USAIR INC, S-4/A, 1996-07-02

USAIR INC
S-4/A, 1996-07-02
AIR TRANSPORTATION, SCHEDULED

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<PAGE>

AS FILED WITH THE SECURITIES AND COMMISSSION ON JULY 2, 1996
Registration No. 333-4335

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

--------------------------

AMENDMENT NO. 1 TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

--------------------------

USAIR, INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

4512

(Primary Standard Industrial Classification Code Number)

-------------------------

53-0218143

(I.R.S. Employer Identification Number)

2345 Crystal Drive

Arlington, Virginia 22227

(703) 418-7000

(Address, including zip code and telephone number, including
area code, of Registrants' principal executive office)

-------------------------
copies to:
John W. Harper Lawrence M. Nagin
Senior Vice President-Finance Executive Vice President-Corporate
and Chief Financial Officer Affairs and General Counsel
USAir, Inc. USAir, Inc.
2345 Crystal Drive 2345 Crystal Drive
Arlington, Virginia 22227 Arlington, Virginia 22227
(703) 418-7000 (703) 418-7000
<PAGE>

(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration Statement
becomes effective.

If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box. [x]
<PAGE>

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

<PAGE>

CROSS REFERENCE SHEET
---------------------

Item Item Caption Location or Heading
in Prospectus

A. INFORMATION ABOUT THE TRANSACTION
---------------------------------

1. Forepart of the Regis-
tration Statement and
Outside Front Cover
Page of Prospectus........ Facing Page; Cross
Reference Sheet; Outside
Front Cover Page of the
Prospectus

2. Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front Cover Page
of Prospectus

3. Risk Factors; Ratio of
Earnings to Fixed Charges
and Other Information..... "Prospectus Summary";
"Risk Factors";
"Business";
"Selected Consolidated
Financial and Operating
Data"

4. Terms of the Transaction... "Prospectus Summary";
"Risk Factors"; "The
"The Exchange Offer";
"Description of the
Notes"; "United States
Federal Income Tax
Consequences"; "Plan of
Distribution"

5. Pro Forma Financial
Information................ *

6. Material Contacts With the
Company Being Acquired..... *
<PAGE>

7. Additional Information
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters.. *

8. Interests of Named
Experts and Counsel........ "Independent Auditors";
"Experts"; "Legal
Matters"

9. Disclosure of Commission
Position on Indemnifi-
cation for Securities
Act Liabilities............ *

B. INFORMATION ABOUT THE REGISTRANT
--------------------------------

10. Information With Respect
to S-3 Registrants......... *

11. Incorporation of Certain
Information by Reference... *

12. Information With Respect
to S-2 or S-3 Registrants.. *

13. Incorporation of Certain
Information by Reference... *

14. Information With Respect
to Registrants Other Than
S-2 or S-3 Registrants..... Cover Page of Regis-
tration Statement;
"Prospectus Summary";
"Risk Factors";
"Business"; "Use
of Proceeds"; "Selected
Consolidated Financial
and Operating Data";
"Management's Discussion
and Analysis of Financial
Condition and Results of
Operations";
"Management";
"Security Ownership of
Certain Beneficial Owners
and Management".
<PAGE>

15. Information With Respect
S-3 Companies.............. *

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
--------------------------------------------

16. Information With Respect *
to S-2 or S-3 Companies....

17. Information With Respect
to Companies Other Than
S-2 or S-3 Companies....... *

18. Information if Proxies,
Consents or Authorizations
are to be Solicited........ *

D. VOTING AND MANAGEMENT INFORMATION
---------------------------------

19. Information if Proxies,
Consents or Authorizations
are not to be Solicited
or in an Exchange Offer "Management"; "Security
Ownership of Certain
Beneficial Owners and
Management"

____________________
*Not Applicable
<PAGE>

PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION

$263,000,000
------------

Offer to Exchange 6.76% Class A Enhanced Equipment Notes,
7.50% Class B Enhanced Equipment Notes and
8.93% Class C Enhanced Equipment Notes for any and all
outstanding 6.76% Class A Enhanced Equipment Notes,
7.50% Class B Enhanced Equipment Notes and
8.93% Class C Enhanced Equipment Notes

USAir, Inc. ("USAir" or the "Company") hereby offers to
exchange (the "Exchange Offer") (a) up to $142,400,000 in
aggregate principal amount of new 6.76% Class A Enhanced
Equipment Notes (the "New Class A Notes") for up to $142,400,000
in aggregate principal amount of outstanding Class A Enhanced
Equipment Notes (the "Old Class A Notes"), (b) up to $54,800,000
in aggregate principal amount of new 7.50% Class B Enhanced
Equipment Notes (the "New Class B Notes") for up to $54,800,000
in aggregate principal amount of outstanding Class B Enhanced
Equipment Notes (the "Old Class B Notes") and (c) up to
$65,800,000 in aggregate principal amount of new 8.93% Class C
Enhanced Equipment Notes (the "New Class C Notes") for up to
$65,800,000 in aggregate principal amount of outstanding Class C
Enhanced Equipment Notes (the "Old Class C Notes"; the New Class
A Notes, the New Class B Notes and the New Class C Notes are
sometimes collectively referred to as the "New Notes"; the Old
Class A Notes, the Old Class B Notes and the Old Class C Notes
are sometimes collectively referred to as the "Old Notes"; the
New Notes and the Old Notes, collectively, the "Notes").

The Old Notes were issued pursuant to three separate
indentures (each, an "Indenture") dated as of February 15, 1996
between USAir and Wilmington Trust Company, as Indenture Trustee.
The terms of the New Notes are identical in all respects
(including principal amount, interest rate and maturity) to the
terms of the Old Notes for which they may be exchanged in the
Exchange Offer, except that the New Notes are freely transferable
by holders thereof and are issued free from any covenant
regarding registration. The New Notes will evidence the same
debt as the Old Notes and contain terms which are identical to
the terms of the Old Notes that are to be exchanged therefor.
For a complete description of the terms of the New Notes, see
"Description of the Notes." There will be no cash proceeds to
USAir from the Exchange Offer.

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<PAGE>

The Old Notes were issued and sold on February 16, 1996 in
transactions not registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the exemption
provided in Section 4(2) of the Securities Act (the "Private
Offering"). Accordingly, the Old Notes may not be reoffered,
resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities
Act is available. The New Notes are being offered hereunder in
order to satisfy the obligations of USAir under a registration
rights agreement (the "Registration Rights Agreement") dated as
of February 15, 1996 between Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc., Chase Securities, Inc. and Lehman Brothers
Inc. (collectively, the "Initial Purchasers") on the one hand and
USAir on the other, relating to the Old Notes. See "The
Exchange Offer--Purposes of the Exchange Offer." New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by
holders thereof (other than any holder which is an "affiliate" of
USAir within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such holders' business and
such holders have no arrangements with any person to participate
in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The "Letter of
Transmittal" relating to the Exchange Offer states that by so
acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other
trading activities. USAir will, for a period of 90 days after
the Expiration Date (as defined herein), make this Prospectus
available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."

The Notes constitute securities for which there is no
established trading market. Any Old Notes not tendered and
accepted in the Exchange Offer will remain outstanding. USAir
does not currently intend to list the New Notes on any securities
exchange. To the extent that any Old Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell
untendered Old Notes could be adversely affected. No assurance
can be given as to the liquidity of the trading market for the
Notes.

- 2 -
<PAGE>

The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Old Notes being tendered for exchange. The
Exchange Offer will expire at 5:00 p.m., New York City time, on August __, 1996,
unless extended (the "Expiration Date"). The date of acceptance for exchange of
the Old Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date, otherwise such tenders will
be irrevocable. USAir will pay all expenses incident to the Exchange Offer.

See "Risk Factors" commencing on page 33 for a discussion of certain
factors that should be considered by prospective investors in evaluating the New
Notes.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is July __, 1996

- 3 -
<PAGE>

AVAILABLE INFORMATION
---------------------

USAir has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-4 (the "Exchange Offer
Registration Statement") under the Securities Act with respect to the New Notes
offered hereby. This Prospectus does not contain all the information set forth
in the Exchange Offer Registration Statement, certain parts of which are omitted
in accordance with the rules and regulations of the Commission, and to which
reference is hereby made. Statements made in this Prospectus as to the contents
of any contract, agreement or document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Exchange Offer Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved. USAir is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended, and in accordance therewith files reports with the Commission. Such
reports and other information concerning USAir may be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, Room 1228; The Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and 75 Park Avenue, New York, New York 10007, 14th Floor. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER MADE BY THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

------------

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<PAGE>

TABLE OF CONTENTS
-----------------

Page
- ----------------------------------------------------------- ----
<S> <C>
Prospectus Summary........................................ 1
Risk Factors.............................................. 33
Use of Proceeds........................................... 52
Description of the Aircraft and the Appraisals............ 53
Selected Financial and Operating Information.............. 55
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 58
Business.................................................. 85
Management................................................ 137
Beneficial Security Ownership............................. 157
The Exchange Offer........................................ 165
Description of the Notes.................................. 176
Plan of Distribution...................................... 204
United States Federal Income Tax Consequences............. 205
Legal Matters............................................. 206
Independent Auditors...................................... 206
Experts................................................... 206
Consolidated Financial Statements......................... 207

</TABLE>
------------

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<PAGE>

PROSPECTUS SUMMARY
------------------

The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in this Prospectus.
Capitalized terms used in this summary and not defined herein shall have the
meanings assigned to them elsewhere in this Prospectus.

The Company
-----------

USAir, a certificated air carrier engaged primarily in the
business of transporting passengers, property and mail, is a wholly-owned
subsidiary of USAir Group, Inc. ("USAir Group"). USAir accounted for
approximately 93% of USAir Group's operating revenues for the fiscal year ended
December 31, 1995 and 92% of USAir Group's operating revenues for the first
quarter of 1996. USAir is USAir Group's principal operating subsidiary. USAir
enplaned more than 57 million passengers in 1995 and was the fifth largest
United States air carrier ranked by revenue passenger miles ("RPMs") in 1995. As
of December 31, 1995, USAir provided regularly scheduled jet service through 108
airports to approximately 143 cities in the continental United States, Canada,
Mexico, France, Germany and the Caribbean. USAir added service to Italy and
Spain in 1996. USAir's executive offices are located at 2345 Crystal Drive,
Arlington, Virginia 22227 (telephone number (703) 418-7000) and its primary
connecting hubs are located at the principal airports in Pittsburgh,
Pennsylvania, Charlotte, North Carolina, Philadelphia, Pennsylvania, and
Baltimore/Washington International Airport ("BWI"). USAir also maintains
significant operations at major airports in the large east coast population
centers of Boston, New York City (LaGuardia Airport ("LaGuardia")) and
Washington, D.C. (National Airport ("Washington National")). When measured by
departures, USAir is the largest or second largest airline at each of the
foregoing airports and is the predominant air carrier in many smaller eastern
cities, such as Albany, Buffalo, Hartford, Providence, Richmond, Rochester and
Syracuse. In addition, USAir is the leading airline from the Northeast to
Florida. As discussed below in "Business - Significant Impact of Low Cost, Low
Fare Competition," a substantial portion of USAir's RPMs are flown within or to
and from the eastern United States. For fiscal year 1995, approximately 36% of
all scheduled flights on the east coast of the United States were USAir flights.
Approximately 64% of USAir's current flights and 44% of its available seat miles
("ASMs") are represented by intra-east coast flying.

- 6 -
<PAGE>

USAir has an important international alliance with British Airways Plc
("BA"), a major investor in USAir Group. As of December 31, 1995, USAir and BA
had implemented code sharing from 70 of the 138 airports currently authorized by
the United States Department of Transportation ("DOT"). The USAir/BA alliance
also extends to the sharing of ground services at certain airports and joint
cooperation in areas such as product branding, cargo services, jet fuel
purchasing, frequent traveler programs and maintenance services. In June 1996,
BA and American Airlines, Inc. ("American") jointly announced that they intend
to enter into an extensive alliance and code-sharing arrangement, subject to
regulatory approvals in the United States and the United Kingdom. American is
the second largest domestic airline and a major competitor of USAir. USAir has
stated that it is reviewing the proposed alliance and how, if approved, the
BA/American alliance might affect USAir and its relationship with BA. USAir has
stated that it will act in the best interests of its shareholders, employees
and communities served.

USAir also code-shares with eleven regional airlines which operate under
the "USAir Express" trade name. The USAir Express network feeds traffic into
USAir's route system at several points, including its major hub operations at
Pittsburgh, Charlotte, Philadelphia and BWI. At December 31, 1995, USAir Express
carriers enplaned approximately 9.6 million passengers, over half of whom
connected to USAir flights. USAir also has a management agreement and code
shares with Shuttle, Inc. which operates under the name "USAir Shuttle." The
USAir Shuttle operates frequent service between LaGuardia and Boston and between
LaGuardia and Washington National.

In January 1996, Stephen M. Wolf was appointed Chairman and
Chief Executive Officer of USAir and of USAir Group. Mr. Wolf succeeded Seth E.
Schofield, who retired after 38 years with USAir. Mr. Wolf has been a senior
executive at United Airlines, Inc. ("United"), The Flying Tiger Line Inc.
("Flying Tigers"), Republic Airlines, Inc. ("Republic"), Continental Airlines,
Inc. ("Continental"), Pan American World Airways ("Pan Am") and American. In
addition, in February 1996, USAir appointed Rakesh Gangwal as President and
Chief Operating Officer of USAir and USAir Group and Lawrence M. Nagin as
Executive Vice President- Corporate Affairs and General Counsel of USAir and
USAir Group. Mr. Gangwal has been a senior officer at Air France and United and
Mr. Nagin has held senior positions at United and Flying Tigers.

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<PAGE>

Recent Operating Results Strategy
- ------------------------ --------

USAir recorded a net loss of $54.9 million for the three
months ended March 31, 1996 compared to a net loss of $101.8
million for the three months ended March 31, 1995. USAir recorded
net income of $33.0 million and operating income of $234.7 million
for the fiscal year ended December 31, 1995 compared with a net
loss of $716.2 million and an operating loss of $517.0 million for
the fiscal year ended December 31, 1994. The year-over-year
improvement reflects a $406.3 million revenue increase coupled with
a decrease in operating expenses of $345.3 million. From 1989
through 1994, USAir incurred substantial losses. Its results of
operations have been adversely affected by, among other factors,
the growth of low cost, low fare competition, particularly in 1994,
and its unit costs, which are the highest of major United States air
carriers.

Strategy
- --------

USAir has been striving to improve its profitability and
respond to the competitive environment that characterizes the
United States airline industry by:

- Rationalizing the level and geographic distribution of
its capacity;

- Building brand loyalty by improving its product and its
delivery; and

- Reducing its operating costs and aircraft commitments.

Most recently, Stephen M. Wolf, Chairman of the Board of Directors
and Chief Executive Officer of both USAir Group and USAir, and
Rakesh Gangwal, President and Chief Operating Officer of both
companies, have held a series of employee meetings where they
presented their assessment of USAir's competitive position. The
focal point of these meetings was to communicate senior
management's belief that USAir must lower its personnel costs,
increase employee productivity, increase the quality of USAir's
service and customer satisfaction and grow in size to ensure long-
term viability. The Chairman made a similar presentation at USAir
Group's annual stockholders meeting in May 1996. USAir remains
committed to reducing USAir's personnel costs and improving employee
productivity. With regard to the growth of USAir, USAir believes
that internal growth is preferable but has not excluded other
alternatives.

- 8 -

<PAGE>

Capacity and Route Rationalization
- ----------------------------------

Beginning in the spring of 1995, USAir instituted a significant
rationalization of its capacity and routes with the goals of reducing less
profitable non-hub (point-to-point) flying, emphasizing the quality of
departures versus quantity of flights, reducing excess capacity in strong
markets and replacing low demand jet service with modern turboprop aircraft
operated by USAir Express. USAir has also been seeking to broaden its route
portfolio by leveraging its strong east coast franchise into expanded
transcontinental and international service from the eastern United States. By
diversifying its route structure in this way, USAir can enhance its long-haul
service and increase its average length of haul. Increasing its length of haul
will enable USAir to increase the average value of tickets sold and reduce the
unit cost of serving each passenger.

- 9 -
<PAGE>

Internationally, USAir has expanded service to the Caribbean and has re-
aligned its international routes in an effort to further develop Philadelphia
and Boston as transatlantic gateways. USAir has recently commenced service to
Munich, Germany, Madrid, Spain and Rome, Italy to complement its European
service to Frankfurt and Paris. USAir estimates that its transatlantic capacity
in 1996 (as measured by ASMs) will increase by approximately 54% compared to
1995. USAir believes that the further development of international service from
Philadelphia and Boston will enable it to achieve a competitive advantage by
leveraging USAir's existing domestic network with the strong local transatlantic
demand and the favorable geographic position of these cities.

USAir's reduction in jet aircraft and its continuing efforts
to reduce costs and enhance revenue by eliminating less profitable
routes have resulted in the cessation of or reduction in jet flying
between certain city pairs. In some cases, existing or former jet
routes have been turned over to USAir Express with the goal of
maintaining portions of the revenue base (particularly the hub
connecting traffic) with lower cost operations.

- 10 -
<PAGE>

Enhanced Customer Service, Performance and Reliability
- ------------------------------------------------------

USAir has undertaken a number of initiatives to build brand
loyalty among its customers with the goal of maintaining and
enhancing its traditional unit revenue premiums over its
competitors. USAir hopes to increase its market share of business
travelers and long-haul customers. The initiatives include
enhancements appealing to business travelers, investments in
technology and new facilities, improvements in service levels
and an emphasis on safety.

- 11 -
<PAGE>

Cost Reductions
- ---------------

Although USAir has recently demonstrated significantly
improved financial performance, USAir believes that it must
continue to lower its costs (including personnel costs) in order to
compete effectively in a low fare environment. USAir, whose
operating costs are the highest among the major United States airlines,
is actively pursuing several initiatives in an effort to further
reduce its cost structure. USAir is working to achieve additional
substantial cost savings through a combination of organizational and
structural changes, reengineering and other initiatives including:
centralization of its purchasing functions; realignment of customer
services; improvements in operations performance to increase crew
productivity; outsourcing of cargo, and communications; and
reengineering its maintenance operations, finance, reservations,
purchasing, accounts payable, payroll and human resources
functions.

- 12 -
<PAGE>

In February 1995, USAir and several other major U.S. carriers,
including Delta Airlines, Inc. ("Delta"), American, Northwest
Airlines, Inc. ("Northwest") and United, imposed limits on the base
commissions they pay travel agents for domestic air fares. See
"Business - Industry Restructuring and Cost-Cutting." The new
limits on commissions are designed to reduce one of the airlines'
largest expenses. USAir has experienced cost savings due to the
new commission limits.

In March 1994, in an attempt to reduce its annual labor
personnel costs by approximately $500 million through concession
agreements involving wage and benefit reductions, improved
productivity and other cost savings, USAir Group began negotiating
with the unions that represent certain of USAir's employees.
USAir's wages and benefits are the largest single component of its
operating costs (approximately 41% for 1995). In late July 1995,
USAir Group announced that it was ending discussions with the
unions on a wage concession and restructuring package and that it
would concentrate on reducing USAir's labor costs through tradi-
tional collective bargaining. See "Business - Employees." USAir
remains committed to obtaining labor cost reductions.

