UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year end December 31, 1998
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Supplemental Retirement Plan of Piedmont Aviation, Inc.
(Full title of the plan)
US Airways Group, Inc.
(Issuer of securities held pursuant to the plan noted
above)
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
Commission file number: 1-8444
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Financial Statements
and Supplemental Schedules
December 31, 1998 and 1997
(With Independent Auditors'
Report Thereon)
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Table of Contents
-----------------
Page
----
Independent Auditors' Report 1
Financial Statements
Statements of Net Assets Available for Plan
Benefits as of December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1998 and 1997 3
Notes to Financial Statements 4 - 13
Supplemental Schedule I - Item 27a
Schedule of Assets Held for Investment Purposes
as of December 31, 1998 14 - 15
Supplemental Schedule II - Item 27d
Schedule of Reportable Transactions for the year
ended December 31, 1998 16
Signature 17
Exhibit 23
Consent of Independent Auditors 18
Independent Auditors' Report
The Plan Administrator and Participants
Supplemental Retirement Plan of Piedmont Aviation, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits of the Supplemental Retirement Plan of Piedmont Aviation, Inc. (the
Plan), as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for plan benefits for the years then ended.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 1998 and 1997, and the changes in net assets available for
plan benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes as of December 31, 1998 and reportable transactions for
the year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
Washington, D.C. KPMG
June 11, 1999
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1998 1997
---- ----
Assets
Investments:
At fair value:
Shares of registered investment
companies:
Fidelity Magellan Fund $11,131,717 $ 8,363,329
Fidelity Equity Income Fund 9,213,647 9,860,992
Fidelity Spartan U.S. Equity
Index Portfolio 6,095,147 4,928,165
Capital Growth Mix Portfolio 2,496,886 2,462,814
Moderation Mix Portfolio 1,901,904 1,426,658
Neuberger & Berman Guardian Trust 1,015,453 1,267,162
MAS Domestic Fixed Income
Portfolio Institutional 762,416 -
T. Rowe Price Small Cap
Stock Fund 252,045 -
Income Mix Portfolio 73,393 161,570
Putnam International Growth
A Fund 48,626 -
Fidelity Intermediate Bond Fund - 685,509
US Airways Common Stock Fund 8,676,300 7,093,768
Fidelity Retirement Government
Money Market Portfolio 777,894 516,883
---------- ----------
42,445,428 36,766,850
At contract value:
Fixed Income Fund 14,521,971 18,100,096
---------- ----------
Total investments 56,967,399 54,866,946
---------- ----------
Net assets available for plan benefits $56,967,399 $54,866,946
========== ==========
See accompanying Notes to Financial Statements.
2
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
Years ended December 31,
------------------------
1998 1997
---- ----
Additions to net assets attributable to:
Net appreciation in fair value of
investments $ 3,455,385 $ 9,421,176
Investment income 2,305,563 2,464,847
----------- -----------
Total additions 5,760,948 11,886,023
----------- -----------
Deductions from net assets attributable to:
Benefits paid to participants 3,660,495 1,750,997
----------- ----------
Total deductions 3,660,495 1,750,997
----------- ----------
Net increase 2,100,453 10,135,026
Net assets available for plan benefits:
Beginning of year 54,866,946 44,731,920
----------- -----------
End of year $ 56,967,399 $ 54,866,946
=========== ===========
See accompanying Notes to Financial Statements.
3
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the Supplemental Retirement Plan of Piedmont
Aviation, Inc. (the Plan) provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
(a) General
The Plan is a defined contribution plan intended to qualify as a profit
sharing plan under Section 401(a) of the Internal Revenue Code (IRC), as
amended. Certain former employees of Piedmont Aviation, Inc. (Piedmont)
are covered by the Plan. In November 1987, Piedmont was acquired by US
Airways Group, Inc. (Group). In August 1989, Piedmont was merged into US
Airways, Inc. (US Airways or the Company), a wholly owned subsidiary of
Group. As part of the merger, the Plan was frozen as to additional
contributions effective July 31, 1989, with the exception of rollover
contributions from the terminated Piedmont Aviation, Inc. Pilot Variable
Annuity Trust. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
US Airways, the plan administrator, is responsible for the content and
issuance of the Plan's financial statements. Group is the issuer of
certain common stock securities held pursuant to the Plan.
