saving approximately $115.9 million on
dividends and interest on an annualized basis.
<PAGE>
Cost, Capacity Projections
- --------------------------
The analysts were told that capacity for 1998 is expected to
be down by about 2.4 percent while unit costs are expected to
increase about 2.0 percent as compared to 1997. The company also
said that operating income, based on the current forecast for the
full year 1998, is expected to be higher than that for 1997.
For the near term, the company said that capacity for the
first quarter will be down by 5 percent and that unit costs will
be up about 3 percent to 3.5 percent, as compared to the
comparable quarter of 1997.
Fleet Projections
- -----------------
In outlining US Airways' fleet projections, the company
indicated that the fleet at the end of 1998 will total 384,
including six new Airbus aircraft and the retirement of 10
aircraft. At the end of 1999, the fleet is projected at 391
aircraft, including 20 more new Airbus aircraft and the
retirement of 13 additional aircraft. In the year 2000, the fleet
total is projected at 411, including 32 more new Airbus aircraft
and the retirement of 12 additional aircraft.
US Airways has an agreement with Airbus for 124 firm
deliveries of A319, A320 and A321 aircraft. In addition, the
company has options and orders to be reconfirmed for a total
order of up to 400 aircraft. US Airways also is expected to
announce a decision on new widebody aircraft for its
transatlantic service in the near future. Aircraft under
consideration include the Airbus A330 and the Boeing 777.
--more--
US Airways To Launch MetroJet
Page 4
Feb. 4, 1998
Certain of the information contained in this news release
should be considered "forward-looking information" which is
subject to a number of risks and uncertainties. The preparation
of forward-looking information requires the use of estimates of
future revenues, expenses, activity levels and economic and
market conditions, many of which are outside the Company's
control. Among the specific factors that could cause actual
results to differ materially from those set forth in the forward-
looking information are the following: economic conditions, labor
costs, aviation fuel costs, competitive pressures on pricing
particularly from lower-cost competitors, weather conditions,
government legislation, consumer perceptions of the company's
<PAGE>
product, demand for air transportation in the markets in which
the company operates and risks listed from time to time in the
company's reports to the U. S. Securities and Exchange
Commission. Other factors and assumptions not identified above
also were involved in the preparation of this forward-looking
information, and the failure of such other factors and
assumptions to be realized also may cause actual results to
differ materially from those in this release. The Company assumes
no obligation to update such estimates to reflect actual results,
changes in assumptions or changes in other factors affecting such
estimates.
--30--
NUMBER: 3369
METROJET FACT SHEET
NAME: MetroJet is a part of US Airways, designed to offer
quality, convenient service at low fares between selected eastern
U.S. cities and with a special focus on Florida.
ROUTES: Initially, focusing on Baltimore with service to and
from Cleveland (six daily departures), Providence, R.I. (five
daily departures), Fort Lauderdale, Fla. (three daily
departures), and Manchester, N.H. (three daily departures). New
cities and frequencies will be added monthly.
AIRCRAFT: The Boeing 737-200, configured for 118 coach seats.
There will be five MetroJet planes on June 1, with more planes
being added as the system grows. The system could include about
20 planes by the end of 1998 and can grow to as many as 54 planes
in its initial phase.
LIVERY: MetroJet aircraft will be painted with a red top and
grey undercarriage separated by blue and white stripes. The blue
tail will carry the familiar US Airways stylized version of the
nation's flag. Interiors will be specially designed for
MetroJet.
SERVICE: All coach with assigned seating on day of departure and
snack service of beverage and nuts.
RESERVATIONS: Direct to MetroJet or through the US Airways
reservations system, on-line computerized booking or through
travel agents. MetroJet flights will be listed in all
computerized reservations systems. Reservations details will be
available shortly.
<PAGE>
DIVIDEND MILES: There will be Dividend Miles benefits designed
for MetroJet flights.
PHILOSOPHY: To compete aggressively in the growing market for
lower-fare service that is spreading in the eastern United
States, and to do so with a quality, convenient service.
PLANNING: MetroJet was planned by a US Airways employee task
force made up of representatives of the many departments and
labor groups that are part of US Airways.