- 13 -
<PAGE>

In order to decrease aircraft ownership costs, facilitate its
capacity rationalization plan and reduce its fleet size and number of fleet
types, USAir has deferred new aircraft deliveries, pursued the sale or lease of
certain jet aircraft and declined to renew leases for certain other aircraft
upon lease expiry. USAir has no current plans to add new aircraft to its fleet
until January 1998. In May 1994, USAir reached an agreement with The Boeing
Company ("Boeing") to reschedule the delivery of 40 737-300 series aircraft from
the 1997 through 2000 time period to the years 2003 through 2005. In June 1995,
USAir reached agreements with Boeing and Rolls-Royce plc ("Rolls-Royce") to
reschedule the delivery dates for eight 757-200 aircraft from 1996 to 1998. As a
result of these recent agreements, USAir's capital commitments have been
substantially reduced for the 1996 to 2000 time period. In addition, USAir has
committed financing for a substantial portion of the purchase price of each of
the scheduled 1998 deliveries.

Transaction Overview
--------------------

On February 16, 1996 (the "Closing Date"), USAir issued the Old Notes, the
proceeds of which were used as part of the funds necessary to repay in full the
indebtedness incurred by USAir in connection with its acquisition of nine Boeing
757-200 aircraft (each an "Aircraft" and collectively, the "Aircraft"). USAir
took delivery of two of the Aircraft from Boeing in the fourth quarter of 1994
and seven during 1995. Each of the Aircraft is equipped with two Rolls-Royce
model RB211-535E4 aircraft engines.

The Old Class A Notes, the Old Class B Notes and the Old Class C Notes were
issued in principal amounts not exceeding 32.5%, 45% and 60%, respectively, on a
cumulative basis, of $438,120,000 - the "Initial Aggregate Appraised Value."
"Appraised Value" for an Aircraft is defined as the lower of the average and
median of the appraisals for such Aircraft as of December 31, 1995 from the

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<PAGE>

following three independent aircraft appraisal and consulting firms
commissioned by USAir: AirClaims Limited ("AirClaims"), Aircraft
Information Services, Inc. ("AISI") and BK Associates, Inc. ("BK").
The Initial Aggregate Appraised Value of $438,120,000 was the sum
of the nine Appraised Values.

The Old Notes are and the New Notes will be secured by a
security interest in, among other things, the Aircraft, granted on
the Closing Date by USAir to Wilmington Trust Company, as
collateral agent (the "Collateral Agent") under a Collateral Agency
Agreement (the "Collateral Agency Agreement") entered into by
USAir, the Indenture Trustees, the Liquidity Providers (as defined
herein) and the Collateral Agent. Payments of interest on the
Notes will be supported by three separate Liquidity Facilities (as
defined herein), being provided initially by Westdeutsche
Landesbank Girozentrale, acting through its New York branch
("WestLB New York"), each in an amount sufficient to pay interest
on (but not principal of or premium on) the respective Class of
Notes at the applicable interest rate on three successive
semi-annual Interest Payment Dates (as defined herein).

USAir will make semi-annual payments of interest on, and is
expected to make semi-annual payments of principal of, the Notes
directly to the Collateral Agent. From these payments (as well as
from other payments described herein required to be made by USAir
under the Collateral Agency Agreement and the Liquidity Agreements
(as defined herein)), the Collateral Agent will first reimburse the
Liquidity Providers for amounts owing to such Liquidity Providers
and then pay to the applicable Indenture Trustee for each Class of
Notes interest on and principal of the Notes. The expected final
principal payment date of the Notes is April 15, 2008. Failure to
make an expected payment of principal of the Notes before the Legal
Maturity Date (as defined below) is not an Event of Default (as
defined herein) under the applicable Indenture.

[remainder of page left blank intentionally]

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<PAGE>

<TABLE>
<CAPTION>
Summary of Terms of the Notes
Class A Notes Class B Notes Class C Notes
-------------- -------------- -------------
<S> <C> <C> <C>
Aggregate Princi-
pal Amount....... $142,400,000 $54,800,000 $65,800,000
Ratings of Old Notes
on February 16, 1996:
Moody's.......... A2 Baa1 Ba2
S&P.............. A+ A- BBB-
Initial Loan to
Aircraft Value
(cumulative)..... 32.5% 45.0% 60.0%
Expected Average
Life Date........ 02/20/2006 02/20/2006 02/20/2006
Initial Average
Life (in years).. 10.0 10.0 10.0

Interest Payment
Dates............ 04/15 & 10/15 04/15 & 10/15 04/15 & 10/15
Expected Principal
Payment Dates.... 04/15 & 10/15 04/15 & 10/15 04/15 & 10/15
Final Expected
Payment Dates.... 04/15/2008 04/15/2008 04/15/2008
Legal Maturity
Date............. 10/15/2009 10/15/2009 10/15/2009
Minimum Denomi-
nation........... $100,000 $100,000 $100,000
Section 1110 Pro-
tection (1)...... yes yes yes
Liquidity Provider
Ratings.......... A-1+/P-1 A-1+/P-1 A-1+/P-1
Liquidity Facility
Coverage......... 3 semi-annual 3 semi-annual 3 semi-annual
int. pymts. int. pymts. int. pymts.
Initial Liquidity
Facility
Amounts(2)...... $14,439,360 $ 6,165,000 $ 8,813,910
- -----------------------------------------------------------------
(1) The benefits of Section 1110 of the Bankruptcy Code are
available to the Collateral Agent.
(2) The initial available amount of each of the Liquidity
Facilities is sufficient to cover three times the amount of
interest to accrue on the relevant Class of Notes during the first
semi-annual interest period. The aggregate initial amount of the
Liquidity Facilities is $29,418,270.

</TABLE>

- 16 -
<PAGE>

<TABLE>
Aircraft Securing the Notes
---------------------------
The following table sets forth the registration number,
type, in-service date and Appraised Value of each of the
Aircraft:

Aircraft
Registration Aircraft Appraised
Number Aircraft Type In-Service Date Values(1)
- ------------ -------------- --------------- ------------
<S> <C> <C> <C>
N625VJ Boeing 757-200 November 1994 $47,710,000
N626AU Boeing 757-200 November 1994 47,920,000
N627AU Boeing 757-200 February 1995 48,330,000
N628AU Boeing 757-200 February 1995 48,330,000
N629AU Boeing 757-200 March 1995 48,740,000
N630AU Boeing 757-200 April 1995 48,750,000
N631AU Boeing 757-200 May 1995 49,170,000
N632AU Boeing 757-200 June 1995 49,380,000
N633AU Boeing 757-200 July 1995 49,790,000
------------
$438,120,000
============
- ------------------------------------------------------------
(1) Appraised Value for each Aircraft means the lower of the
average and median of the appraisals for such Aircraft
commissioned by USAir from AirClaims, AISI and BK as of December
31, 1995. The median appraisal was used in each case.

</TABLE>

[remainder of page left blank intentionally]

- 17 -
<PAGE>

Loan to Value Ratios
--------------------

The following table sets forth loan to value ratios ("LTVs")
for each Class of Notes as of the date specified. The LTV for
any Class of Notes is equal to the outstanding principal amount
of such Class, together in each case with the outstanding
principal amount of the Notes of all Classes senior to such
Class, divided by the "Assumed Aggregate Appraised Value." USAir
does not generally disclose projections of future values. USAir
has no obligation, and does not intend, to prepare updated
projections of the LTVs set forth below.

The table is based on the assumption that the value of each
Aircraft included in the aggregate pool set forth below
depreciates by 2% per year from the Initial Aggregate Appraised
Value. Other rates or methods of depreciation would result in
materially different LTVs and no assurance can be given (i) that
the depreciation rates and method assumed for the purpose of the
table are those most likely to occur or (ii) as to the actual
future value of any Aircraft. The Note balances are calculated
on the assumption that USAir makes all payments of principal when
expected to be made. Thus, the table should not be considered a
forecast or prediction of expected or likely LTVs but simply a
mathematical calculation based on one set of assumptions.

[remainder of page left blank intentionally]

- 18 -
<PAGE>

<TABLE>

Class A
-------
<CAPTION>

Assumed
Aggregate
Appraised Class A Class A
Payment Date Value (1) Balance LTV
- ------------ ----------------- ------------ -------
<S> <C> <C> <C>
Apr. 15, 1996 $438,120,000 $142,400,000 32.5%
Oct. 15, 1996 438,120,000 138,703,000 31.7%
Apr. 15, 1997 429,357,600 137,011,500 31.9%
Oct. 15, 1997 429,357,600 135,320,000 31.5%
Apr. 15, 1998 420,595,200 133,797,650 31.8%
Oct. 15, 1998 420,595,200 132,275,300 31.4%
Apr. 15, 1999 411,832,800 130,895,410 31.8%
Oct. 15, 1999 411,832,800 129,515,520 31.4%
Apr. 15, 2000 403,070,400 128,503,680 31.9%
Oct. 15, 2000 403,070,400 127,491,840 31.6%
Apr. 15, 2001 394,308,000 126,657,177 32.1%
Oct. 15, 2001 394,308,000 124,996,877 31.7%
Apr. 15, 2002 385,545,600 123,842,573 32.1%
Oct. 15, 2002 385,545,600 122,980,798 31.9%
Apr. 15, 2003 376,783,200 120,627,040 32.0%
Oct. 15, 2003 376,783,200 119,285,600 31.7%
Apr. 15, 2004 368,020,800 113,635,200 30.9%
Oct. 15, 2004 368,020,800 110,353,800 30.0%
Apr. 15, 2005 359,258,400 103,923,520 28.9%
Oct. 15, 2005 359,258,400 96,807,604 26.9%
Apr. 15, 2006 350,496,000 88,857,600 25.4%
Oct. 15, 2006 350,496,000 79,804,800 22.8%
Apr. 15, 2007 341,733,600 73,154,400 21.4%
Oct. 15, 2007 341,733,600 63,648,000 18.6%
Apr. 15, 2008 332,971,200 0 0.0%
- -----------------------------
(1) The Assumed Aggregate Appraised Value set forth opposite
April 15, 1996 (but not the Assumed Aggregate Appraised Values
for subsequent periods) is the Initial Aggregate Appraised Value
(see "Description of the Aircraft and the Appraisals"). No
assurance can be given that such value represents the realizable
value of the Aircraft. See "Risk Factors-Limitations Regarding
Aircraft Collateral-Appraisals of Aircraft; Realizable Value" and
"Description of the Aircraft and the Appraisals."

</TABLE>

- 19 -
<PAGE>

<TABLE>
Class B
-------
<CAPTION>
Assumed
Aggregate
Appraised Class B Class B
Payment Date Value (1) Balance LTV
- ------------ ----------------- ------------ -------
<S> <C> <C> <C>
Apr. 15, 1996 $438,120,000 $54,800,000 45.0%
Oct. 15, 1996 438,120,000 53,377,278 43.8%
Apr. 15, 1997 429,357,600 52,726,336 44.2%
Oct. 15, 1997 429,357,600 52,075,393 43.6%
Apr. 15, 1998 420,595,200 51,489,545 44.1%
Oct. 15, 1998 420,595,200 50,903,697 43.6%
Apr. 15, 1999 411,832,800 50,372,672 44.0%
Oct. 15, 1999 411,832,800 49,841,647 43.6%
Apr. 15, 2000 403,070,400 49,452,259 44.2%
Oct. 15, 2000 403,070,400 49,062,871 43.8%
Apr. 15, 2001 394,308,000 48,741,666 44.5%
Oct. 15, 2001 394,308,000 48,102,731 43.9%
Apr. 15, 2002 385,545,600 47,658,518 44.5%
Oct. 15, 2002 385,545,600 47,326,880 44.2%
Apr. 15, 2003 376,783,200 46,421,080 44.3%
Oct. 15, 2003 376,783,200 45,904,852 43.8%
Apr. 15, 2004 368,020,800 43,730,400 42.8%
Oct. 15, 2004 368,020,800 42,467,614 41.5%
Apr. 15, 2005 359,258,400 39,993,040 40.1%
Oct. 15, 2005 359,258,400 37,254,612 37.3%
Apr. 15, 2006 350,496,000 34,195,200 35.1%
Oct. 15, 2006 350,496,000 30,711,398 31.5%
Apr. 15, 2007 341,733,600 28,152,115 29.6%
Oct. 15, 2007 341,733,600 24,493,753 25.8%
Apr. 15, 2008 332,971,200 0 0.0%
- -----------------------------
(1) The Assumed Aggregate Appraised Value set forth opposite
April 15, 1996 (but not the Assumed Aggregate Appraised Values
for subsequent periods) is the Initial Aggregate Appraised Value
(see "Description of the Aircraft and the Appraisals"). No
assurance can be given that such value represents the realizable
value of the Aircraft. See "Risk Factors-Limitations Regarding
Aircraft Collateral-Appraisals of Aircraft; Realizable Value" and
"Description of the Aircraft and the Appraisals."

</TABLE>

- 20 -
<PAGE>

<TABLE>
Class C
-------
<CAPTION>

Assumed
Aggregate
Appraised Class B Class B
Payment Date Value (1) Balance LTV
- ------------ ----------------- ------------ -------
<S> <C> <C> <C>
Apr. 15, 1996 $438,120,000 $65,800,000 60.0%
Oct. 15, 1996 438,120,000 64,091,695 58.5%
Apr. 15, 1997 429,357,600 63,310,089 58.9%
Oct. 15, 1997 429,357,600 62,528,483 58.2%
Apr. 15, 1998 420,595,200 61,825,038 58.8%
Oct. 15, 1998 420,595,200 61,121,592 58.1%
Apr. 15, 1999 411,832,800 60,483,975 58.7%
Oct. 15, 1999 411,832,800 59,846,357 58.1%
Apr. 15, 2000 403,070,400 59,378,807 58.9%
Oct. 15, 2000 403,070,400 59,911,258 58.4%
Apr. 15, 2001 394,308,000 58,525,578 59.3%
Oct. 15, 2001 394,308,000 58,758,388 58.5%
Apr. 15, 2002 385,545,600 57,225,009 59.3%
Oct. 15, 2002 385,545,600 57,826,801 58.9%
Apr. 15, 2003 376,783,200 56,739,180 59.1%
Oct. 15, 2003 376,783,200 55,119,329 58.5%
Apr. 15, 2004 368,020,800 52,508,400 57.0%
Oct. 15, 2004 368,020,800 50,992,135 55.4%
Apr. 15, 2005 359,258,400 48,020,840 53.4%
Oct. 15, 2005 359,258,400 44,732,727 49.8%
Apr. 15, 2006 350,496,000 41,059,200 46.8%
Oct. 15, 2006 350,496,000 36,876,094 42.1%
Apr. 15, 2007 341,733,600 33,803,087 39.5%
Oct. 15, 2007 341,733,600 29,410,382 34.4%
Apr. 15, 2008 332,971,200 0 0.0%
- -----------------------------
(1) The Assumed Aggregate Appraised Value set forth opposite
April 15, 1996 (but not the Assumed Aggregate Appraised Values
for subsequent periods) is the Initial Aggregate Appraised Value
(see "Description of the Aircraft and the Appraisals"). No
assurance can be given that such value represents the realizable
value of the Aircraft. See "Risk Factors-Limitations Regarding
Aircraft Collateral-Appraisals of Aircraft; Realizable Value" and
"Description of the Aircraft and the Appraisals."

</TABLE>

- 21 -
<PAGE>

The Exchange Offer
------------------

Exchange Offer
- --------------

USAir is offering to exchange pursuant to the Exchange Offer
(a) up to $142,400,000 in aggregate principal amount of new 6.76%
Class A Enhanced Equipment Notes for up to $142,400,000 in
aggregate principal amount of outstanding 6.76% Class A Enhanced
Equipment Notes, (b) up to $54,800,000 in aggregate principal
amount of new 7.50% Class B Enhanced Equipment Notes for up to
$54,800,000 in aggregate principal amount of outstanding 7.50%
Class B Enhanced Equipment Notes and (c) up to $65,800,000 in
aggregate principal amount of new 8.93% Class C Enhanced
Equipment Notes for up to $65,800,000 in aggregate principal
amount of outstanding 8.93% Class C Enhanced Equipment Notes.
The terms of the New Notes are identical in all respects
(including principal amount, interest rate and maturity) to the
terms of the Old Notes for which they may be exchanged pursuant
to the Exchange Offer, except that the New Notes are freely
transferable by holders thereof, and are not subject to any
covenant regarding registration under the Securities Act. See
"The Exchange Offer-Terms of the Notes" and "-Terms and
Conditions of the Letter of Transmittal."

Interest Payments
- -----------------

Interest on the New Notes will accrue from the last Interest
Payment Date (defined below) on which interest was paid on the
Old Notes so surrendered or, if no interest has been paid on such
Old Notes, from February 16, 1996.

Minimum Condition
- -----------------

The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Old Notes being tendered for
exchange.

Expiration Date
- ---------------

The Exchange Offer will expire at 5:00 p.m., New York City
time, on the Expiration Date.

- 22 -
<PAGE>

Exchange Date
- -------------

The date of acceptance for exchange of the Old Notes will be
the first business day following the Expiration Date.

Conditions of the Exchange Offer
- --------------------------------

USAir's obligation to consummate the Exchange Offer will be
subject to certain conditions. See "The Exchange Offer-
- -Conditions to the Exchange Offer." USAir reserves the right to
terminate or amend the Exchange Offer at any time prior the
Expiration Date upon the occurrence of any such condition.

Withdrawal Rights
- -----------------

Tenders may be withdrawn at any time prior to the Expiration
Date; otherwise, all tenders will be irrevocable.

Procedures for Tendering Notes
- ------------------------------

See "The Exchange Offer--Tender Procedure."

Federal Income Tax Consequences
- -------------------------------

The exchange of Old Notes for New Notes should not be a
taxable exchange for federal income tax purposes. See "United
States Federal Income Tax Consequences."

Effect on Holders of Old Notes
- ------------------------------

As a result of the making of, and upon acceptance for
exchange of all validly tendered Old Notes pursuant to the terms
of, this Exchange Offer, USAir will have fulfilled a covenant
contained in the Registration Rights Agreement, and accordingly
there will be no increase in the interest rate on the Old Notes
pursuant to the terms of the Registration Rights Agreement, and
the holders of the

- 23 -
<PAGE>

Old Notes will have no further registration or other rights under
the Registration Rights Agreement. Holders of the Old Notes who
do not tender their Old Notes in the Exchange Offer will continue
to hold such Old Notes and will be entitled to all the rights and
limitations applicable thereto under the applicable Indenture,
except for any such rights under the Registration Rights
Agreement which by their terms terminate or cease to have further
effectiveness as a result of the making of, and the acceptance
for exchange of all validly tendered Notes pursuant to, the
Exchange Offer. All untendered Old Notes will continue to be
subject to the restrictions on transfer provided for in the Old
Notes and in the applicable Indenture. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered Old Notes could be adversely
affected.

Use of Proceeds
- ---------------

There will be no cash proceeds to USAir from the exchange
pursuant to the Exchange Offer.

Terms of the Notes
------------------

New Notes Offered
- -----------------

The form and terms of the New Notes are identical in all
respects (including principal amount, interest rate and maturity)
to the Old Notes except that the New Notes have been registered
under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof and are not subject to any
covenant regarding registration under the Securities Act. The
New Notes will evidence the same debt as the Old Notes and will
be entitled to the benefits of the Indentures. See "Description
of the Notes".