(b) Vesting
Participants are fully vested in their contributions, plus actual
earnings thereon.
(c) Investment Options
The Company selects the number and type of investment options available.
Fidelity Institutional Retirement Services Company, the Plan's
Recordkeeper, is responsible for maintaining an account balance for each
participant. Fidelity Management Trust Company is the Plan Trustee.
The Recordkeeper values account balances daily. Each account balance is
based on the value of the underlying investments in each account.
Generally, participants may transfer current account balances among
investment options.
4
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
As of December 31, 1998, the Company offered thirteen investment options
in the form of ten individual investment options and three diversified
portfolio mixes, which are pre-selected combinations of mutual funds.
The thirteen options available to participants are as follows:
Fidelity Magellan Fund - The fund primarily invests in common stocks and
securities of both well-known and lesser known companies with potentially
above-average growth potential. Securities may be of foreign, domestic
and multinational companies.
US Airways Common Stock Fund - A fund comprised primarily of US Airways
Group, Inc. (Group) common stock purchased on the open market or directly
from Group at market prices. A small percentage of the fund is invested
in short-term liquid investments. Company contributions cannot be
invested in this fund, in accordance with the Plan document. In addition,
officers of the Company are not permitted to invest their contributions in
this Fund. Effective November 28, 1997 participants who exchange out of
this fund to other investment options cannot exchange into the fund for a
period of 30 calendar days.
Fidelity Equity Income Fund - The fund seeks reasonable income by
investing primarily in common and preferred stocks. The fund also invests
in bonds and convertible securities.
Fidelity Spartan U.S. Equity Index Portfolio - The portfolio seeks growth
and income by matching the composition and total return of the Standard &
Poor's Daily Stock Price Index of 500 common stocks.
Capital Growth Mix Portfolio - A diversified portfolio mix comprised of
80% equity securities and 20% fixed income securities. The equity
securities are invested 20% in the Fidelity Equity Income Fund,
approximately 15% in the Fidelity OTC Portfolio, approximately 30% in the
Fidelity Magellan Fund and approximately 15% in the Fidelity Overseas
Fund. The fixed income securities are invested in the Fidelity
Intermediate Bond Fund.
Fidelity Retirement Government Money Market Portfolio - Investments are
made in obligations issued or guaranteed as to principal and interest by
the U.S. government, its agencies or instrumentalities.
5
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
MAS Domestic Fixed Income Portfolio Institutional - The portfolio seeks to
provide above-average total returns from both income and price
appreciation by investing in U.S. government securities, and other U.S.
investment-grade fixed income securities. The Portfolio's average
duration is generally between five and seven years.
Neuberger & Berman Guardian Trust - The fund primarily invests in stocks
of established, high-quality companies considered to be undervalued.
Moderation Mix Portfolio - A diversified portfolio mix comprised of 60%
equity securities and 40% fixed income securities. The equity securities
are invested approximately 20% in the Fidelity Equity Income Fund,
approximately 20% in the Fidelity Spartan U.S. Equity Index Portfolio, 15%
in the Fidelity Magellan Fund and approximately 5% in the Fidelity
Overseas Fund. The fixed income securities are invested approximately 15%
in the Fidelity Short-Term Bond Fund and approximately 25% in the Fidelity
Intermediate Bond Fund.
Income Mix Portfolio - A diversified portfolio mix comprised of 20% equity
securities and 80% fixed income securities. The equity securities are
invested 10% in the Fidelity Equity Income Fund and 10% in the Fidelity
Spartan U.S. Equity Index Portfolio. The fixed income securities are
invested approximately 15% in the Fidelity Retirement Government Money
Market Portfolio, approximately 35% in the Fidelity Short-Term Bond Fund
and approximately 30% in the Fidelity Intermediate Bond Fund.