Class A Notes
- -------------

$142,400,000 aggregate principal amount of Class A Enhanced
Equipment Notes.

- 24 -
<PAGE>

Class B Notes
- -------------

$54,800,000 aggregate principal amount of Class B Enhanced
Equipment Notes.

Class C Notes
- -------------

$65,800,000 aggregate principal amount of Class C Enhanced
Equipment Notes.

Interest Payments
- -----------------

Interest Payment Dates
- ----------------------

Each April 15 and October 15, commencing April 15, 1996,
except that, if any such date shall not be a Business Day (as
defined in the Indentures), the Interest Payment Date shall be
the next Business Day.

Interest
- --------

Interest will be paid on each Class of Notes on each
Interest Payment Date at the following interest rates: 6.76% for
the New Class A Notes, 7.50% for the New Class B Notes and 8.93%
for the New Class C Notes. Interest will be calculated assuming
a 360-day year of twelve 30-day months.

[remainder of page left blank intentionally]

- 25 -
<PAGE>

Principal Payments
- ------------------

Principal Payment Dates
- -----------------------

The principal amount of the Notes is due and payable on the
Legal Maturity Date. It is expected that a portion of the
principal amount of each Note will be paid each April 15 and
October 15, commencing October 15, 1996 (each, a "Principal
Payment Date" and, together with the Interest Payment Dates, the
"Payment Dates"). Failure to make an expected payment of
principal before the Legal Maturity Date is not an Event of
Default under the Indentures.

Expected Average Life Date
- --------------------------

The initial expected average life date with respect to the
amortization of each Class of Notes will be February 20, 2006.

Final Expected Payment Date
- ---------------------------

It is expected that the final principal payment on the Notes
will be made on April 15, 2008.

Legal Maturity Date
- -------------------

October 15, 2009 for each Class of Notes (the "Legal
Maturity Date").

Redemption of the Notes
- -----------------------

- 26 -
<PAGE>

Optional Redemption
- -------------------

Any Class of Notes may be redeemed in whole or from time to
time in part at the option of USAir, so long as no Collateral
Access Event (as defined herein) has occurred and is continuing,
at a redemption price equal to the outstanding principal amount
of the Notes to be redeemed, together with accrued interest and,
if any of the Notes are redeemed prior to February 20, 2006, a
Make Whole Premium (as defined herein). See "Description of the
Notes-Redemption." In calculating the Make Whole Premium,
expected payments of principal and interest will be discounted at
the applicable Treasury Yield (as defined herein).

The Notes may be redeemed at par on or after February 20,
2006. Prior to any such redemption, all amounts (if any) then
owing to the Liquidity Providers shall be paid in full.

Mandatory Redemption
- --------------------

Following an Event of Loss (as defined herein), Notes of
every Class shall be redeemed, so long as no Collateral Access
Event has occurred and is continuing, at par plus accrued
interest, in a pro rata amount (based upon the ratio borne by the
initial Appraised Value of the Aircraft subject to such Event of
Loss to the Initial Aggregate Appraised Value). All amounts paid
in connection with any such redemption shall be applied (i) to
the Notes within each Class pro rata in accordance with the then
outstanding principal amount thereof and (ii) pro rata to each of
the unpaid installments of principal of such Notes expected to be
paid on each Principal Payment Date. Prior to any such
redemption, all amounts (if any) then owing to the Liquidity
Providers shall be paid in full. See "Description of the
Notes-Redemption" and "Collateral Agency Agreement-Event of
Loss."

Minimum Denominations
- ---------------------

$100,000 and integral multiples of $1,000 in excess thereof.

- 27 -
<PAGE>

Collateral
- ----------

All amounts payable in respect of the Notes will be secured
pursuant to the Collateral Agency Agreement by a security
interest in, among other things, the Aircraft (collectively, the
"Collateral"). See "Risk Factors-Limitations Regarding Aircraft
Collateral," "Description of the Aircraft and the Appraisals" and
"Description of the Notes-Collateral."

Events of Default
- -----------------

The following constitute Events of Default under each
Indenture: the failure to pay within 15 days of the due date
thereof (i) the outstanding principal amount of the applicable
Class of Notes on the Legal Maturity Date for such Class or (ii)
interest due on any Note on any Interest Payment Date (unless the
Collateral Agent shall have made an Interest Advance with respect
thereto).

Collateral Access Events
- ------------------------

Each Indenture provides that, upon the occurrence and during
the continuance of a Collateral Access Event, the applicable
Indenture Trustee may, subject to notice requirements and grace
periods, accelerate the Notes and, at (but only at) the direction
of the Controlling Party (as defined herein), exercise remedies
against USAir and the Collateral. "Collateral Access Events"
under each Indenture include (subject to notice requirements and
grace periods): (i) the failure by USAir to pay principal of the
applicable Notes when expected, (ii) the failure by USAir to pay
interest or premium on the applicable Notes when due, (iii) the
failure to procure or maintain insurance as provided in the
Collateral Agency Agreement, (iv) the failure to perform certain
covenants under the Collateral Agency Agreement, (v) the falsity
of representations and warranties in the Operative Documents in
any material respect, (vi) certain bankruptcy, insolvency or
reorganization events of USAir and (vii) the occurrence of a
Collateral Access Event under any other Indenture. In addition,
each Indenture provides that the acceleration of one Class of
Notes will result in the acceleration of all of the Notes. The

- 28 -
<PAGE>

Controlling Party shall have the exclusive right to cause and
direct the exercise of remedies following an acceleration of
Notes. See "Description of the Notes-Collateral Agency
Agreement-Collateral Access Events" and "-Collateral Agency
Agreement-Remedies."

Purchase Rights of Noteholders
- ------------------------------

Upon acceleration of the Notes, the holders of each junior
Class of Notes shall have the right to purchase all, but not less
than all, of the Notes of all senior Classes at a purchase price
equal to par plus accrued interest. See "Description of the
Notes-Purchase Rights of Noteholders."

Liquidity Facilities
- --------------------

With respect to each Class of Notes, USAir has entered into
a Liquidity Agreement (collectively, the "Liquidity Agreements")
with the Liquidity Provider for such Class of Notes pursuant to
which such Liquidity Provider has agreed to make advances to the
Collateral Agent (each such advance, an "Interest Advance") to
pay interest on (but not principal of or premium on) the Notes of
such Class in an amount equal, at any time, to three times the
interest payable on such Notes on the next Interest Payment Date
(collectively, the "Liquidity Facilities") to the extent that
payments made by USAir to the Collateral Agent on or prior to the
fifth day after such Interest Payment Date are not sufficient to
pay interest due on such Interest Payment Date on the Notes to
which such Liquidity Facility relates. On the Closing Date, the
amounts available under the Class A Liquidity Facility, the Class
B Liquidity Facility and the Class C Liquidity Facility were
$14,439,360, $6,165,000 and $8,813,910, respectively. The
Liquidity Facilities do not provide for any payment in respect of
principal of or premium on any Class of Notes.

In the event of an acceleration of any Class of Notes the
Liquidity Provider for such Class of Notes shall advance the
entire available amount under such Liquidity Agreement (an
"Acceleration Advance"). The proceeds of each Acceleration
Advance will be deposited into a cash collateral account (each, a
"Cash Collateral Account") maintained at the offices of the
Collateral Agent and used for the same purposes and under the
same circumstances as Interest Advances under the Liquidity
Facility are to be used. See "Description of the Notes-Liquidity
Facilities."

- 29 -
<PAGE>

If at any time the short-term unsecured debt obligations of
a Liquidity Provider are rated lower than A-1 by Standard and
Poor's Ratings Services ("S&P") or lower than P-1 by Moody's
Investors Service, Inc. ("Moody's"), the Collateral Agency
Agreement will provide for replacement of the applicable
Liquidity Facility. If a Liquidity Facility is not replaced in
connection with such a downgrade by S&P or Moody's, a borrowing
in an amount equal to the entire available amount will be made
under such Liquidity Facility (a "Downgrade Advance") and the
proceeds will be deposited into the Cash Collateral Account and
used for the same purposes and under the same circumstances as
Interest Advances under the Liquidity Facility are to be used.
See "Description of the Notes-Liquidity Facilities."

In addition, the Collateral Agency Agreement will provide
for the replacement of a Liquidity Facility (other than a
Liquidity Facility that expires no earlier than 15 days after the
Legal Maturity Date of the applicable Class of Notes) in the
event that it is not extended by the date that is 30 days prior
to the then scheduled expiration date thereof. In such event, a
borrowing in an amount equal to the entire available amount under
such Liquidity Facility will be made (the "Non-Extension
Advance") and the proceeds will be deposited in a Cash Collateral
Account and used for the same purposes and under the same
circumstances as Interest Advances under such Liquidity Facility
are to be used. The initial Liquidity Facilities are scheduled
to expire on February 14, 1997.

Upon an advance of any kind under a Liquidity Facility,
USAir will be obligated to repay to the Liquidity Provider the
amount of such advance together with accrued interest thereon at
the rates and in the manner described herein. Such repayment
obligation and any other amounts payable by USAir under the
Liquidity Agreements will be secured by the Collateral and will
rank senior in right of distribution to all amounts payable to
Noteholders, other than distributions to Noteholders of amounts
advanced in respect of Interest Advances under the respective
Liquidity Facilities.

Liquidity Provider
- ------------------

WestLB New York is serving as the initial Liquidity Provider
for each Class of Old Notes and will serve as Liquidity Provider
for each Class of New Notes. The short-term, unsecured debt
ratings of the Liquidity Providers are A-1+ from S&P and P-1 from
Moody's.

- 30 -
<PAGE>

Subordination of Distributions
- ------------------------------

The Class B Notes are subordinated to the Class A Notes in
right of payment and the Class C Notes are subordinated to the
Class A Notes and the Class B Notes in right of payment. On each
Payment Date, all payments of interest on and principal of the
Class A Notes will be made prior to payments of interest on and
principal of the Class B Notes and payments of interest on and
principal of the Class A Notes and the Class B Notes will be made
prior to payments of interest on and principal of the Class C
Notes. Upon acceleration of the Notes, no payment will be made
on the Class B Notes until all amounts outstanding on or in
respect of the Class A Notes have been paid in full and no
payment will be made on the Class C Notes until all amounts
outstanding on or in respect of the Class A Notes and the Class B
Notes have been paid in full.

Both before and after an acceleration of the Notes, payments
of amounts owing to the Liquidity Providers under the Liquidity
Facilities are payable before any payments may be made to
Noteholders of any Class, except that the Noteholders of each
Class will be entitled to receive and retain amounts available in
respect of Interest Advances under the Liquidity Facility for
such Class of Notes. See "Description of the Notes-Priority of
Distributions."

Intercreditor Rights
- --------------------

At any given time, except as set forth below, only one of
the Class A Indenture Trustee, the Class B Indenture Trustee and
the Class C Indenture Trustee may direct and control the exercise
of remedies in respect of the Collateral (the party so entitled
to act, the "Controlling Party"). Such control will include the
ability to direct the Collateral Agent or applicable Indenture
Trustee as to when, and in what manner, to exercise remedies
under the applicable Indenture.

Except as set forth below, the Class A Indenture Trustee
will be the Controlling Party until all amounts outstanding on or
in respect of the Class A Notes have been paid in full, in which
case the Class B Indenture Trustee will be the Controlling Party
until all amounts outstanding on or in respect of the Class B
Notes have been paid in full, in which case the Class C Indenture
Trustee will be the Controlling Party. Notwithstanding the

- 31 -
<PAGE>

foregoing, if none of the Indenture Trustees acting as
Controlling Party has taken action to exercise remedies in
respect of the Collateral within 24 months following the earlier
of the acceleration of the Notes and the unreimbursed utilization
of the entire available amount under any of the Liquidity
Facilities, the Liquidity Provider for the Class A Notes shall
thereupon become the Controlling Party for all purposes under the
Collateral Agency Agreement until all amounts outstanding in
respect of the Liquidity Facility for the Class A Notes shall
have been paid in full, whereupon the Liquidity Provider for the
Class B Notes shall become the Controlling Party until all
amounts outstanding in respect of the Liquidity Facility for the
Class B Notes shall have been paid in full, whereupon the
Liquidity Provider for the Class C Notes shall become the
Controlling Party until all amounts outstanding in respect of
the Liquidity Facility for the Class C Notes shall have been paid
in full, whereupon the Controlling Party shall be the appropriate
Indenture Trustee.

For a period of nine months after the acceleration of the
Notes, without the consent of a majority in principal amount of
Notes of each Class, if the Indenture Trustee for such Class of
Notes is not the Controlling Party, no Aircraft may be sold if
the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft. "Minimum Sale Price" means, with
respect to any Aircraft, the lesser of (i) 75% of the value of
such Aircraft based upon a then-current appraisal and (ii) a pro
rata amount of the total amount then owed by USAir to the
Noteholders and the Liquidity Providers (the allocation for any
such Aircraft shall be based upon the ratio borne by the initial
Appraised Value thereof to the Initial Aggregate Appraised
Value.) See "Description of the Notes-Intercreditor Rights."

Section 1110
- ------------

The Collateral Agent received, on the Closing Date, an
opinion from Fulbright & Jaworski, L.L.P. (special counsel to
USAir) that the Collateral Agent will be entitled to the benefits
of Section 1110 of the Bankruptcy Code ("Section 1110 of the
Bankruptcy Code") with respect to the Aircraft. See "Description
of the Notes-Remedies" for a description of Section 1110 of the
Bankruptcy Code.

- 32 -
<PAGE>

Indenture Trustees
- ------------------

Wilmington Trust Company, Wilmington, Delaware, is acting as
Indenture Trustee, Paying Agent and Registrar for each Class of
Notes.

Collateral Agent
- ----------------

Wilmington Trust Company, Wilmington, Delaware.

Exchange Agent
- --------------

Wilmington Trust Company, Wilmington, Delaware.

RISK FACTORS
------------

In deciding whether to accept the Exchange Offer, holders of
the Old Notes should consider carefully the following specific
risk factors, as well as the other information set forth in this
Prospectus.

Company Related Considerations
------------------------------

Substantial Leverage; Limited Access to New Capital; Liquidity
- --------------------------------------------------------------

USAir is highly leveraged and, as of March 31, 1996, had
long-term debt and capital lease obligations of approximately
$2.7 billion. In addition, as of December 31, 1995, USAir's
minimum lease payment obligations under noncancelable operating
leases totaled approximately $3.4 billion for the years 1996
through 2000 and $6.6 billion thereafter. The ability of USAir
to fulfill these payment obligations will depend upon a variety
of factors, including favorable domestic and international
pricing environments, the absence of adverse general economic
conditions,

- 33 -
<PAGE>

the absence of adverse regulatory changes, continued operating
cost reductions and the ability of USAir to attract new capital.
However, there can be no assurances that any of these factors
will produce an outcome favorable to USAir. For USAir, continued
cost reductions (particularly in personnel costs) are especially
critical in order to enable USAir to become more competitive with
airlines with lower operating costs and those with greater
financial strength.

At March 31, 1996, USAir's unrestricted cash, cash
equivalents and short-term investments totaled approximately $828
million. Factors beyond USAir's control, such as a downturn in
the economy, adverse regulatory changes, intensified industry
fare wars, substantial increases in jet fuel prices or fuel
taxes, adverse weather conditions, negative public perception
regarding safety or further incursions by low cost, low fare
carriers into USAir's markets, could have a material adverse
effect on USAir's prospects, liquidity, financial condition and
results of operations. Because USAir is highly leveraged and
currently has no bank credit or receivables facilities in place
and has limited access to public debt and equity markets, it is
more vulnerable to these factors than are financially stronger
competitors or those with standby funding sources or better
access to such markets. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources." In addition, because of the two
aircraft accidents involving USAir in 1994 and the negative
publicity associated with these accidents and other incidents in
recent years, should any other aircraft accident or incident
involving USAir or its code-share partners occur in the near
future, USAir may be particularly susceptible to adverse
passenger reactions, and its ability to procure sufficient
amounts of insurance on commercially reasonable terms may be
materially impaired.

Loss History
- ------------

Although USAir recorded net income of $33.0 million for
1995, it recorded net losses in excess of $3 billion on revenues
of approximately $36 billion from 1989 through 1994. USAir
recorded a net loss of $54.9 million in the first three months of
1996.

- 34 -
<PAGE>

USAir's cumulative losses through 1994 and in the first
quarter of 1996 have resulted in a common stockholder's deficit
as of March 31, 1996 of $366.1 million. There may be investors
and lenders who have policies that limit or preclude their
investment in or lending to companies with a common stockholder's
deficit and therefore USAir's common stockholder's deficit may
affect its ability to obtain additional financing in the future.

- 35 -

<PAGE>

Deferral of Dividends by USAir Group
- ------------------------------------

On September 29, 1994, USAir Group announced that it was
deferring the quarterly dividend payment due September 30, 1994
on the 358,000 outstanding shares of its 9-1/4% Series A
Cumulative Convertible Preferred Stock ("Series A Preferred
Stock"). The Series A Preferred Stock is owned by affiliates of
Berkshire Hathaway Inc. ("Berkshire"). USAir Group has also
deferred quarterly dividend payments on all its other outstanding
series of preferred stock, including the Series F Cumulative
Convertible Senior Preferred Stock (the "Series F Preferred
Stock") and Series T-1 and T-2 Cumulative Convertible
Exchangeable Senior Preferred Stock (the "Series T Preferred
Stock"), both of which are owned by BA, as well as on the
publicly held $437.50 Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock"). On March 13, 1995,
Berkshire announced that it had recorded a pre-tax charge of
$268.5 million to recognize a decline in the value of its
investment in the Series A Preferred Stock that had an original
cost of $358 million. On May 22, 1995, BA announced that it had
made a $200 million provision against its $400 million investment
in preferred stock of USAir Group. USAir Group has not paid a
dividend on its common stock, par value $1.00 per share (the
"Common Stock"), since the second quarter of 1990. As of June 28,
1996, the board of directors of USAir Group had not authorized
the resumption of any dividends on USAir Group's preferred stock
or Common Stock and there can be no assurance when or if such
dividend payments will resume.

- 36 -
<PAGE>

directors from January 27, 1993 until November 28, 1995. They
did not stand for re-election as directors in November 1995.
Under the terms of the Series B Preferred Stock, the holders of
that security have the right to elect two additional directors to
the board of directors of USAir Group if six quarterly dividends
are not paid. That right became effective on February 15, 1996.
In May 1996, Berkshire offered to sell the Series A Preferred
Stock to USAir Group. Berkshire has advised that if USAir Group
does not buy back the shares from Berkshire, Berkshire may sell
the Series A Preferred Stock to third parties but Berkshire has
stated it will not knowingly sell the shares to any person who
would own 3% or more of a voting stake in USAir Group as a result
of the purchase. As of March 31, 1996, USAir believes that USAir
Group was legally prohibited from paying dividends on or
redeeming its capital stock in accordance with Section 170 of the
Delaware General Corporation Law. A requisite percentage of
Series B Preferred Stockholders have informed USAir Group that
they would be pursuing the right to elect two additional
directors to USAir Group's board of directors and they have
provided the name of one such nominee to USAir Group. If Berkshire
were to exercise its right to elect directors and upon the election
of the Series B directors, BA would have the right to designate an
additional nominee for election as director to the board of
directors of USAir Group pursuant to the January 21, 1993
Investment Agreement between USAir Group and BA (as amended, the
"Investment Agreement").

High Personnel Costs
- --------------------

USAir's wages and benefits are the largest single component
of its operating costs (approximately 41% for the year ended
December 31, 1995). USAir's operating costs, and particularly
its personnel costs, are generally higher than those of its
competitors. USAir believes that it must reduce its operating
costs substantially if it is to achieve sustained improved
financial performance. USAir Group began negotiating with the
unions that represent certain of USAir's employees in March 1994
toward its goal of reducing USAir's annual personnel costs by
$500 million through concession agreements involving wage and
benefit reductions, improved productivity and other cost savings.
After reaching agreements in principle with its unions during the
spring of 1995, USAir Group in July 1995 terminated discussions
with the unions on tentative wage concession and restructuring

- 37 -
<PAGE>

packages, which had included equity participation in USAir Group and
representation on USAir Group's board of directors for USAir's employees,
because the Air Line Pilots Association ("ALPA") covering USAir's pilots had
made significant additional demands which were unacceptable. USAir had stated
that it intends to concentrate on reducing its labor costs through traditional
collective bargaining. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Cost Reduction and Revenue
Enhancement Initiatives." It is not possible to predict whether USAir will be
successful in achieving its desired personnel cost savings. The contract with
the International Association of Machinists (the "IAM"), covering USAir's
mechanics and related employees, became open for negotiation on October 1, 1995.
Talks between USAir and the IAMs advisory counsel began in late 1995 and
continued during the first quarter of 1996. USAir's contract with ALPA became
open for negotiations on April 30, 1996 and collective bargaining talks have
begun. USAir cannot predict the outcome of these negotiations at this time or if
USAir will be able to secure meaningful wage and benefit concessions and
productivity improvements from its unionized employee groups.

Possibility of Further Unionization
- -----------------------------------

The Railway Labor Act ("RLA") governs, and the National Mediation Board
(the "NMB") has jurisdiction over, campaigns to unionize workers. Approximately
65% of USAir's employees are covered by collective bargaining agreements with
various labor unions, or will be covered by a collective bargaining agreement
for which initial negotiations are in progress. Certain unions are engaged in
efforts to unionize USAir's passenger service employees. Under the RLA, the NMB
could order an election among a class or craft of eligible employees if a union
submitted an application to the NMB supported by the authorization cards from at
least 35% of the applicable class or craft of employees. If the NMB ordered an
election and a majority of the eligible employees voted for representation,
USAir would be required to negotiate a collective bargaining agreement with the
union that wins the election. On April 24 and 25, 1996, respectively the IAM
workers and the Communications Workers of America filed applications with the
NMB requesting that an election be held among USAir's passenger service workers.
The NMB is in the process of determining whether these applications are
supported by sufficient authorization cards to warrant an election. USAir

- 38 -
<PAGE>

cannot predict whether an election will be held among the passenger service
class or craft and the outcome of the election, if held.

Likelihood of No Future Investments by British Airways
- ------------------------------------------------------

As described in greater detail in "British Airways Investment Agreement,"
on January 21, 1993, USAir Group and BA entered into the Investment Agreement.
BA invested approximately $400 million in certain preferred stock of USAir Group
in accordance with the Investment Agreement. USAir Group has deferred quarterly
dividend payments on all outstanding series of preferred stock beginning with
payments due September 30, 1994. See "-Deferral of Dividends by USAir Group."
The deadline for BA's election to purchase a certain series of preferred stock
of USAir Group and therefore, to elect to make any further investment in USAir
Group pursuant to the Investment Agreement, was January 21, 1996 (except that,
if the DOT shall approve all of the transactions contemplated by the Investment
Agreement on or before January 21, 1998, BA may make additional investments in
USAir Group under certain circumstances). BA declined to make any further
investment on or before the January 21, 1996 deadline. BA stated publicly that
it was precluded from making additional investments under existing DOT policy
and that it did not expect DOT approval to be forthcoming. Pursuant to the
Investment Agreement, BA has the right to maintain its proportionate ownership
of USAir Group's securities under certain circumstances by purchasing additional
shares of certain series. British Airways has advised USAir Group that it would
not exercise the right (triggered by the issuances of USAir Group Common Stock
pursuant to certain USAir Group benefit plans during the nine months ended March
31, 1996) to buy additional shares of Series T Convertible Exchangeable Senior
Preferred Stock. See "British Airways Investment Agreement-Provisions Regarding
Additional BA Investments; BA Announcement Regarding No Additional Investment in
USAir Group and "-Miscellaneous"." In June 1996, BA and American jointly
announced that they intend to enter into an extensive alliance and code-sharing
arrangement, subject to regulatory approvals in the United States and the United
Kingdom. American is the second largest domestic airline and a major competitor
of USAir. USAir has stated that it is reviewing the proposed alliance and how,
if approved, the BA/American alliance might affect USAir and its relationship
with BA. USAir has stated that it will act in the best interests of its
shareholders, employees and communities served.

- 39 -
<PAGE>

Geographical Concentration
- --------------------------

A substantial portion of USAir's operations are to and from
or among cities in the eastern United States. Approximately 64%
of USAir's flights and 44% of its ASMs are represented by
intra-east coast flying. Accordingly, USAir is particularly
susceptible to regional factors such as severe weather,
regionalized downturns in the economy and air traffic control
problems. For example, USAir's revenues were adversely affected
by approximately $55 million as a result of the severe winter
weather during January 1996 and the partial federal government
shutdowns in the first quarter of 1996.

Fokker Aircraft
- ---------------

In March 1996, Fokker Aircraft N.V. ("Fokker"), a Dutch
aircraft manufacturer, was declared bankrupt under the laws of
The Netherlands. In May 1996, Fokker Aircraft U.S.A., Inc.
("FAUSA"), an affiliate of Fokker, advised USAir that it is
winding down its affairs and imminently ceasing operations. As
of December 31, 1995, USAir operated 55 Fokker aircraft.
Although USAir had no outstanding aircraft purchase orders with
Fokker, FAUSA has certain warranty obligations to USAir under
purchase agreements and also supplied aircraft parts and
components to USAir. Although USAir has been advised that
successor entities will supply parts and technical services to
Fokker's airline customers, a disruption in the supply of parts
or components could adversely impact USAir's operations.
Moreover, an adverse market perception of Fokker products could
adversely affect market values of USAir's owned Fokker aircraft
or the ability of USAir to sell or lease retired Fokker products.
As of June 28, 1996, USAir owned 57 Fokker aircraft (20 of which
were operated by lessees of USAir).

- 40 -
<PAGE>

Industry Related Considerations
-------------------------------

General Industry Conditions
- ---------------------------

Demand for air transportation historically has tended to
mirror general economic conditions. During the most recent
economic recession in the United States, the change in industry
capacity failed to mirror the reduction in demand for domestic
air transportation due primarily to continued delivery of new
aircraft and, secondarily, to the operation of certain major U.S.
carriers under the protection of Chapter 11 of the Bankruptcy
Code for extended periods. While industry capacity has leveled
off and the general economy has improved, USAir expects that the
airline industry will remain extremely competitive for the
foreseeable future, primarily due to the dramatic change which
has occurred in industry pricing and which has resulted in
generally lower fares. See "-Significant Impact of Low Cost, Low
Fare Competition."

In 1995, the U.S. airline industry had its best year since
the recession began in July 1990, with several airlines posting
profits, although many of the major carriers continue to be
burdened with large amounts of debt. Unlike the results of some
of its competitors, USAir's results did not improve in 1994.
USAir experienced a pre-tax loss of $716.2 million in 1994. The
entire airline industry experienced further improved results in
1995. USAir's results improved in 1995 as well. Nonetheless,
USAir believes that for the foreseeable future, while the demand
for higher yield "business fares" will remain essentially flat
and relatively inelastic, the lower yield "leisure" market, which
is affected by the general economy, will remain highly price
sensitive. This trend will make it more difficult for the
domestic airlines, including USAir, to sustain meaningful yield
increases in the long run. Therefore, USAir believes it must
reduce its cost structure substantially in order to ensure its
long-term financial stability.

Significant Impact of Low Cost, Low Fare Competition
- ----------------------------------------------------

- 41 -
<PAGE>

reduced discount fares in many of these markets. Airlines,
including USAir, use discount fares and other promotions to
stimulate traffic during normally slack travel periods, to
generate cash flow and to increase relative market share in
selected markets. Discount and promotional fares are often
subject to various restrictions such as minimum stay
requirements, advance ticketing, limited seating and refund
penalties. USAir has often elected to match discount or
promotional fares in certain markets in order to compete in those
discounted markets.

The dramatic expansion of low fare competitive service in
many of USAir's markets in the eastern United States during 1994
and USAir's competitive response of reducing its fares up to 70%
in certain affected primary and secondary markets in order to
preserve its market share contributed to large losses in 1994.
In particular, Continental created a high frequency, low fare
product called "Continental Lite." By late 1994, USAir competed
with Continental in primary and secondary markets from which
USAir then generated 46% of its passenger revenue with fare
reductions of up to 70% in certain markets. As discussed below,
in 1995 the airline industry did not generally experience the
deep level of fare discounting prevalent during the last several
years. Continental abandoned its Continental Lite strategy in
1995 and fare levels have somewhat recovered. Nonetheless, USAir
does not believe that there has been a reduction in the public
demand for generally lower air fares. The growth of the
operations of low cost, low fare carriers in USAir's domestic
markets represents an intense competitive challenge for USAir,
which has higher operating costs and fewer financial resources
than many of its competitors. For example, the expansion of
Southwest Airlines, Inc. ("Southwest") into BWI, Florida and the
Northeast poses a competitive challenge for USAir. Southwest has
a significant cost advantage over USAir. In addition, Delta
recently announced that its pilots' union has ratified a new
contract that allows for the creation of a low cost, low fare
operation in certain short-haul markets, principally within the
eastern United States. USAir believes that it must reduce its
operating costs substantially if it is to ensure its long-term
financial stability and that low-cost incursions into markets
served by USAir have had a

- 42 -
<PAGE>

material and adverse affect on USAir's financial condition and
results of operations. ValuJet Airlines, Inc. ("ValuJet") has
been a competitor of USAir in the eastern United States. ValuJet
was significantly harmed by adverse public reaction to a crash
of a ValuJet DC-9 in the Florida Everglades in May 1996 and the
subsequent investigation into the maintenance and operations of
ValuJet by the FAA. The investigation resulted in a suspension of
ValuJet's operations pursuant to an agreement between the Federal
Aviation Administration ("FAA") and ValuJet. That agreement
contemplates the resumption of operations by ValuJet if certain
conditions are met by the airline but it will significantly curtail
the scope of ValuJet's operations if and when it flies again.
Although USAir and certain of its competitors have benefited from
the suspension of ValuJet's operations, USAir does not know whether
such circumstances will have a long-term positive effect on USAir's
financial condition or results of operations.

In addition, other low cost carriers may enter other USAir
markets. For example, America West Airlines, Inc. ("America
West") commenced service in April 1994 between Columbus, Ohio,
where it operates a hub, and Philadelphia, where USAir has a hub
operation. Other carriers, including some of the larger
carriers, have also developed or indicated their intent to
develop similar low fare short-haul service, such as United's low
cost, low fare operation in the western United States discussed
below. USAir has stated that it will be competitive on routes
that are important to USAir and has underscored the necessity of
cutting costs to remain competitive with insurgents on these
routes.

Industry Restructuring and Cost-Cutting
- ---------------------------------------

- 43 -
<PAGE>

reorganization plan approved by a bankruptcy court which reduces
the carrier's debt by approximately 30%. Continental has reduced
capacity and returned non-productive aircraft to lessors. In
early 1995, Southwest announced that its pilots had ratified a
10-year labor contract that provides for no wage increases in the
first five years, providing for grants of stock options to the
pilots instead. USAir expects that the implementation of this
labor contract will further enhance Southwest's low cost
advantage over USAir and other carriers. These actions by
certain of USAir's competitors illustrate the trend among the
major U.S. airlines to restructure in order to reduce their
operating costs and enable them to compete in a low fare
environment. See "Prospectus Summary-Strategy" and "Capacity and
Route Rationalization" above for a discussion of USAir's cost
reduction initiatives.

There are recent examples of companies in the airline
industry which have obtained employee concessions in agreements
that provided for the recapitalization of the companies,
including employee ownership stakes and employee participation in
corporate governance. Most recently, in July 1994, UAL
Corporation ("UAL"), parent of United, consummated the
recapitalization noted above which resulted in majority ownership
and board membership for certain employee groups in exchange for
concessions. In other cases, airlines have filed for bankruptcy
protection under Chapter 11 of the Bankruptcy Code, and some
airlines have ceased operation altogether when their operating
costs remained excessive in relation to their revenues, and their
liquidity became insufficient to sustain their operations.

In 1995, various carriers, including USAir, implemented
cutbacks in service in the eastern U.S. The "intra-east coast"
area represents approximately 64% of USAir's departures and
approximately 44% of its ASMs. USAir has implemented a plan to
cut capacity throughout its system and to emphasize the strength
of its hubs in Pittsburgh, Charlotte, Philadelphia and Baltimore,
as well as other major east coast urban centers. See "Prospectus
Summary-Strategy" and "Capacity and Route Rationalization" above.
The major carriers decreased service in the East by approximately
9.8% year-over-year. However, several smaller carriers increased
the number of departures in this region during the same time
period or have announced plans to introduce or increase service
in this region. The net result was a decrease in jet capacity in
the intra-east coast region of approximately 3.5% for the full
year 1995 from 1994 levels.

- 44 -
<PAGE>

Jet Fuel
- --------

Because jet fuel costs represent a significant portion of
USAir's operating costs (approximately 9% for fiscal year 1995),
significant increases in jet fuel costs could materially and
adversely affect USAir's results of operations. Fuel prices
continue to be susceptible to, among other factors, political
events and market factors that USAir cannot control. In the
event of a fuel supply shortage resulting from a disruption of
oil imports or otherwise, higher fuel prices or curtailment of
scheduled service could result.

- 45 -
<PAGE>

In August 1993, the United States increased taxes on
domestic fuel, including aircraft fuel used on domestic routes,
by 4.3 cents per gallon. Airlines were exempt from the tax
increase until October 1, 1995. Pending legislation in Congress
would continue the exemption through September 30, 1997, subject
to termination of the exemption on September 30, 1996 if certain
aviation trust funds are not extended. These aviation trust
funds expired on December 31, 1995 and have not, as of June 28,
1996, been extended. There can be no assurance that the
continuation of the fuel tax exemption will be enacted, or if
enacted, the terms under and the period for which the exemption
will be effective. The additional fuel tax is currently being
collected. Non-extension of the fuel tax exemption would
increase the annual operating expenses of USAir by approximately
$47 million based on projected domestic fuel consumption for
1996.

Regulatory Matters
- ------------------

In the last several years, the FAA has issued a number of
maintenance directives and other regulations relating to, among
other things, retirement of older aircraft, collision avoidance
systems, airborne windshear avoidance systems, noise abatement,
increased inspections and maintenance procedures to be conducted
on older aircraft. See "Business-Regulation." USAir expects to
continue to incur expenditures relating to compliance with noise
and ageing aircraft modifications. In addition, several airports
have increased substantially the rates charged to airlines, and
the ability of airlines to contest these increases has been
restricted by federal legislation, DOT regulations and judicial
decisions.

Additional laws and regulations have been proposed from time
to time which could significantly increase the cost of airline
operations by, for instance, imposing additional restrictions or
requirements on operations. Laws and regulations have also been
considered from time to time that would prohibit, restrict or tax
the ownership of airline routes or takeoff and landing slots.
Also, the award and retention of international routes is governed
by several aviation treaties and agreements between the United
States and foreign governments that are amendable. In addition,
proposals are being considered that would provide that a portion
of the appropriations for the FAA and other aviation governmental
functions be funded pursuant to additional taxes on ticket and
cargo revenue or fees for use of the air traffic control system.

- 46 -
<PAGE>

USAir cannot predict what laws and regulations will be adopted,
what changes to treaties may be effected or whether and how any
of the foregoing might affect USAir, and there can be no
assurance that existing or future laws or regulations will not
adversely affect USAir.

Transaction Considerations
--------------------------

Payments Generally; Scope of Support by Liquidity Facilities
- ------------------------------------------------------------

The Old Notes represent and the New Notes will represent
general payment obligations of USAir. The ability of USAir to
make its expected payments of principal and interest will depend
upon USAir's financial condition. The Liquidity Facilities, each
of which will be in an amount sufficient to pay interest due in
respect of the relevant Class of Notes on three Interest Payment
Dates, are intended to enhance the likelihood of the timely
receipt of interest by the holders of Notes ("Noteholders") in
the event of the failure by USAir to make interest payments on
the Notes. None of the Liquidity Facilities will be available to
pay principal of or premium on any Class of Notes. See
"Description of the Notes-Priority of Distributions" and
"Liquidity Facilities."

Limitations Regarding Aircraft Collateral
- -----------------------------------------

USAir's obligations under the Notes, the Collateral Agency
Agreement, the Indentures and the Liquidity Agreements are
secured by the Collateral, which consists primarily of the
Aircraft.

- 47 -
<PAGE>

Appraisals of Aircraft; Realizable Values
- -----------------------------------------

Appraisals in respect of the Aircraft were prepared by
AirClaims, AISI and BK. Based upon the appraisals of the three
firms, the Aircraft had an Initial Aggregate Appraised Value of
$438,120,000 as of December 31, 1995. See "Description of the
Aircraft and the Appraisals." However, an appraisal is only an
estimate of value and should not be relied upon as a measure of
realizable value; the proceeds realized upon a sale of any
Aircraft may be more or less than its Appraised Value. In
addition, the market value of the Aircraft at any time may be
more or less than their Aggregate Appraised Value. The value of
the Aircraft in the event of the exercise of remedies under the
Collateral Agency Agreement will depend on market and economic
conditions, demand for such Aircraft, the condition of the
Aircraft and other factors at the time. Accordingly, there can
be no assurance that the proceeds realized upon any exercise of
remedies in respect of the Collateral would be sufficient to
satisfy in full payments due on the Notes. If such proceeds were
not sufficient to pay or repay all amounts due on any Class of
Notes, then holders thereof would need to pursue other remedies
against USAir, and their recovery would be limited to amounts
realized in any such proceedings. See "Description of the
Notes-Priority of Distributions."

Maintenance
- -----------

USAir is responsible for the maintenance, service, repair
and overhaul of the Aircraft, as more fully set forth in the
Collateral Agency Agreement. The failure of USAir (or any lessee
of USAir) to adequately maintain, service, repair or overhaul any
of the Aircraft may adversely affect the value of such Aircraft
and thus, upon a liquidation of the Aircraft, may reduce the
proceeds available to repay the holders of the Notes. Under the
Collateral Agency Agreement, the applicable maintenance standards
may vary depending upon the jurisdiction in which an Aircraft is
registered or if an Aircraft is leased by USAir to a lessee.
Notwithstanding compliance by USAir (or any lessee of USAir) with
its obligations under the Collateral Agency Agreement to
adequately maintain, service, repair or overhaul the Aircraft,
the value of the Aircraft may deteriorate. Such a deterioration
in the value of the Aircraft would not, in and of itself,
constitute a breach by USAir of its obligations under the
Collateral Agency Agreement or give rise to the enforcement of
remedies by the Noteholders. See "Description of the Notes-The
Collateral Agency Agreement."