T. Rowe Price Small Cap Stock Fund - The fund seeks to provide long-term
capital growth by investing primarily in stocks of small and medium sized
companies that are believed to offer superior earnings or appear to be
undervalued. Small cap stocks are those with a market capitalization of
$1 billion or less at the time of investment. The fund also invests in
foreign securities.
Putnam International Growth A Fund - The fund seeks capital appreciation
over the long term by investing primarily in stocks of all-sized companies
located outside the United States that have the potential for growth.
Investments include stocks of companies that appear to be undervalued as
well as inexpensive stocks of well-developed companies.
6
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
Fixed Income Fund - The fund buys high-quality investment contracts, a
type of investment product offered to retirement and savings plans by
insurance companies, banks, and other financial institutions. Money
transferred out of the Fixed Income Fund cannot be invested in the
Fidelity Retirement Government Money Market Portfolio, the Fidelity
Intermediate Bond Fund or the Income Mix Portfolio for a period of 90 days
because these funds are considered competitive by the insurance industry.
(d) Participant Withdrawals
Upon approval by the plan administrator, a participant may withdraw his
or her contributions from the account if it is determined that the
withdrawal is necessary to (i) alleviate a financial hardship; (ii)
reduce non-mortgage debt; or (iii) make improvements to the participant's
residence which are determined by the plan administrator to be necessary.
(e) Payment of Benefits
Upon termination of service due to death, disability, retirement or other
termination of employment, a participant may elect to receive one of the
following: (i) a lump-sum equal to the value of his/her account; (ii) to
apply such amount to the purchase of an immediate noncashable and
nontransferable contract from a legal reserve life insurance company
providing any one of several annuities (as elected by the participant);
or (iii) installment payments.
(f) Administrative Expenses
Certain administrative expenses of the Plan are paid by US Airways.
2. Summary of Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared under the accrual
method of accounting.
(b) Investment Valuation and Income Recognition
The assets of the US Airways Common Stock Fund, Capital Growth Mix
Portfolio, Moderation Mix Portfolio, Income Mix Portfolio, and Fixed
Income Fund are commingled with certain assets of other defined
contribution plans sponsored by US Airways. The Plan's Recordkeeper
separately identifies the assets of each plan participant who has an
interest in the commingled funds.
7
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
Fair values for assets were determined by quoted market values, when
available. The Plan presents in its statement of changes in net assets
the net appreciation (depreciation) in the fair value of its investments,
which consists of the realized gains or losses and unrealized
appreciation (depreciation) on those investments. The Plan's investments
in guaranteed investment contracts (GICs) are stated at contract value
(See Note 4). Purchases and sales of investments are recorded on a
trade-date basis. Interest and dividend income are recorded on the
accrual basis.
The value of a participant's investment in the US Airways Common Stock
Fund is represented by units credited to the participant's account. The
unit values were determined by the trustee. The units and unit values
(rounded to the nearest whole unit and cent) of the US Airways Common
Stock Fund as of the close of each quarter during 1998 and 1997 were as
follows:
1998 Number of Units Unit Value
- ----------- --------------- ----------
March 31 98,670 $ 106.88
June 30 100,245 114.27
September 30 110,000 73.68
December 31 114,766 75.60
1997 Number of Units Unit Value
- ----------- --------------- ----------
March 31 94,598 $ 38.44
June 30 84,599 52.69
September 30 92,166 61.08
December 31 78,306 90.59
(c) Payment of Benefits
Benefits are recorded as deductions when paid.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those
estimates.