- 48 -
<PAGE>

Insurance
- ---------

USAir is responsible for the maintenance of public
liability, property damage and all-risk aircraft hull insurance
on the Aircraft to the extent described in the Collateral Agency
Agreement; all-risk aircraft hull insurance must at all times be
in an amount not less than the sum of the aggregate outstanding
principal amount of the Notes and the scheduled amount of
interest payable on the Notes on the next Interest Payment Date.
The failure of USAir to adequately insure the Aircraft, or the
retention of self-insurance amounts or deductibles, may adversely
affect the proceeds which could be obtained upon an Event of Loss
and, thus, may reduce the proceeds available to repay the holders
of the Notes.

With respect to any insurance required, USAir may maintain
deductibles and self-insurance amounts to the extent permitted
under the Collateral Agency Agreement. See "Description of the
Notes-Collateral Agency Agreement-Insurance."

Foreclosure
- -----------

The Collateral Agency Agreement does not contain any general
geographic restriction on the ability of USAir (or of any lessee
of USAir) to operate the Aircraft. Although USAir has no current
intention to do so, USAir is permitted, upon compliance with
certain provisions of the Collateral Agency Agreement, to lease
the Aircraft or to register the Aircraft in foreign
jurisdictions. While the Collateral Agent's rights and remedies
in the event of a Collateral Access Event include the right to
obtain possession of the Aircraft, it may be difficult, expensive
and time-consuming for the Collateral Agent to obtain possession,
particularly when an Aircraft located outside the United States
has been registered in a foreign jurisdiction or is leased to a
foreign operator. Any such exercise of the right to foreclose
upon the Aircraft may be subject to the limitations and
requirements of applicable law, including the need to obtain
consents or approvals for deregistration or re-export of the
Aircraft, which may be subject to delays and political risk.
When a defaulting lessee or other permitted transferee is the
subject of a bankruptcy, insolvency or similar event, additional
limitations may apply.

- 49 -
<PAGE>

Furthermore, certain jurisdictions may not accord
recognition to, or recognize the priority of, the Collateral
Agency Agreement or may have no specific laws providing for the
creation, recognition or registration of mortgages over aircraft
such as the Collateral Agency Agreement, or may accord higher
priority to certain other liens or other third party rights over
the Aircraft. Some or all of these factors could limit the
benefits to the Collateral Agent of the security interest in the
Aircraft. See "Description of the Notes-Collateral" and
"-Registration, Possession and Leasing."

Control Over Collateral
- -----------------------

The exercise of remedies under the Collateral Agency
Agreement with respect to the Collateral will be subject to the
control of the Controlling Party. Until all principal, interest
and other amounts payable to the Class A Noteholders shall have
been paid in full, the Class A Indenture Trustee will be the
Controlling Party; thereafter the Class B Indenture Trustee will
be the Controlling Party until all amounts owing to the Class B
Noteholders have been paid in full, whereupon the Class C
Indenture Trustee will be the Controlling Party. Such control by
the Controlling Party will include the ability, subject to
certain limitations, to direct the Collateral Agent in the
exercise of all remedies under the Collateral Agency Agreement
following the occurrence of a Collateral Access Event. In
addition, if an Indenture Trustee acting as Controlling Party has
not taken any action to exercise remedies in respect of the
Collateral within 24 months after the earlier of the acceleration
of the Notes and the unreimbursed utilization of the entire
available amount under any of the Liquidity Facilities, the
Liquidity Provider for the Class A Notes shall thereupon become
the Controlling Party for all purposes under the Collateral
Agency Agreement until all amounts outstanding in respect of the
Liquidity Facility for the Class A Notes shall have been paid in
full, whereupon the Liquidity Provider for the Class B Notes
shall become the Controlling Party until all amounts outstanding
in respect of the Liquidity Facility for the Class B Notes shall
have been paid in full, whereupon the Liquidity Provider for the
Class C Notes shall become the Controlling Party until all
amounts outstanding in respect of the Liquidity Facility for the
Class C Notes shall have been paid in full, whereupon the
Controlling Party shall be the appropriate Indenture Trustee.
See "Description of the Notes-Intercreditor Rights."

- 50 -
<PAGE>

Priority of Distributions
- -------------------------

In general, on each Interest Payment Date prior to the
acceleration of the Notes, amounts owing to the Liquidity
Providers in respect of (x) fees under the Liquidity Facilities,
(y) interest on unreimbursed Interest Advances and (z)
reimbursement of Interest Advances are payable prior to payments
to Noteholders of expected principal of and interest due on any
of the Notes (except for payment of interest made from the
proceeds of Interest Advances (or the portion of other Advances
(as defined in the Collateral Agency Agreement) being applied as
Interest Advances) under the Liquidity Facilities), and expected
principal of and interest due on the Notes are payable in the
following order of priority: expected principal of and interest
on the Class A Notes are payable prior to payments of principal
of and interest on the Class B Notes and expected principal of
and interest on the Class B Notes are payable prior to payments
of principal of and interest on the Class C Notes. Following the
bankruptcy of USAir or the acceleration of the Notes: (i) amounts
owing to the Liquidity Providers are payable prior to payments of
principal of and interest on the Notes (except for payment of
interest made from the proceeds of Interest Advances (or the
portion of other Advances being applied as Interest Advances)
under the Liquidity Facilities), (ii) the total principal of and
interest on the Class A Notes are payable prior to any payments
on account of the Class B Notes and (iii) the total principal of
and interest on the Class B Notes are payable prior to any
payments on account of the Class C Notes.

No Protection Against Highly Leveraged Transactions
- ---------------------------------------------------

There are no provisions in the Indenture, Collateral Agency
Agreement or other documents that would afford the Noteholders
additional protection in the event of a highly leveraged
transaction, including transactions effected by management or
affiliates, which may or may not result in a change of control of
USAir or USAir Group.

Limited Market for Notes
- ------------------------

The New Notes are being offered to the holders of the Old
Notes. The Old Notes were offered and sold in February 1996 to
a small number of institutional investors. Prior to the Exchange
Offer, there had been no secondary market for the Old Notes.
There can be no assurance that a secondary market will develop
or, if a secondary market does develop, that it will provide the
Noteholders with liquidity of investment or that it will continue
for the life of the New Notes.

- 51 -
<PAGE>

Consequences of Failure to Exchange
- -----------------------------------

Holders of Old Notes who do not exchange their Old Notes for
New Notes pursuant to the Exchange Offer will continue to be
subject to the restrictions on transfer of such Old Notes as set
forth in the legend thereon as a consequence of the offer or sale
of the Old Notes pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general,
the Old Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. USAir does not currently anticipate that
it will register the Old Notes under the Securities Act. Based
on the interpretations by the staff of the Commission, New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by
holders thereof (other than any such holder which is an
"affiliate" of USAir within the meaning of Rule 405 under the
Securities Act), provided that such New Notes are acquired in the
ordinary course of such holders' business and such holders have
no arrangement with any person to participate in the distribution
of such New Notes. Each broker-dealer that receives New Notes
for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale
or such New Notes. See "Plan of Distribution."

USE OF PROCEEDS
---------------

There will be no cash proceeds to USAir from the exchange
pursuant to the Exchange offer.

- 52 -
<PAGE>

DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
----------------------------------------------
The Aircraft
- ------------

The Aircraft consist of nine Boeing 757-200 aircraft purchased by USAir
from Boeing in the fourth quarter of 1994 and during 1995. USAir's 757 fleet is
operated in its North American route system and between the continental United
States and the Caribbean. Each of USAir's 757-200s is equipped with two Rolls-
Royce RB211-535E4 engines and is in compliance with Stage 3 noise level
standards-the most restrictive regulatory standards currently in effect in the
United States for aircraft noise abatement.

The table below sets forth certain additional information for the Aircraft:

<TABLE>
<CAPTION>
Appraisals
----------

FAA Mfg. Serial In Service Appraised
Reg. No. Number Date AirClaims AISI BK Values(1)
- --------- ----------- ---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
N625VJ 27246 11/03/94 $45,500,000 $56,610,000 $47,710,000 $47,710,000
N626AU 27303 11/15/94 45,500,000 56,610,000 47,920,000 47,920,000
N627AU 27805 02/01/95 46,400,000 57,210,000 48,330,000 48,330,000
N628AU 27806 02/03/95 47,300,000 57,500,000 48,330,000 48,330,000
N629AU 27807 03/04/95 47,300,000 57,810,000 48,750,000 48,740,000
N630AU 27808 04/01/95 47,300,000 58,100,000 48,750,000 48,750,000
N631AU 27809 05/21/95 47,300,000 58,400,000 49,170,000 49,170,000
N632AU 27810 06/20/95 47,300,000 59,000,000 49,380,000 49,380,000
N633AU 27811 07/16/95 47,300,000 59,000,000 49,790,000 49,790,000
-------------
$438,120,000
=============
- ------------------------------------------------------------------------------------------
</TABLE>
[table continued on following page]
- 53 -

<PAGE>

(1) The Initial Aggregate Appraised Value of $438,120,000 is the
sum of the lower of the median and average of the appraisals for
each Aircraft commissioned by USAir from AirClaims, AISI and BK
as of December 31, 1995. The median appraisal was used in each
case.

Appraised Value
- ---------------

The Appraised Values set forth in the foregoing table were
determined by AirClaims, AISI and BK and by appraisers certified
by ISTAT. Each Appraiser was asked to provide its opinion as to
the fair market value of each Aircraft as of December 31, 1995.
The Aggregate Appraised Value of the Aircraft of $438,120,000
equals the sum of the Appraised Value for each Aircraft. The
Appraised Value for each Aircraft equals the lower of the median
and the average of the three appraisals therefor. All three
appraisals involved "desk-top" analyses with no physical
inspection of the Aircraft or related records. In addition, each
of the Appraisers delivered to USAir a report dated December 31,
1995, copies of which are available from USAir upon request.

[remainder of page left blank intentionally]

- 54 -
<PAGE>

SELECTED FINANCIAL AND OPERATING INFORMATION
--------------------------------------------

SELECTED FINANCIAL INFORMATION (1):
Consolidated Statements of Operations:

<TABLE>
<CAPTION>
Year Ended December 31,
1996*** 1995 1994 1993 1992 1991 1990
------- -------- ------- ------- ------- ------- -------
(In millions)

<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues........ $1,740 $6,985 $6,579 $6,623 $6,236 $6,069 $6,138
Operating Expenses........ 1,749 6,750 7,096 6,772 6,621 6,285 6,680
Operating Inc. (Loss) (9) 235 (517) (149) (385) (216) (542)
Income (Loss) before
income taxes and accoun-
ting change............... (55) 37 (716) (375) (590) (284) (427)
Accounting change (2)..... - - - (44) (639) - -
Net Income (Loss)......... (55) 33 (716) (419) (1,228) (284) (427)
Consolidated Balance
Sheet:
Total Assets.............. 6,857 6,824 6,676 6,809 6,718 6,564 6,395
Long-Term Oblig-
ations (3)............ 3,776 3,835 3,889 3,540 3,049 1,956 1,656
Stockholder's Equity
(Deficit)................. (366) (311) (273) 408 862 2,097 2,381
Ratio of Earnings to
Fixed Charges............. 88 1.1 * * * * *
- ----------------------------------------------------------------------------------------
***Three months ended March 31, 1996
</TABLE>

- 55 -
<PAGE>

AIRLINE OPERATING AND FINANCIAL STATISTICS
<TABLE>
<CAPTION>
Year Ended December 31,
1996*** 1995 1994 1993 1992 1991 1990
---------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Scheduled Service
Revenue Passengers
(Millions)......... 12.9 56.7 59.5 53.7 54.7 55.6 60.1
Average Passenger
Journey (Miles).... 673 664 638 656 642 614 592
Revenue Passenger
Miles (Millions).... 8,788 37,618 37,941 35,221 35,097 34,120 35,551
Available Seat
Miles (Millions).... 13,493 58,163 61,027 59,485 59,667 58,261 59,484
Passenger Load
Factor............. 64.6% 64.7% 62.2% 59.2% 58.8% 58.6% 59.8%
Yield................ 17.81c 16.66c 15.61c 17.27c 16.49c 16.67c 16.18c
Break Even Load
Factor (4).......... 67.1% 64.9% 67.3% 61.7% 63.2% 62.7% 64.5%
Revenue per Avai-
lable Seat Mile..... 12.74c 11.80c 10.59c 11.04c 10.38c 10.33c 10.19c
Cost per Available
Seat Mile (4)....... 12.81c 11.40c 11.02c 11.12c 10.85c 10.80c 10.86c
Average Stage
Length (Miles)...... 573 560 536 536 516 495 469
Gallons of Jet Fuel Con-
sumed (Millions).... 266 1,137 1,205 1,161 1,183 1,168 1,283
Cost of Jet Fuel
per Gallon.......... 58.61c 53.23c 53.28c 58.40c 60.94c 65.90c 75.42c
Number of Employees at
End of Period (5)... 39,959 39,900 42,400 45,400 46,200 45,300 49,200
Operating Aircraft at
End of Period....... 396 394 424 441 440 436 454
</TABLE>

[table continued on following page]
- 56 -

<PAGE>

***Three months ended March 31, 1996
(1) The selected financial information has been summarized from the financial
statements of USAir included herein and should be read in conjunction with the
notes thereto and in conjunction with the financial statements contained
elsewhere in this Prospectus. Operating statistics exclude flights operated by
USAir under a wet lease with BA. Financial statistics for the first quarter of
1996 exclude the revenue and expenses (which amounts net to zero) generated
under the BA wet lease.
(2) Cumulative effect of changes in method of accounting for (i) post-employment
benefits other than pensions which was effective as of January 1, 1993 and (ii)
post-retirement benefits other than pensions (net of income tax benefit of $107
million) effective as of January 1, 1992.
(3) Long-term obligations include long-term debt, capital leases and post-
retirement benefits other than pensions, non-current. Long-term debt included
$0, $68 million, $0, $105 million, $130 million and $98 million payable to USAir
Group at, March 31, 1996, December 31, 1995, 1994, 1993, 1992 and 1991,
respectively. USAir fully paid its long-term obligation to USAir Group during
the fourth quarter of 1994 and during the first quarter of 1996. (4) Financial
statistics exclude non-recurring charges as well as revenue and expense
generated under the wet lease arrangements with BA .
(5) Full-time equivalent employees.
* For the years ended December 31, 1994, 1993, 1992, 1991, and 1990, earnings
were not sufficient to cover fixed charges. Additional earnings of approximately
$721 million for the year ended December 31, 1994, $385 million for 1993, $610
million for 1992, $411 million for 1991, and $674 million for 1990 would have
been required to achieve a ratio of 1.0. **Ratio of earnings to fixed charges is
not available for the quarter ended March 31, 1996. c = cents

- 57 -
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------

Results of Operations
- ---------------------

The following discussion relates to the financial results and
condition of USAir. USAir is the principal subsidiary of USAir
Group and accounted for approximately 93% of USAir Group's
operating revenues for fiscal year 1995 and 92% for the first three
months of 1996. USAir is a major United States air carrier whose
primary business is transporting passengers, property and mail.
USAir enplaned more than 57 million passengers during 1995 and is
currently the fifth largest domestic air carrier, as measured by
revenue passenger miles. Except where noted, the following
discussion is based primarily upon USAir's financial condition,
results of operations and future prospects.

USAir, whose results include USAir's wholly-owned subsidiary
USAM Corp. ("USAM"), recorded net income of $33.0 million in 1995
compared to a loss of $716.2 million for 1994. USAir recognized a
net loss of $54.9 million for the first three months of 1996
compared to a $101.8 million loss for the same period in 1995.

USAir's improved results in 1995 and for the first quarter of
1996 are mainly attributable to a stable domestic economic climate,
favorable capacity trends in USAir's markets, less fare discounting
and low fare competition and the positive influence of USAir's
cost-reduction and revenue enhancement initiatives. USAir
estimates that severe winter weather within the eastern United
States and the partial shutdowns of the United States government
adversely affected first quarter results by approximately $55
million. The entire domestic airline industry has benefitted from
a stable domestic economic environment and overall favorable
capacity and fare pricing factors. However, USAir's financial
condition, results of operations and future prospects are more
susceptible to an economic downturn and competitive influences than
most of its major competitors due to USAir's high cost structure
amid the growing low cost, low fare environment of the domestic
airline industry.

[remainder of page left blank intentionally]

- 58 -
<PAGE>

Factors Contributing to Improved 1995 Financial Results
- -------------------------------------------------------

USAir realized stronger than anticipated yields (Passenger
Transportation revenue per RPM) in 1995 due in part to a decrease
in industry capacity in the eastern United States and less intense
low fare competition and fare discounting than in recent years.
The eastern U.S. is the primary operating region for USAir and its
regional airline affiliates. In 1995, several major air carriers,
including USAir, implemented reductions in capacity (as measured by
ASMs in the eastern U.S. (see discussion of USAir's capacity
reductions below in "Cost-Reduction and Revenue Enhancement
Initiatives"). Most notably, Continental eliminated its low fare,
"no frills" pricing and marketing strategy, "Continental Lite," in
early 1995. Continental Lite was launched in October of 1993 on
certain routes in the eastern U.S. also served by USAir and was
substantially expanded during 1994 into additional markets also
served by USAir. In an effort to maintain market share, USAir
responded to Continental Lite's competitive threat by selectively
lowering its fares by as much as 70% compared to the fares in
effect prior to Continental Lite's incursion. These fare
reductions affected markets where USAir had previously generated
approximately 46% of its Passenger Transportation revenues. In
addition to Continental's capacity reductions, American and United
also reduced service in the intra-east coast region during 1995.
Overall, during 1995, the mature, established air carriers
decreased capacity in the intra-east coast region by approximately
9.8% versus 1994 levels. However, other air carriers with low
costs of operations and low fare structures ("low cost, low fare"
air carriers) increased capacity in this region during the same
period (see further discussion below in "Current Industry
Conditions - Continued Growth of Low Cost, Low Fare Competition").
The net result was that capacity in the intra-east coast region
decreased by approximately 3.5% year-over-year.

As discussed in further detail below, USAir's recent cost-
reduction and revenue enhancement initiatives contributed positive-
ly to USAir's improved 1995 results. USAir stated in 1994 and
early 1995 that it sought to reduce its annual operating costs by
$1 billion through a combination of labor-related and other cost
reductions. During 1995, USAir achieved its goal of reducing
annual non-labor operating expenses by approximately $500 million
from otherwise expected levels. USAir believes that these savings
will approach $600 million in 1996 from otherwise expected levels.
The anticipated savings in the labor-related areas, the other half
of the targeted annual reduction in operating costs, have not been
realized. USAir's 1995 financial results represent a significant

- 59 -
<PAGE>

improvement over 1994 levels, but USAir believes that it will not
be able to achieve either its short-term or long-term goals without
achieving significant reductions in USAir's personnel costs.

- 60 -
<PAGE>

- 61 -
<PAGE>

- 62 -
<PAGE>

Results of Operations
- ---------------------

First Quarter of 1996 Compared with First Quarter of 1995
---------------------------------------------------------

USAir recorded a net loss of $54.9 million for the first
quarter of 1996, an improvement of $46.9 million (or 46.1%) over
its $101.8 million loss for the first quarter of 1995.