(this space intentionally left blank)
8
<TABLE>
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
3. Investment Activity
The following table represents the investment funds' activities for the years ended December 31, 1998 and 1997:
<CAPTION>
Fidelity Fidelity
Retirement Fidelity Fidelity Spartan
Fixed Government Fidelity Intermediate Equity U.S. Equity
Income Money Market Magellan Bond Income Index
Fund 1) Portfolio 1) Fund 1) Fund 1) Fund 1) Portfolio 1)
----------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $18,999,630* $ 861,462 $ 7,261,121* $ 883,864 $6,971,943* $2,595,052*
Investment income 1,090,067 47,287 550,289 50,413 536,489 97,938
Net appreciation (depreciation) in
fair value - - 1,225,764 5,495 1,718,144 942,466
Net exchanges between investment funds (867,353) (305,890) (533,079) (239,996) 957,067 1,325,024
Benefits paid to participants (1,122,248) (85,976) (140,766) (14,267) (322,651) (32,315)
----------- ----------- ---------- ---------- ----------- ----------
Net Change in Investment Funds (899,534) (344,579) 1,102,208 (198,355) 2,889,049 2,333,113
----------- ----------- ---------- ---------- ----------- ----------
Balance at December 31, 1997 $18,100,096* $ 516,883 $ 8,363,329* $ 685,509 $9,860,992* $4,928,165*
Investment income 919,565 34,412 515,511 36,453 560,545 122,887
Net appreciation (depreciation) in
fair value - - 2,198,983 6,486 497,557 1,212,095
Net exchanges between investment funds (2,949,956) 356,783 347,857 (691,190) (843,452) 376,776
Benefits paid to participants (1,547,725) (193,842) (272,288) (35,643) (844,559) (537,540)
Transfers (to)/ from other plans (9) 63,658 (21,675) (1,615) (17,436) (7,236)
----------- ----------- ---------- ---------- ----------- ----------
Net Change in Investment Funds (3,578,125) 261,011 2,768,388 (685,509) (647,345) 1,166,982
----------- ----------- ---------- ---------- ----------- ----------
Balance at December 31, 1998 $14,521,971* $ 777,894 $11,131,717* $ - $9,213,647* $6,095,147*
=========== =========== ========== ========== =========== ==========
* Investment fund balance represents greater than five percent of ending net assets available for plan benefits.
1) Party in interest.
(table continued on next page)
9
</TABLE>
<TABLE>
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
<CAPTION>
MAS Domestic T. Rowe
Income Capital Moderation Putnam Fixed Income Price
Mix Growth Mix Mix International Portfolio Small Cap
Portfolio 1) Portfolio 1) Portfolio 1) Growth A Fund Institutional Stock Fund
---------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 69,484 $ 1,850,571 $ 992,897 $ - $ - $ -
Investment income - - - - - -
Net appreciation (depreciation) in
fair value 11,476 370,149 232,220 - - -
Net exchanges between investment funds 80,610 243,235 208,044 - - -
Benefits paid to participants - (1,141) (6,503) - - -
---------- ----------- ----------- ----------- ----------- ------------
Net Change in Investment Funds 92,086 612,243 433,761 - - -
---------- ----------- ----------- ----------- ----------- ------------
Balance at December 31, 1997 $ 161,570 $ 2,462,814 $ 1,426,658 $ - $ - $ -
Investment income - - - 1,313 17,453 7,056
Net appreciation (depreciation) in
fair value 10,447 476,336 267,805 1,879 (14,433) 30,748
Net exchanges between investment funds (98,624) (411,264) 243,128 45,434 759,414 214,241
Benefits paid to participants - (31,000) (35,687) - (18) -
Transfers (to)/from other plans - - - - - -
---------- ----------- ----------- ----------- ----------- ------------
Net Change in Investment Funds (88,177) 34,072 475,246 48,626 762,416 252,045
---------- ----------- ----------- ----------- ----------- ------------
Balance at December 31, 1998 $ 73,393 $ 2,496,886 $ 1,901,904 $ 48,626 $ 762,416 $ 252,045
========== =========== ============ =========== =========== ============
* Investment fund balance represents greater than five percent of ending net assets available for plan benefits.
1) Party in interest.