During the first quarter of 1996, USAir reduced capacity (ASMs) by
11.4% versus first quarter of 1995. For the same comparative
periods, USAir boarded 6.0% fewer scheduled service revenue
passengers and experienced a 4.1% decrease in scheduled service
revenue passenger miles (scheduled service revenue passengers
multiplied by the number of miles that they are flown or "RPMs"),
but realized an 8.8% increase in yield (revenue per RPM) and a 4.9
percentage point increase in load factor (percentage of seats
occupied by revenue passengers). The capacity decrease reflects
USAir's schedule reductions during mid-1995 and the effects of the
harsh weather experienced in the eastern United States during the
first quarter of 1996. The Company estimates that approximately
1.5% of the quarter-over-quarter capacity decrease is due to
weather factors. USAir believes that it has been able to recapture
most of the revenues from flights eliminated as the result of its
schedule reductions. USAir's capacity (ASMs) for full-year 1996 is
expected to be 2.5% less than for full-year 1995.

The increase in yield for the first quarter of 1996 as
compared to the first quarter of 1995 was primarily driven by
capacity and pricing factors that prevailed during the first
quarter of 1995, as well as select fare increases that were put in
place by USAir during the first quarter of 1996. During the first
quarter of 1995, USAir was facing considerable competitive pressure
from the low fare, "no frills" product, "Continental Lite," offered
by Continental. In response to Continental Lite, USAir selectively
reduced fares in certain markets to maintain market share.
Continental eliminated its Continental Lite operation early in the
second quarter of 1995. USAir estimates that its yield will
increase marginally for the second quarter of 1996 as compared to
the second quarter of 1995, but remain relatively flat or decrease
slightly as compared to 1995 results for the remainder of 1996 due
to competitive factors.

- 63 -
<PAGE>

USAir's unit cost, or cost per ASM, was 12.81 cents for the
first quarter of 1996, a 15.6% increase versus the first quarter of
1995. This increase is primarily the result of relatively flat
operating expenses applied over 11.4% less capacity (ASMs). USAir
estimates that its unit cost for full-year 1996 will be
approximately 8% higher than for full-year 1995, reflecting
slightly higher operating expenses and less capacity year-over-
year. However, this estimate is dependent on a number of factors
that are generally outside of the Company's control, including, for
example, aviation fuel prices and weather-related factors.

Operating Revenues
- ------------------

Passenger Transportation - USAir's Passenger Transportation
revenues increased $65.0 million, or 4.4%. USAir's increase is the
result of an 8.8% increase in yield partially offset by a 4.1%
decrease in scheduled service RPMs. As mentioned above, USAir
selectively increased fares during the first quarter of 1996. In
addition to other factors discussed previously, the Company's
Passenger Transportation revenues may have been stimulated by the
expiration of the 10% Federal Transportation Tax on January 1,
1996. USAir stopped collecting this tax from customers when it
lapsed. The Company cannot estimate the dollar impact of the lapse
of this tax on its Passenger Transportation revenues due to the
complexity and number of factors that contribute to the Company's
performance in this area.

Other Operating Revenues - Fees received by USAir from USAir
Express carriers (other than the fees USAir receives from USAir
Group's three wholly-owned regional air carriers) increased due to
higher passenger volumes and a higher per-passenger fee structure.
In addition, USAir had increased revenues from USAir Club
membership renewals (a special renewal incentive program was
offered during the first quarter of 1996) and reservation
cancellation fees. Revenues received from the wet lease arrangement
with British Airways decreased approximately $6.9 million due to
the phase-out of these arrangements. Increases in this category are
largely offset by increases in the Other Operating Expenses
category.

- 64 -
<PAGE>

Operating Expenses
- ------------------

Personnel Costs - Interest rate-driven increases in pension and
post-retirement benefits expenses, contractual wage increases that
USAir's pilot and flight attendant employee groups received in
January 1996 and wage increases received by certain non-contract
employees effective January 1, 1996, combined to more than offset
personnel complement decreases. USAir's pilots and flight
attendants also received contractual wage increases in January 1995
and July 1995, respectively, and USAir's mechanics received
contractual wage increases in March 1995. USAir had approximately
39,959 full-time equivalent employees on March 31, 1996 versus
41,887 full-time equivalent employees on March 31, 1995. The
Company also recognized expenses of approximately $10.1 million
during the first quarter of 1996 related to restricted stock
grants, sign-on bonuses, severance payments and other compensation
related to recent management changes. The Company expects to
recognize additional expenses related to executive compensation
during the second quarter of 1996. The Company did not recognize
expenses related to profit sharing plans during the first quarter
of 1996, but expects to record such expenses from the second
quarter of 1996 through the end of the year, subject to the
Company's profitability and the terms of the profit sharing plans.

Aviation Fuel - Consumption decreased approximately 33 million
gallons, but was offset by the effects of a 6.55 cent increase in
the average cost of aviation fuel per gallon. USAir experienced
even higher aviation fuel prices during April 1996; however, the
Company cannot predict whether or not this trend will continue.
Sustained increases in the price of aviation fuel would have a
materially adverse effect on the Company's results of operations.
Based on current consumption, each one cent increase in USAir's
cost of aviation fuel per gallon translates into an increase of
approximately $11 million in USAir's annual aviation fuel expense.
See Other Operating Expenses below related to federal taxes on
aviation fuel.

Commissions - Decreased primarily due to the effects of the revised
rate structure for commissions paid to travel agencies, which went
into effect during February 1995.

Other Rent and Landing Fees - Decreased due mainly to credits
received by USAir from certain airport facilities related to 1995
activity (these facilities experienced lower operating costs than
expected) and an increase in the sublease of certain facilities to
third parties. USAir also experienced a slight decrease in landing
fees expenses quarter-over-quarter due to capacity reductions.

- 65 -
<PAGE>

Aircraft Maintenance - Efficiencies gained from re-engineering
efforts in USAir maintenance areas and the effects of fewer
operating aircraft in USAir's fleet were more than offset by timing
factors and an increase in the rate-per-engine USAir pays to an
outside contractor to overhaul certain jet engines.

Aircraft Rent - Increased due primarily to two leased Boeing 767-
200ER aircraft re-entering USAir's operating fleet during the first
quarter of 1996. USAir recognized expenses related to these two
aircraft in the Other Operating Expenses category while they were
operated by British Airways (see also Other Operating Revenues).

Depreciation and Amortization - Decreased due mainly to fewer owned
aircraft in USAir's operating fleet. During 1995, USAir sold 13
owned Boeing 737-300 aircraft and took delivery of 7 new Boeing
757-200 aircraft.

Other Operating Expenses - Increased primarily due to additional
Federal taxes on aviation fuel and increases in insurance, de-icing
fluid and communications-related costs. The Federal Excise Tax on
Transportation Fuels, which USAir became obligated to pay beginning
October 1, 1995, totaled approximately $10 million for the first
quarter of 1996. Expenses related to the wet lease arrangements
with British Airways decreased approximately $6.9 million due to
the recent termination of two of the three wet leases (see also
Other Operating Revenues and Aircraft Rent).

Other Income (Expense)
- ----------------------

Interest Income - Increased due mainly to higher Cash and Cash
Equivalents and Short-Term Investments balances period-over-period.

Interest Expense - Decreased primarily as the result of less long-
term debt outstanding period-over-period. USAir made early debt
repayments totaling approximately $202.1 million during 1995.

- 66 -
<PAGE>

Liquidity and Capital Resources
- -------------------------------

Net cash used for operations was $12.9 million for the first
quarter of 1996. As of March 31, 1996, Cash and Cash Equivalents
totaled $782.7 million and Short-Term Investments totaled $45.5
million. USAir also had $99.0 million deposited in trust accounts
to collateralize letters of credit and worker's compensation
policies at quarter-end.

The Company is highly leveraged. USAir requires substantial
working capital in order to meet scheduled debt and lease payments
and to finance day-to-day operations. In addition, USAir currently
does not have access to a short-term credit or receivables sale
facilities. However, based on current projections, the Company
expects to satisfy its liquidity requirements for the remainder of
1996 through a combination of cash on hand and cash flows from
operations. USAir has committed financing for a significant
portion of the purchase price for each of its scheduled 1998
aircraft deliveries. The Company's expectations are subject to
revision. Changes in certain factors that are generally outside the
Company's control, such as the general economic environment,
intensified competition from low cost, low fare carriers or
operations and the price of aviation fuel, could have a materially
adverse effect on the Company's liquidity, financial condition and
results of operations.

Investing activities during the first quarter of 1996 included
cash outflows of $31.4 for the acquisition of assets ($3.4 million
related to progress payments for Boeing 757-200 aircraft scheduled
for delivery in 1998 and $28.0 million related to the purchase of
rotables, hush kits, computer equipment and various ground support
equipment). The Company's Short-Term Investments increased by $25.7
million during the period and the Other investing uses of cash
category includes $12.2 million related to the purchase of debt
issued by Shuttle, Inc. The net cash used by investing activities
during the first quarter of 1996 was $64.5 million.

Net cash used by financing activities during the first quarter
of 1996 was $19.5 million. USAir sold the Old Notes during the
first quarter of 1996 through a private placement offering under
Securities and Exchange Commission Regulation 144A. USAir used the
proceeds from the offering as part of the funds necessary to repay
in full the indebtedness incurred in connection with certain 757-
200 aircraft delivered to USAir in 1994 and 1995. The transaction
is reflected on the Company's Condensed Consolidated Statements of

- 67 -
<PAGE>

Cash Flows as proceeds from the issuance of debt of $103.0 million
and a "non-cash" issuance of debt of $160.0 million. The non-cash
component reflects proceeds that USAir directed to reduce debt and
pay underwriter's fees at the time of the offering. USAir used cash
proceeds it received from the offering and additional funds to make
debt repayments of approximately $105.5 million immediately
following the offering. The Old Notes are secured by the Aircraft.
In addition to the sale of the Old Notes, the Company made
scheduled debt repayments of approximately $17.0 million during the
first quarter of 1996. USAir also incurred new debt of $4.6 million
associated with progress payments for Boeing 757-200 aircraft
scheduled for delivery in 1998. The $4.6 million is reflected as
non-cash activity in the Company's Condensed Consolidated Statement
of Cash Flows because USAir incurred the related debt in
conjunction with the payment of the progress payments. As mentioned
above, USAir has committed financing for a significant portion of
the purchase price for each of its scheduled 1998 aircraft
deliveries.

As of March 31, 1996, USAir's ratio of current assets to
current liabilities was .59 to 1 and the debt component of USAir's
capitalization structure was greater than 100% due to a net capital
deficiency.

1995 Compared with 1994
-----------------------

USAir recorded net income of $33.0 million for 1995 which
represents an improvement of $749.2 million over its 1994 results.

USAir's yield was 16.66 cents for 1995, a 6.7% improvement
versus 1994. The stronger than anticipated increase in yield
primarily resulted from the effects of the factors discussed in
"Factors Contributing to Improved 1995 Financial Results" above.
USAir's capacity (ASMs) for 1995 decreased by approximately 4.7%.
RPMs, however, decreased less than 1% and USAir's load factor was
64.7% for 1995, a historical high. USAir's unit costs increased to
11.40 cents from 1994's 11.02 cents primarily due to the capacity
reductions that occurred in 1995. USAir's capacity (ASMs) for 1996
is expected to be approximately 3% less than for 1995 reflecting
the full-year effects of USAir's right-sizing initiatives. USAir's
unit costs are expected to increase for 1996 mainly due to higher
Personnel Costs and Aviation Fuel expenses, partially offset by
decreases in certain capacity-related expenses, applied over less

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<PAGE>

capacity on a year-over-year basis. USAir's pilot and flight
attendant employees received contractual wage increases in early
1996 and certain USAir non-contract employees received salary
increases effective January 1, 1996.

USAir believes that for the foreseeable future, while demand
for higher yield "business fares" will remain essentially flat and
relatively inelastic, the lower yield "leisure" market will remain
highly price sensitive. The leisure market, which is affected by
general economic conditions, is also the primary target market for
low cost, low fare carriers. The Company expects that low fares
offered by its airline affiliates in response to low cost, low fare
competition in their markets will increase during 1996 and such
competitive actions may have an adverse effect on the Company's
results of operations, liquidity and financial condition.

Although a competitive strength, concentration of significant
operations in the eastern U.S. leaves USAir susceptible to certain
regional conditions that may have an adverse affect on the
Company's results of operations and financial condition.

In August 1993, the United States increased taxes on domestic
fuels, including aircraft fuel used on domestic routes, by 4.3
cents per gallon. Airlines were exempt from the tax increase until
October 1, 1995. Pending legislation in Congress would reinstate
the exemption through September 30, 1997, subject to termination of
the exemption on September 30, 1996 if excise taxes relating to
certain aviation trust funds are not extended. These excise taxes
expired on December 31, 1995 and have not, as of May 20, 1996, been
extended. There can be no assurance that an airline jet fuel tax
exemption will be reinstated, or if reinstated, the terms under and
the period for which the exemption will be effective. The
additional fuel tax is currently being collected. USAir's 1995
results include expenses related to this tax of approximately $11.9
million, recognized as an operating expense, in Other Expense, Net.
The lack of an airline jet fuel tax exemption would increase
USAir's annual operating expenses by approximately $47 million
based on projected domestic fuel consumption for 1996.

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<PAGE>

The financial results for 1994 include: (i) a $172.9 million
charge related to USAir's grounded BAe-146 fleet (see below for
additional information related to the reserve for the BAe-146
fleet) and to USAir's decision to cease operations of its remaining
Boeing 727-200 aircraft in 1995 (the last operational 727-200
aircraft was retired from service in September 1995); (ii) a $54.0
million charge for obsolete inventory and rotables to reflect
market values; (iii) a $25.9 million charge related to USAir's
decision to reduce substantially service between Los Angeles and
San Francisco in November 1994; and (iv) a gain of $18.6 million
resulting from the accounting treatment of the hull insurance
recovery on the aircraft lost in the September 1994 accident.

California
Line Item Aircraft Inventory Reduction Other Total
- ------------------ -------- --------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Personnel
Costs.......... $ - $ - $ (0.3) $ - $ (0.3)
Aircraft
Rent........... (115.5) - - - (115.5)
Aircraft
Maintenance.... 3.4 - - - 3.4
Depreciation/
Amortization... (21.7) (18.0) (18.2) - (57.9)
Other Operating
Expenses....... (39.1) (36.0) (7.4) - (82.5)
--------- --------- --------- ------ ------
Total Operating... $(172.9) $(54.0) $(25.9) $ - $(252.8)
========= ========= ========= ====== =======
Other Non-Oper-
ating... $ - $- $- $18.6 $ 18.6
========= ========= ========= ====== =======

</TABLE>

In addition to the above charges, USAir recorded a $50
million addition to Passenger Transportation revenue in the fourth
quarter of 1994 to adjust estimates made during the first three
quarters of 1994.

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<PAGE>

USAir recognized a $4.1 million unusual item during the fourth
quarter of 1995. This amount, a reduction of Aircraft Rent
expense, reflects a partial reversal of the unusual item recorded
in the fourth quarter of 1994 related to USAir's grounded BAe-146
fleet (see discussion of 1994 unusual items above). The $4.1
million reflects USAir's success subleasing three leased BAe-146
aircraft during the fourth quarter of 1995. USAir expects to
reverse additional amounts previously accrued for dependant on
USAir's success remarketing these aircraft.

Operating Revenues - USAir's Passenger Transportation revenues
increased $345.5 million, (5.8%). USAir's estimates that its
Passenger Transportation revenues were adversely affected during
1994 by approximately $50 million due to unfavorable weather during
the first quarter and approximately $150 million as the result of
the two accidents that occurred during the third quarter. By early
1995, USAir's traffic had recovered from the effects of the
accidents and approached a level more normally associated with
USAir's capacity in the marketplace. USAir's 6.7% yield improve-
ment was sufficient to offset the effects on revenues of a 4.7%
decrease in both revenue passengers and capacity (see related
discussion in "Factors Contributing to Improved 1995 Financial
Results" above).

In March 1993, the U.S. District Court in Atlanta, Georgia
entered a settlement involving USAir and five other U.S. air
carrier defendants in the Domestic Air Transportation Antitrust
Litigation class action lawsuit. The class action suit, which was
filed in July 1990, alleged that the airlines used the Airline
Tariff Publishing Company to signal and communicate air carrier
pricing intentions and otherwise limit price competition for travel
to and from numerous hub airports. Under the terms of the
settlement, the six air carriers paid $45 million in cash and
issued $396.5 million in certificates valid for purchase of
domestic air travel on any of the six airlines. USAir's share of
the cash portion of the settlement, $5 million, was recorded in the
results of operations in the second quarter of 1992. Incremental
cost associated with the settlement will not be material based on
the nominal equivalent free trips associated with the settlement.
The travel certificates may be applied towards travel purchased
between January 1995 and December 1998.

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<PAGE>

On October 11, 1994, USAir and seven other air carriers
entered into a settlement agreement with a group of State Attorneys
General resolving similar issues with the states. The settlement
entitles passengers traveling within the United States on state
government business to a 10% discount off the published fares of
each of the settling air carriers and will be available for 18
months from August 16, 1995, or until the combined discount amount
reaches $40 million, whichever first occurs. On May 10, 1995, a
U.S. federal district court judge approved this settlement. USAir
does not expect that this settlement will have a material adverse
effect on its financial condition or results of operations.

USAir's Cargo and Freight revenue decreased $6.7 million
(4.2%). The U.S. Postal Service's increased emphasis on truck
movement of mail in the Northeastern U.S. has resulted in lower
mail volumes and yields. The $67.5 million (13.6%) increase in
USAir's Other Revenue is mainly attributed to an increase in fees
received from participants in USAir's frequent traveler program and
increased revenues from higher volumes and rates for cancellation
and rebooking fees. Revenues from third party aircraft lease and
sublease arrangements also increased during 1995. Overall,
increases in the Other Revenue category were largely offset by
increases in related expenses recognized as Other Expenses, Net
(see below). Revenues associated with USAir's wet lease
arrangements with BA, recognized as Other Revenue, are expected to
decrease in 1996 in conjunction with the phase-out of the wet lease
program (see "Wet Lease Arrangements" above). USAir's results
include certain transactions that are eliminated at the USAir Group
level.