(table continued on next page)
10
</TABLE>
<TABLE>
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
<CAPTION>
US Airways
Common Neuberger &
Stock Berman Guardian
Fund 1) Fund TOTAL
---------- ----------- ------------
<S> <C> <C> <C>
Balance at December 31, 1996 $ 3,603,225* $ 642,671 $ 44,731,920
Investment income - 92,364 2,464,847
Net appreciation (depreciation) in
fair value 4,878,126 37,336 9,421,176
Net exchanges between investment funds (1,362,453) 494,791 -
Benefits paid to participants (25,130) - (1,750,997)
---------- ----------- -----------
Net Change in Investment Funds 3,490,543 624,491 10,135,026
---------- ----------- -----------
Balance at December 31, 1997 $ 7,093,768* $ 1,267,162 $ 54,866,946
Investment income - 90,368 2,305,563
Net appreciation (depreciation) in
fair value (1,161,461) (71,057) 3,455,385
Net exchanges between investment funds 2,904,970 (254,117) -
Benefits paid to participants (148,102) (14,091) (3,660,495)
Transfers (to)/from other plans (12,875) (2,812) -
---------- ----------- ----------
Net Change in Investment Funds 1,582,532 (251,709) 2,100,453
---------- ----------- -----------
Balance at December 31, 1998 $ 8,676,300* $ 1,015,453 $ 56,967,399
========== =========== ============
* Investment fund balance represents greater than five percent of ending net assets available for
plan benefits.
1) Party in interest.
11
</TABLE>
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
4. Investment Contracts with Insurance Companies
The Plan had an interest in a portfolio of GICs with certain insurance
companies of $14,521,971 and $18,100,096 at December 31, 1998 and 1997,
respectively. The GICs are benefit responsive because they provide
reasonable access by Plan participants to invested funds. Therefore, in
accordance with the American Institute of Certified Public Accountant's
Statement of Position 94-4, "Application of Fair Value and Contract Value
Reporting for Defined Contribution Plan Investments," the interest in
these contracts is disclosed in the financial statements at contract
value which equals contributions made, plus accrued interest at the
specified rate, less plan withdrawals and administrative expenses. The
portfolio's contract value at December 31, 1998 and 1997 was $90,475,438
and $85,983,442, respectively. The average portfolio crediting interest
rate was approximately 5.9% and 6.0% at December 31, 1998 and 1997,
respectively. The portfolio average yield was approximately 6.2% and
6.1% for the years ended December 31, 1998 and 1997, respectively.
For GICs with variable rates (approximately 64% of the portfolio, as
measured by contract values), crediting rates are reset either quarterly
or bi-annually. Crediting rates are determined based upon the yields to
maturity of the underlying assets, net of certain origination fees.
No valuation reserves were recognized related to the portfolio as all
insurance companies in the portfolio had received an investment grade
rating from nationally recognized rating agencies as of December 31, 1998
and 1997. The fair value of the portfolio was $90,895,034 and
$85,243,181 at December 31, 1998 and 1997, respectively.
5. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company. Fidelity Management Trust Company is the
trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest.
6. Plan Termination
Although it has not expressed any intent to do so, the Company reserves
the right to terminate the Plan at any time subject to the provisions of
ERISA. Upon termination of the Plan, US Airways shall provide for the
assets under the Plan to be distributed in the forms of payment available
under the Plan to the participants, beneficiaries or other successors in
interest, the balance of their account at the time of termination.
12
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan
benefits per the financial statements to the Form 5500:
December 31,
-------------------
1998 1997
---- ----
Net assets available for plan
benefits per the financial
statements $56,967,399 $54,866,946
Amounts allocated to withdrawing
participants (36,047) (18,335)
----------- -----------
Net assets available for plan
benefits per the Form 5500 $56,931,352 $54,848,611
=========== ===========
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
Year Ended
December 31, 1998
-----------------
Benefits paid to participants per the
financial statements $3,660,495
Add: Amounts allocated to withdrawing
participants at December 31, 1998 36,047
Less: Amounts allocated to withdrawing
participants at December 31, 1997 (18,335)
---------
Benefits paid to participants per the
Form 5500 $3,678,207
==========
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
8. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated July 22, 1995, that the Plan and related trust are designed
in accordance with applicable sections of the IRC. The Plan has been
amended since receiving the determination letter. However, the plan
administrator and the Plan's legal counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRC.