Operating Expenses - USAir's Personnel Costs were relatively
unchanged. USAir recognized approximately $49.7 million of expense
in 1995 associated with the profit share component of the 1992
Salary Reduction Program (see further discussion of this profit
share plan in "Liquidity and Capital Resources" below). Profit
share expense during 1994 was approximately $4.1 million, resulting
from employees receiving certain guaranteed profit share payments
upon termination. Overall, profit share expense and the
contractual wage increases that USAir's pilots, flight attendants
and mechanics received during 1995 were offset by lower personnel
levels. USAir's workforce had approximately 2,500 fewer employees
at December 31, 1995 than at December 31, 1994. Aviation Fuel
expense decreased $37.3 million, a 5.8% decrease. Year-over-year,
the average cost of fuel per gallon was relatively unchanged but
USAir's capacity (ASMs) decreased approximately 4.7%. The
decreased capacity contributed to a 5.6% reduction in fuel

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<PAGE>

consumption. Jet fuel prices have increased during the first
quarter of 1996. The cost of jet fuel per gallon is expected to be
higher during 1996 than 1995, however, the price of jet fuel is
dependant on market factors generally outside of the Company's
control. See discussion above related to jet fuel tax legislation.
The Company's Commissions expense decreased $22.1 million (4.0%)
despite an increase in Passenger Transportation revenues primarily
due to the effects of a change in the rate structure for travel
agency commissions that went into effect during early 1995.
USAir's Aircraft Rent decreased $123.3 million (23.7%). Excluding
the unusual items recognized during 1994 and 1995, as discussed
above, USAir's Aircraft Rent decreased $3.7 million (0.9%) mainly
due to fewer leased aircraft year-over-year. The Company's Other
Rent and Landing Fees expense decreased $33.3 million (7.9%)
primarily due to USAir's capacity reductions and credits totalling
approximately $6.0 million received from various airport
authorities during 1995 related to 1994 activity. The Company's
Aircraft Maintenance decreased $40.2 million (12.0%) which resulted
from fewer operating aircraft year-over-year and the positive
impact of USAir's re-engineering efforts in the maintenance areas.
Excluding the effects of the unusual items recognized during 1994,
as discussed above, USAir's Depreciation and Amortization expense
increased $7.8 million (2.4%) in 1995 compared with 1994.
Excluding the effect of the unusual items recognized in 1994, as
discussed above, the Company's Other Expenses, Net increased
approximately $45.4 million (3.2%) largely due to increases in
expenses associated with increased sales activity and increased
taxes on jet fuel (see discussion above related to jet fuel tax
legislation). Increased third party lease and sublease
arrangements have also contributed to the increase in this expense
category (see related discussion above in "Other Revenues").
Decreases in certain capacity-related expenses partially offset
increases in other components of the Other Expense, Net. Expenses
associated with USAir's wet lease of aircraft to BA, recognized as
Other Expenses, Net, are expected to decrease in 1996 in
conjunction with the phase-out of the wet lease program (see "Wet
Lease Arrangements" above). USAir's results include certain
transactions that are eliminated at the USAir Group level.

Other Income (Expense) - The Company's Interest Income
improved by $23.1 million (82.3%) mainly as a result of signifi-
cantly higher cash levels during 1995. The Company's Interest
Expense increased $16.1 million (5.6%) primarily as a result of
interest incurred on debt associated with new aircraft deliveries
during 1994 and 1995. Interest Capitalized decreased $5.0 million
(36.2%) mainly due to USAir's agreement with Boeing to defer the
delivery of certain 757-200 aircraft from 1996 to 1998. Other, Net
was relatively unchanged as the effects of the $18.6 million gain
recognized in 1994 (discussed above) was offset by USAir's improved

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<PAGE>

equity results in USAM and gains of approximately $10.7 million
associated with the sale of 13 737-300 aircraft during 1995. USAM
owns 11% of the Galileo International Partnership, which owns and
operates the Galileo Computerized Reservation System ("CRS"), and
21% of the Apollo Travel Services Partnership, which markets the
Galileo CRS in the U.S. and Mexico. On a consolidated basis, USAM
recorded pre-tax income of $34.5 million for 1995.

Income Tax Provision (Credit) - The Company was subject to
Federal alternative minimum tax for 1995 as well as income taxes in
certain states. The Company was not subject to regular Federal
income tax for 1995 as the result of using Federal net operating
loss carryforwards. The results for 1994 do not include any income
tax credit due to Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109") limitations in
recognizing a current benefit for net operating losses.

The Company implemented Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" as of January 1,
1995. The effects, which were negligible, are included in the
Company's results of operations for 1995. In October 1995, the
Financial Accounting Standards Board adopted Statement No. 123
"Accounting for Stock-Based Compensation" ("FAS 123"). This
statement establishes the fair value based method of accounting for
stock compensation. The Company has elected to continue using the
intrinsic value based method of accounting prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."

1994 Compared with 1993
-----------------------

Adverse weather during the first quarter, the two aircraft
accidents which occurred during the third quarter, the intense
competitive environment characterized by the growth of low cost,
low fare airlines in USAir's markets, widespread industry fare
discounting, and USAir's cost structure had a negative effect on
USAir's results of operations during 1994.

USAir recorded a net loss of $716.2 million on revenue of $6.6
billion for 1994, compared with a net loss of $418.8 million on
revenue of $6.6 billion for 1993. USAir estimates that severe
winter weather in the first quarter of 1994 negatively affected its
results of operations by approximately $50 million and that the
effect of the two aircraft accidents during the third quarter of
1994 produced a revenue shortfall of approximately $150 million
from forecast amounts for the third and fourth quarters.

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<PAGE>

USAir's 1994 financial results contain $234.2 million of
unusual items as discussed in "1995 Compared with 1994" above.

The financial results for 1993 included: (i) a $43.7 million
charge for the cumulative effect of an accounting change, as
required by Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits;" (ii) a $68.8
million charge for severance, early retirement, and other
personnel-related expenses for a workforce reduction of
approximately 2,500 full-time positions; (iii) a $36.8 million
charge based on a projection of the repayment of certain employee
pay reductions; (iv) a $13.5 million charge for certain airport
facilities at locations where USAir has, among other things,
discontinued or reduced its service; (v) $8.8 million for a loss on
USAir's investment in the Galileo International Partnership, which
operates a computerized reservations system; and (vi) an $18.4
million credit related to non-operating aircraft. The following
table indicates where these items (excluding the accounting change)
appear in USAir's consolidated statement of operations ($ millions,
brackets denote expense):

- 75 -
<PAGE>

Workforce Employee Aircraft/
Line Item Reduction Payback Facilities Galileo Total
- -------------------------------- --------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Personnel Costs................. $(65.6) $(36.8) $ - $ - $(102.4)
Aircraft Maintenance............ - - 18.4 - 18.4
Depreciation and Amortization... - - (13.5) - (13.5)
Other Operating Expenses........ (3.2) - - - (3.2)
--------- -------- ---------- ------- ---------
Total Operating................. $(68.8) $(36.8) $ 4.9 $ - $(100.7)
========= ======== ========== ======= =========
Other Non-Operating............. $ - $ - $ - $(8.8) $ (8.8)
========= ======== ========== ======= =========

Operating Revenues-Increases in traffic which were stimulated by the lower fares during
1994 were not sufficient to offset USAir's lower yields experienced during 1994.
</TABLE>

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<PAGE>

As discussed above, severe winter weather in the first quarter
of 1994 had a material adverse effect on USAir's operations and
financial results. Passenger transportation revenue increased
during the second quarter compared with 1993 because increases in
passenger traffic more than offset the dilutive effect of the lower
fares. However, this trend did not continue in the third and fourth
quarters primarily due to the reduced number of passengers
following the two aircraft accidents. By early 1995, USAir's
traffic had largely recovered from the effects of the accidents and
approached a level normally associated with USAir's capacity in the
marketplace.

USAir's Passenger Transportation Revenue decreased $159.6
million (2.6%) in 1994 compared with 1993. Despite the negative
effect of the adverse weather during the first quarter and the two
accidents during the third quarter, USAir's scheduled traffic as
measured by RPMs increased by 7.7% during 1994 on 2.6% of
additional capacity, as measured by ASMs, resulting in a 3.0
percentage point increase in passenger load factor, a measure of
capacity utilization. However, USAir's yield decreased by 9.6% in
1994 compared with 1993 due to several factors including lower
fares resulting from increased competition from low cost, low fare
carriers in USAir's markets and industry fare discounting
promotions.

USAir's Cargo and Freight revenue decreased $10.1 million
(5.9%) due to overall lower volumes and lower mail yields during
1994. The $125.2 million (33.8%) increase in USAir's Other Revenue
is the result of several factors including the wet lease
arrangement between USAir and BA, increased volume and rate for
cancellation and rebooking fees, and fees from companies which
participate in USAir's frequent traveler program. These increases
were largely offset by increases in other operating expenses.
USAir has begun to phase out the wet lease arrangements with BA.
See "Business-British Airways Investment Agreement-U.S.-U.K.
Routes." One each of the three aircraft began the wet lease service
in the months of June 1993, October 1993 and January 1994.

Operating Expenses-USAir's Personnel Costs increased $55.2
million (2.0%). Excluding the effect of the unusual items
discussed and presented in the tables above, USAir's personnel
costs increased $157.3 million (6.1%) in 1994 compared with 1993
due to the expiration during 1993 of employee wage reductions,
subsequent contractual and general salary increases and a lower
discount rate used during 1994 in the calculation of pension and
post-retirement benefit expense. These increases more than offset

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<PAGE>

any expense reductions realized as a result of the workforce
reduction during 1994. Aviation Fuel expense decreased $35.6
million (5.2%), which is the result of an 8.8% reduction in the
cost of fuel partially offset by a 3.8% increase in consumption
compared with 1993. USAir's Commissions expense decreased $10.6
million (1.9%) as a result of decreased passenger revenue. See
"Business-Industry Restructuring and Cost-Cutting," and
"Business-Legal Proceedings." USAir's Other Rent and Landing Fees
expense decreased $9.4 million (2.2%) primarily due to lower
operating costs at certain airport facilities. USAir's Aircraft
Rent increased $89.8 million (20.8%). Excluding the effect of the
unusual items discussed and presented in the tables above, USAir's
aircraft rent decreased $25.7 million (6.0%) in 1994 compared with
1993 due to the expiration or renegotiation of several aircraft
leases and additional wet lease service over 1993 levels. USAir's
Aircraft Maintenance increased $26.9 million (8.7%), which resulted
from the $18.4 million credit in 1993 (see above table) and initial
repairs on certain of USAir's newer aircraft in 1994. USAir's
Depreciation and Amortization expense increased $62.0 million
(19.1%). Excluding the effect of the unusual items discussed and
presented in the tables above, USAir's depreciation and
amortization expense increased $17.6 million (5.6%) in 1994
compared with 1993 primarily due to the delivery of new Boeing
757-200 aircraft. USAir's Other Expenses, Net increased $145.1
million (10.8%). Excluding the effect of the unusual items
discussed and presented in the tables above, USAir's Other
Expenses, Net increased $65.8 million (4.9%) in 1994 compared with
1993 largely due to increases in several passenger volume-related
expense categories and expenses related to the increase in USAir's
other revenue category discussed above.

Other Income (Expense) - USAir's Interest Income improved by
$3.3 million (13.1%) as a result of higher cash levels and more
favorable interest rates in 1994. Interest Expense increased $47.2
million (19.8%) primarily as a result of interest incurred on
certain aircraft-secured and unsecured financings completed during
1993. Interest Capitalized decreased $4.0 million (22.5%) because
average deposits for future aircraft deliveries were lower during
1994 compared with 1993. Other, Net reflects a $74.7 million
improvement primarily due to the $18.6 million gain discussed above
and improved equity results from USAir's 11% ownership investment
in the Galileo International Partnership, which owns and operates
the Galileo Computerized Reservation System ("Galileo CRS"), and
USAir's 21% ownership investment in the Apollo Travel Services
Partnership. The Apollo Travel Services Partnership markets the
Galileo CRS in the U.S. and Mexico.

- 78 -
<PAGE>

Effective January 1, 1993, USAir adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). The adoption of FAS 109 resulted in no
cumulative adjustment. Results for 1994 and 1993 do not include
any income tax credit due to the FAS 109 limitations in recognizing
a current benefit for net operating losses. See Note 6 to USAir's
consolidated financial statements for additional information.

Inflation and Changing Prices
- -----------------------------

Inflation and changing prices do not have a significant effect
on USAir's operating revenues and expenses (other than depreciation
and amortization) because such revenues and expenses generally
reflect current price levels.

Depreciation and amortization expense is based on historical
cost. For assets acquired through the purchase of Pacific
Southwest Airlines, USAir's historical cost is based on fair market
value of the assets on May 29, 1987. In the case of Piedmont
Aviation, Inc., USAir's historical cost is based on the fair market
value of the assets on November 5, 1987, reduced by the tax effect
of that portion of fair market value not deductible for tax
purposes in the form of depreciation and amortization. Therefore,
aggregate depreciation and amortization is lower than if this
expense reflected today's replacement costs for existing productive
assets. In evaluating how inflation would increase depreciation
expense, however, consideration should also be given to the
reduction in other operating expenses, such as aircraft maintenance
and aviation fuel, that would be achieved from the operating
efficiencies of newer, more technologically advanced productive
assets.

Liquidity and Capital Resources
- -------------------------------

Cash provided by operations was $578.3 million for the year
ended December 31, 1995. As of December 31, 1995, USAir's
unrestricted cash, cash equivalents and short-term investments
totaled approximately $899.0 million.

- 79 -
<PAGE>

During December 1995, USAir completed a transaction which
enabled it to substitute previously unencumbered aircraft in lieu
of cash deposits for certain workers' compensation liabilities and
letters of credit which are classified as "Other Assets" on USAir's
balance sheet at that date.

Although USAir's liquidity and capital resources improved
considerably during 1995, USAir remains highly leveraged. In order
to meet debt service, lease and other obligations and to finance
daily operations, USAir requires substantial liquidity and working
capital. Developments beyond the control of USAir might occur
which could have a material adverse effect on USAir's prospects,
liquidity, financial condition and results of operations, including
a downturn in the economy, adverse regulatory changes, intensified
industry fare wars, substantial increases in jet fuel prices or
fuel taxes, adverse weather conditions, negative public perception
regarding safety or further incursions by low cost, low fare
carriers into USAir's markets. However, based on current
expectations, USAir believes that its cash balances will be more
than sufficient to meet its liquidity requirements for the
remainder of 1996 and is evaluating the possible redemption or
refinancing of certain debt instruments and capital leases in order
to lower interest and lease expenses. Depending on market, economic
and other factors, USAir's expectations of its liquidity
requirements are subject to change.

Certain USAir employees whose wages and/or benefits were
temporarily reduced during 1992 and 1993 currently participate in
a profit sharing plan (a component of the 1992 Salary Reduction
Program) designed to recompense them for the concessions made
during that time period. The plan will cease to exist after these
employees have been recompensed to the extent permitted under the
provisions of the plan. Estimated savings of approximately $23
million attributable to the suspension of longevity/step increases
will not be subject to repayment through the profit-sharing
program. This profit sharing plan is distinct from two other
profit sharing plans that USAir currently offers in conjunction
with certain of its defined contribution plans and its Employee
Stock Ownership Plan. Payouts are determined based on USAir
Group's pre-tax results for a year, less charges associated with
postretirement benefit expenses other than for pensions. Certain
unusual items are also excluded from the calculation. Based on
USAir Group's 1995 results and the provisions of the profit sharing
plan, USAir recognized charges of approximately $49.7 million for

- 80 -
<PAGE>

this plan in 1995. USAir made a cash payment of approximately
$73.7 million to plan participants in March 1996 for 1995 activity.
The maximum remaining pay-out under this plan after the March 1996
payment, the timing of which is dependant on USAir Group's future
profitability, among other factors, is currently estimated to be no
more than $134.3 million.

As discussed above in "Deferral of Dividends", USAir Group
has deferred dividend payments on all series of its outstanding
preferred stock. The aggregate annual dividend requirements
related to USAir Group's outstanding preferred stock issuances,
each of which has a cumulative dividend feature, currently amount
to approximately $79.2 million. Accordingly, aggregate dividends-
in-arrears as of December 31, 1995, including additional dividends
(interest) on deferred dividends, of approximately $117.7 million
represent a future obligation of USAir Group. In addition, USAir
Group's Series A Preferred Stock is mandatorily redeemable on
August 7, 1999 at $1,000 per share plus accrued dividends (inter-
est). The Series F Preferred Stock and Series T Preferred Stock
are mandatorily redeemable in the year 2008. As of December 31,
1995, the redemption values of the Series A Preferred Stock, Series
F Preferred Stock and Series T Preferred Stock were approximately
$412.1 million, $329.1 million, and $109.6 million, respectively.

Investing activities during 1995 included cash inflows of
$219.8 million from the disposition of assets (primarily from
thirteen Boeing 737-300 aircraft, offset by $142.3 million paid for
the acquisition of assets ($61.7 million cash payments related to
new 757-200 aircraft, $80.6 million cash payments related to the
purchase of rotables, hush kits, and various ground support
equipment). Net cash provided by investing activities for 1995 was
$150.7 million.

Financing activities during 1995 included $278.3 million of
debt payments, including the redemption of USAir's remaining
outstanding 12-7/8% Unsecured Senior Notes (the "12-7/8% Notes").
In addition, USAir incurred debt of $169.7 million associated with
the delivery of seven new Boeing 757-200 aircraft and scheduled
aircraft progress payments for future aircraft deliveries half of
1995. In connection with the deferral of eight 757-200 deliveries
to 1998, USAir rescheduled aircraft the due date of $70.8 million
of previously satisfied aircraft purchase deposits into the future
resulting in a reduction of both debt and equipment deposits.
USAir had a $68.6 million 8.4% note payable to USAir Group related
to USAir Group's purchase of aircraft-secured debt obligations of

- 81 -
<PAGE>

USAir. The $169.7 million, $70.8 million and $68.6 million are
reflected as non-cash activity in USAir's Consolidated Statement of
Cash Flows because USAir experienced an increase or decrease in
fixed assets or equipment deposits concurrently with the increase
or decrease in debt. USAir made early debt payments, including the
redemption of the 12-7/8% Notes, totalling approximately $202.1
million during 1995. Further steps by USAir to prepay debt and
lease obligations are possible.

USAir Group has deferred the dividend payments on all series
of its preferred stock. The current aggregate annual dividend
requirements related to all series of USAir Group's preferred stock
total approximately $79.2 million. There can be no assurance when
or if preferred dividend payments will resume. See "Risk Factors-
Deferral of Dividends by USAir Group" for a discussion of the total
amount of deferred dividends and the effects of the dividend
deferrals on USAir Group's corporate governance.

USAir is a party to certain financial contracts to reduce
exposure to fluctuations in the price of jet fuel and changes in
the U.S. dollar to Japanese Yen conversion rates. Under the jet
fuel arrangements, USAir pays a fixed rate per notional gallon of
fuel and receives in return a floating rate per notional gallon
based on the market rate during the month of settlement. Decreases
in the market cost of jet fuel below the rates specified in the
contracts require USAir to make cash payments. However, USAir
believes these contracts do not present a material risk to USAir's
financial position or liquidity due to the relatively simple terms
of the agreements, their purpose and their short remaining
duration. USAir has reviewed the financial condition of each of
the counterparties to these financial contracts and believes that
the potential for default by any of the current counterparties is
negligible. In prior years, USAir participated in contracts to
reduce exposure to interest rate changes but those contracts
expired during 1995 and were not renewed. See Note 2 to USAir's
consolidated financial statements for additional information.

USAir has received notices from the U.S. Environmental
Protection Agency and various state agencies that it is a
potentially responsible party with respect to the remediation of
existing sites of environmental concern. Negotiations with various
governmental agencies continue concerning known and possible
cleanup sites. USAir has made financial contributions for the
performance of remedial investigations and feasibility studies at
sites in Moira, New York; Escondido, California; and Elkton,
Maryland. The contributions were approximately $200,000 in the

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aggregate for 1995, 1994 and 1993. USAir believes that the
ultimate resolution of known environmental contingencies should not
have a material adverse effect on its liquidity, financial position
or results of operations based on USAir's experience with similar
environmental sites.

USAir has been identified as a potentially responsible party
("PRP") for environmental contamination at Boston Logan Airport.
There are a number of other PRPs at the site. The Company is
presently unable to assess its proportionate share of contribution,
but does not expect any such contribution to have a material
adverse effect on its financial condition or results of operations.