13
<TABLE>
Supplemental Retirement Plan of Supplemental Schedule I
Piedmont Aviation, Inc. Page 1 of 2
Item 27a - Schedule of Assets Held for Investment Purposes
----------------------------------------------------------
December 31, 1998
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Fidelity Equity Shares in registered $ 6,465,408 $ 9,213,647
Income Fund* investment company
Fidelity Magellan Fund* Shares in registered 7,454,462 11,131,717
investment company
US Airways Common Stock Fund* Common stock of employer's 7,540,905 8,676,300
parent company, US Airways
Group, Inc., and short-
term investments
Fidelity Spartan U.S. Shares in registered 3,836,605 6,095,147
Equity Index Portfolio* investment company
Capital Growth Mix Shares in registered 1,588,183 2,496,886
Portfolio* investment companies
Moderation Mix Portfolio* Shares in registered 1,305,936 1,901,904
investment companies
Neuberger & Berman Shares in registered 1,076,820 1,015,453
Guardian Trust investment companies
* Party in interest.
(continued on next page)
14
</TABLE>
<TABLE>
Supplemental Retirement Plan of Supplemental Schedule I
Piedmont Aviation, Inc. Page 2 of 2
Item 27a - Schedule of Assets Held for Investment Purposes
----------------------------------------------------------
(Continued)
December 31, 1998
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Fidelity Retirement Shares in money 777,894 777,894
Government Money market fund
Market Portfolio*
Income Mix Portfolio* Shares in registered 56,208 73,393
investment companies
Fixed Income Fund* Guaranteed Investment 14,521,971 14,521,971
Contracts, interest rates
range from 4.05% to 8.28%
per annum
Putnam International Growth Shares in registered 46,747 48,626
A Fund investment companies
MAS Domestic Fixed Income US Government securities 776,909 762,416
Portfolio Institutional and US investment grade
fixed income securities
T. Rowe Price Small Cap Shares in registered 221,298 252,045
Stock Fund investment companies
----------- -----------
Total Investments $45,669,346 $56,967,399
=========== ===========
*Party in interest.
See accompanying Independent Auditors' Report.
15
</TABLE>
<TABLE>
Supplemental Retirement Plan of Supplemental Schedule II
Piedmont Aviation, Inc.
Item 27d - Schedule of Reportable Transactions
----------------------------------------------
Year Ended December 31, 1998
Aggregate transactions during the year ended December 31, 1998, with securities of the same issue,
accounting for greater than five percent of the value of plan assets at the beginning of the period
were as follows:
<CAPTION>
Total Number of Total Number Realized
Purchases Purchases Sales of Sales Gain
--------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Magellan Fund* $ 2,290,119 133 $ 1,720,714 81 $ 190,517
Fidelity Equity 1,693,360 137 2,838,262 101 578,454
Income Fund*
US Airways Common Stock 6,041,980 132 3,297,988 64 1,028,311
Fund*
Fidelity Spartan U.S. 1,584,852 132 1,630,952 58 346,083
Equity Index Portfolio*
Fidelity Retirement 1,973,444 86 1,712,433 89 -
Government Money
Market Fund*
Fixed Income Fund* 3,183,564 148 6,761,690 148 -
*Party in interest.
See accompanying Independent Auditors' Report.
16
</TABLE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on their behalf by the
undersigned hereunto duly authorized.
Supplemental Retirement Plan
of Piedmont Aviation, Inc.
By: /s/ Anita P. Beier
----------------------
Anita P. Beier
Controller
US Airways Group, Inc.
June 25, 1999
17
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
US Airways Group, Inc.:
We consent to incorporation by reference in the registration
statement (No. 33-44835) on Form S-8 of US Airways Group,
Inc. of our report dated June 11, 1999, relating to the
statements of net assets available for plan benefits of the
Supplemental Retirement Plan of Piedmont Aviation, Inc. as
of December 31, 1998 and 1997, and the related statements of
changes in net assets available for plan benefits for the
years then ended, which report appears in the December 31,
1998 annual report on Form 11-K of the Supplemental
Retirement Plan of Piedmont Aviation, Inc.
KPMG LLP
Washington, D.C.
June 25, 1999
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