USAir Group terminated its revolving credit facility with a
group of banks during 1994. USAir Group had historically utilized
such a facility to supplement its and USAir's liquidity from time
to time. In addition, USAir's revolving accounts receivable sale
program expired in December 1994. USAir was unable to sell
receivables under the agreement during 1994 because of failure to
comply with certain financial covenants required to be maintained
in connection with that agreement. USAir had engaged in
discussions with respect to a replacement receivables sale facility
but has elected not to pursue such a financing at this time.

USAir's liquidity and capital resources improved considerably
during 1995. However, USAir is highly leveraged and in order to
meet debt service, lease and other obligations and to finance daily
operations, USAir requires substantial liquidity and working
capital. Developments may occur that are beyond the control of
USAir which could have a material adverse effect on its future
prospects, liquidity and financial condition, including a downturn
in the economy, intensified fare pricing wars, adverse regulatory
changes, substantial increases in jet fuel prices or fuel taxes,
adverse weather conditions, negative public perception regarding
safety, and the further growth and expansion of low cost, low fare
air carriers into markets served by USAir and its regional
affiliates.

USAir anticipates that its 1996 capital expenditures will be
approximately $257 million. Of this amount, approximately $67
million relates to progress payments for future aircraft deliveries
and $35 million relates to the purchase of hush kits for certain
aircraft in order to comply with federal noise and pollution
mandates. USAir expects that it will satisfy its liquidity
requirements for 1996 through a combination of cash flow from

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<PAGE>

operations and cash on hand. As a result of the recent aircraft
delivery deferral agreements with Boeing, the Company's capital
commitments have been substantially reduced for the 1996-2000 time
person (see "Cost-Reduction and Revenue Enhancement Initiatives"
above). USAir currently has committed financing for a significant
portion of the purchase price for each of the scheduled 1998
deliveries of Boeing 757 aircraft.

Except for the Old Notes, USAir's debt securities are
presently rated below investment grade by Standard & Poors and
Moody's. The ratings of USAir's debt securities make it more
difficult and costly for USAir to effect additional financing,
particularly unsecured debt financing.

In February 1996, USAir issued the Old Notes under Securities
and Exchange Commission Regulation 144A. The Private Offering
netted proceeds of approximately $259 million which were used as a
part of the funds necessary to repay in full the indebtedness
incurred in connection with certain 757-200 aircraft delivered to
USAir in 1994 and 1995.

During 1994, USAir's investment in new aircraft acquisitions
and purchase deposits totaled $270.6 million (which includes $224.6
million presented as non-cash on USAir's consolidated statement of
cash flows since debt was incurred upon delivery of aircraft or to
satisfy equipment deposit progress payments). USAir took delivery
of five new Boeing 757-200 aircraft during 1994. USAir invested
$128.9 million in non-aircraft property during 1994 (e.g., ground
support equipment, computer equipment, software, aircraft rotables
and hush kits, and take-off and landing slots), partly offset by
$55.5 million in proceeds from disposition of assets which includes
insurance proceeds related to the jet aircraft involved in the
September 1994 accident. Net cash provided by financing activities
was $70.2 million, which includes $172.2 million net proceeds
received by USAir upon the sale of $175 million principal amount of
9 5/8% Senior Notes due 2001 through an underwritten public
offering, offset by $102.0 million of scheduled debt payments. In
addition, as discussed above, USAir incurred $270.6 million of debt
upon delivery of five 757-200 aircraft and to satisfy equipment
deposit progress payments.

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<PAGE>

During 1993, USAir's investment in new aircraft acquisitions
and purchase deposits totaled $469.2 million (which includes $343.2
million presented as "non-cash" on USAir's consolidated statement
of cash flows because debt was incurred upon delivery of aircraft
or to satisfy equipment deposit progress payments). USAir took
delivery of 11 Boeing 757-200, one Boeing 767-200ER, and six
McDonnell Douglas MD-82 aircraft during the year. The MD-82s were
immediately sold to a third party. In addition, in January 1993
USAir sold two other MD-82 aircraft which had been delivered in the
fourth quarter of 1992. Proceeds from the sale of the MD-82s
approximated $168 million. USAir completed financing arrangements
for, or internally funded, all of its 1993 aircraft expenditures.
The financing arrangements included the $337.7 million issue of
Pass Through Certificates which USAir sold through an underwritten
public offering on November 1, 1993. USAir invested $150.8 million
in non-aircraft property during 1993 (e.g., ground support
equipment, computer equipment, software, aircraft rotables and hush
kits, take-off and landing slots).

On July 8, 1993, USAir sold $300 million principal amount of
10% Senior Notes due 2003 ("10% Notes") through an underwritten
public offering. The offering netted proceeds of approximately $294
million. The 10% Notes are unconditionally guaranteed by USAir
Group.

All net proceeds received by USAir from the sale of the 10%
Notes and the 9-5/8% Notes were added to the working capital of
USAir for general corporate purposes.

As of December 31, 1995, USAir's ratio of current assets to
current liabilities was .60 to 1 and the debt component of USAir's
capitalization structure was greater than 100% due to the existence
of a net capital deficiency.

BUSINESS
--------

USAir, a certificated air carrier engaged primarily in the
business of transporting passengers, property and mail, is the
principal operating subsidiary of USAir Group, and accounted for
approximately 93% of USAir Group's operating revenues for the
fiscal year ended December 31, 1995. USAir enplaned more than 57
million passengers in 1995 and is the fifth largest United States
air carrier ranked by RPMs flown. As of December 31, 1995, USAir

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<PAGE>

provided regularly scheduled jet service through 108 airports to
approximately 143 cities in the continental United States, Canada,
Mexico, France, Germany, and the Caribbean. USAir added service to Italy
and Spain in 1996. USAir's executive offices are located at 2345
Crystal Drive, Arlington, Virginia 22227 (telephone number (703) 418-
7000), and its primary connecting hubs are located at the Pittsburgh,
Charlotte/Douglas, Philadelphia and Baltimore/Washington International
Airports. As discussed below in "Significant Impact of Low Cost, Low
Fare Competition," a substantial portion of USAir's RPMs are flown
within or to and from the eastern United States. USAir also maintains
significant operations at major airports in the large east coast
population centers of Boston, LaGuardia and Washington National. When
measured by departures, USAir is the largest or second largest airline
at each of the foregoing airports and is the predominant air carrier
in many smaller eastern cities, such as Albany, Buffalo, Hartford,
Providence, Richmond, Rochester and Syracuse. In addition, USAir is
the leading airline from the Northeast to Florida. For fiscal year
1995, approximately 36% of all scheduled flights on the east coast of
the United States were USAir flights. Approximately 64% of USAir's
flights and 44% of its ASMs are represented by intra-east coast
flying.

USAir has an important international alliance with BA, a major
investor in USAir Group. As of December 31, 1995, the two air carriers
had implemented code sharing from 70 of the 138 airports currently
authorized by the United States DOT. The USAir/BA alliance also
extends to the sharing of ground services at certain airports and
joint cooperation in areas such as product branding, cargo services, jet fuel
purchasing, frequent traveler programs and maintenance services. In June 1996,
BA and American jointly announced that they intend to enter into an extensive
alliance and code-sharing arrangement, subject to regulatory approvals in the
United States and the United Kingdom. American is the second largest domestic
airline and a major competitor of USAir. USAir has stated that it is reviewing
the proposed alliance and how, if approved, the BA/American alliance might
affect USAir and its relationship with BA. USAir has stated that it will act in
the best interests of its shareholders, employees and communities served.

USAir also code shares with eleven regional airline affiliates
operating under the "USAir Express" trade name. USAir has entered
into service agreements with each of the USAir Express carriers.
Through its service agreements, USAir provides reservations and, at
certain stations, ground support and other services, in return for
service fees. USAir Group owns three of the USAir Express carriers
- - Piedmont, Allegheny and PSA. The USAir Express network feeds
traffic into USAir's route system at several points, including its
major hub operations at Pittsburgh, Charlotte, Philadelphia and
BWI. At December 31, 1995, USAir Express carriers served 176
airports in the United States, Canada and the Bahamas, including 76
also served by USAir. During 1995, USAir Express' combined
operations enplaned approximately 9.6 million passengers, over half
of whom connected to USAir flights. USAir also has a management
agreement and code shares with Shuttle, Inc. operating under the
name "USAir Shuttle." The USAir Shuttle operates frequent service
between LaGuardia and Boston and between LaGuardia and Washington
National.

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<PAGE>

In January 1996, Stephen M. Wolf was appointed Chairman and Chief Executive
Officer of USAir and of USAir Group. Mr. Wolf succeeded Seth E. Schofield, who
retired after 38 years with USAir. Mr. Wolf has been a senior executive at
United, Flying Tigers, Republic, Continental, Pan Am and American. In addition,
in February 1996, USAir appointed Rakesh Gangwal as President and Chief
Operating Officer of USAir and USAir Group and Lawrence M. Nagin as Executive
Vice President - Corporate Affairs and General Counsel of USAir and USAir Group.
Mr. Gangwal has been a senior officer at Air France and United and Mr. Nagin has
held senior positions at United and Flying Tigers.

[remainder of page left blank intentionally]

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<PAGE>

Strategy
- --------

USAir recorded a net loss of $54.9 million for the first three months of
1996 compared to a $101.8 million loss for the first three months of 1995. USAir
recorded net income of $33.0 million in 1995, its first profitable year since
1988. From 1989 through 1994, USAir incurred substantial losses. Its results of
operations have been adversely affected by, among other factors, the growth of
low cost, low fare competition, particularly in 1994, and its unit costs, which
are among the highest of United States air carriers. USAir has been striving to
improve its profitability and respond to the competitive environment that
characterizes the United States airline industry by:

- Rationalizing the level and geographic distribution of capacity;

- Improving product and delivery; and

- Reducing capital requirements and operating costs.

- Stephen M. Wolf, Chairman of the Board of Directors and Chief Executive
Officer of both USAir Group and USAir, and Rakesh Gangwal, President and Chief
Operating Officer of both companies, have held a series of employee meetings
where they presented their assessment of USAir's competitive position. The focal
point of these meetings was to communicate senior management's belief that USAir
must lower its personnel costs, increase employee productivity, increase the
quality of USAir's service and customer satisfaction and grow in size to ensure
long-term viability. The Chairman made a similar presentation at USAir Group's
annual meeting of stockholders in May 1996. USAir remains committed to reducing
USAir's personnel costs and improving employee productivity. With regards to the
grown of USAir, USAir believes that internal growth is preferable but has not
excluded other alternatives.

Capacity and Route Rationalization
- ----------------------------------

Beginning in the spring of 1995, USAir instituted a significant
rationalization of its capacity and routes with the goal of reducing less
profitable non-hub (point-to-point) flying, emphasizing the quality of
departures versus the quantity of flights, reducing excess capacity in strong
markets and replacing low demand

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<PAGE>

jet service with modern turboprop aircraft operated by USAir Express. The effect
of USAir's rightsizing plan has been a reduction in the number of USAir's
departures and its capacity. In the second half of 1995, departures decreased by
17% and capacity (as measured by ASMs) decreased 10.8% compared to the second
half of 1994. Although USAir's traffic also declined as a result of this plan,
USAir was successful in retaining a significant portion of the revenue and
traffic from eliminated flights. In the second half of 1995, USAir achieved a
record load factor of 66.2%. For the full year 1995, USAir's load factor also
set a record at 64.7%. Load factors for the first quarters of 1996 and 1995 were
64.6% and 59.7%, respectively, a 4.9 point improvement. For fiscal year 1995,
USAir's departures, capacity and traffic were down by 10%, 4.7% and 0.9%,
respectively. In addition, by December 31, 1995, USAir non-hub flying
represented less than 10% of its total flying, compared to approximately 18% at
December 31, 1994.

USAir has been seeking to broaden its route portfolio by leveraging its
strong east coast franchise into expanded transcontinental and international
service from the eastern United States. By diversifying its route structure in
this way, USAir can enhance its long-haul service and increase its average
length of haul. Increasing its average length of haul will enable USAir to
increase the average value of tickets sold and reduce the unit cost of serving
each passenger. In 1995, USAir's average length of haul increased 4.1% to 664
miles from 638 miles in 1994. Average lengths of haul were 673 and 659 miles for
the first quarters of 1996 and 1995, respectively, an increase of 2.1%
year-over-year. Domestically, USAir has added more flights to the west coast
from its hubs. In 1995, USAir retired, sold, returned or otherwise disposed of
37 operating aircraft while adding seven Boeing 757-200s - an aircraft more
suitable for transcontinental operations. At March 31, 1996, USAir operated 34
Boeing 757-200 aircraft and had orders for eight additional 757-200 aircraft to
be delivered in 1998.

Internationally, USAir has expanded service to the Caribbean and has re-
aligned its international routes in an effort to further develop Philadelphia
and Boston as transatlantic gateways. In this regard, the DOT recently granted
USAir a two-year exemption authority to operate to Madrid, Spain from both
Philadelphia and Boston. USAir began service to Madrid from Philadelphia on June
15, 1996. In addition, USAir recently re-aligned its Frankfurt service. It
increased the number of weekly flights from the East Coast from 14 to 21 in June
1995 for the summer season and introduced non-stop service from Philadelphia and
Boston. In February 1996, USAir received final approval from the DOT to
serve

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<PAGE>

Munich, Germany from Philadelphia. USAir inaugurated its
service to Munich on May 23, 1996. The number of weekly USAir
flights to Germany has recently increased to 28. In April 1996,
the DOT granted USAir authority to institute service to Rome, Italy
from Philadelphia with through service from Los Angeles. USAir
inaugurated its service to Rome on June 1, 1996. USAir
estimates that its transatlantic capacity in 1996 (as measured by
ASMs) has increased by approximately 54% compared to 1995. USAir
believes that the further development of international service from
Philadelphia and Boston will enable it to achieve a competitive
advantage by leveraging USAir's existing domestic network with the
strong local transatlantic demand and the favorable geographic
position of these cities.

In May 1996, USAir completed its "wet lease" arrangements with
BA. Under the wet lease arrangements, USAir leased three Boeing
767-200ER aircraft, along with cockpit and cabin crews, to BA in order
to serve three routes between the U.S. and London. USAir is utilizing
the previously wet leased aircraft as part of USAir's expansion of
international service, as discussed above. BA did not exercise its
right on January 21, 1996 to purchase additional preferred stock in
USAir Group, as discussed below in "British Airways Investment
Agreement-Provisions Regarding Additional BA Investments, BA
Announcements Regarding No Additional Investment in USAir Group."

In 1992, USAir reached an agreement with the creditors of the
Trump Shuttle to manage and operate the Trump Shuttle under the
name "USAir Shuttle" for a period of up to ten years. Under the
agreement, USAir Group has an option to purchase the shuttle
operation on or after October 10, 1996 with an exclusive right to
do so until April 10, 1997. USAir believes that the USAir Shuttle
fosters traveler loyalty towards USAir because of the USAir
Shuttle's participation in USAir's FTP.

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<PAGE>

Enhanced Customer Service, Performance and Reliability
- ------------------------------------------------------

Focus on Business Traveler - USAir is expanding the first-
class cabins on a significant portion of its aircraft, expanding
"business centers" in certain airports, upgrading certain USAir
Club facilities and installing GTE Airfone's on-board phone system
to improve service. USAir also improved business passenger
accessibility to the First Class cabin through expansion of a
program which lets a passenger sit in First Class for the price of
a full fare coach ticket. This product is now available in most
transcontinental markets that USAir serves. USAir also believes
that the introduction of its personal travel software, "Priority
Travel-Works", will appeal to many high-volume business travelers
by providing users with more information and greater control over
their travel arrangements. In April 1996, USAir announced that it
was discontinuing its Business Select service. Business Select was
a business class product offered on certain short-haul flights on
certain Boeing 737-200 aircraft. USAir will instead modify the
cabins on those aircraft to increase the size of the first class
cabin.

Technology and New Facilities - In addition to "Priority
TravelWorks," USAir is investing in technology to positively affect
its marketing, operational performance and customer services. USAir
introduced "ticketless travel" (i.e., electronic ticketing) in
April 1996 in order to cut distribution costs and increase
travelers' convenience. USAir is working to expand electronic
ticketing to international service and USAir Shuttle flights.
USAir is also working with major computer reservation systems to
make electronic ticketing available to travel agents. In addition,
USAir is exploring self-ticketing machines which, if expanded from
the test phase, could further reduce distribution costs and save
time for USAir's customers. USAir has also implemented a new
inventory management system that allows it to better allocate seats
within fare levels to maximize revenues. USAir has created a
state-of-the-art operations control center in Pittsburgh. The
center improves operational decision-making by more closely
coordinating all flight-related functions such as dispatching,
aircraft routing, maintenance and technical support, crew
scheduling and passenger services.

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<PAGE>

Improved Service Levels - USAir has improved both its
operational performance and attention to customer services. In
1994, USAir ranked ninth in on-time performance among the ten major
United States airlines. USAir substantially improved its on-time
performance in 1995. USAir is also implementing customer service
enhancements in its international operations and is investing in the
training and development of its customer service employees through a
"Core Curriculum Training Program."

Safety - USAir recently implemented several additional safety
initiatives. In November 1994, USAir created a new position of
Vice President-Corporate Safety and Regulatory Compliance. In
1995, USAir established a committee of its board of directors, the
Safety Committee, which has oversight of all corporate safety
matters. In addition, USAir retained an aviation consulting firm,
to conduct a full audit of USAir's safety operations. The audit
was completed in early 1995. In the opinion of the safety
auditors, USAir was being operated safely in compliance with FAA
regulations.

Cost Reductions
- ---------------

Operating Costs - USAir, whose operating costs are the highest
among the major U.S. airlines, is actively pursuing several
initiatives in an effort to reduce these costs significantly. USAir
is working to achieve or has already achieved substantial cost
savings through a combination of organizational and structural
changes, reengineering and other initiatives including: centraliza-
tion of its purchasing functions; realignment of customer services;
improvements in operations performance to increase crew productivity;
outsourcing of cargo and communications; and reengineering of
its maintenance operations, finance, reservations, purchasing,
accounts payable, payroll and human resources functions.

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<PAGE>

USAir has also taken other cost-cutting actions. In October
1995, USAir closed its Reno, Nevada reservations office as part of
its long-term strategy to reduce costs and improve productivity.
The closing affected approximately 260 employees. USAir believes
that the reservations office in San Diego is adequate to handle
west coast customers as well as overflow calls from the East during
irregular operations. USAir reduced the number of daily departures
at Newark International Airport from 51 as of December 31, 1994 to
14 by December 1995, and plans to eliminate several additional
departures in the coming months, as part of its strategy to use
assets where they can be the most productive. The changes have
resulted in lower staffing levels in customer service and mainte-
nance.

In February 1995, USAir and several other major U.S. carriers,
including Delta, American, Northwest and United, imposed limits on
the base commissions they pay travel agents for domestic air fares.
See "-Industry Restructuring and Cost-Cutting." The new limits on
commissions are designed to reduce one of the airlines' largest
expenses. USAir has experienced cost savings due to the new
commission limits.

In March 1994, in an attempt to reduce its annual labor
personnel costs by approximately $500 million through concession
agreements involving wage and benefit reductions, improved
productivity and other cost savings, USAir Group began negotiating
with the unions that represent certain of USAir's employees.
USAir's wages and benefits are the largest single component of its
operating costs (approximately 41% for 1995). In late July 1995,
USAir Group announced that it was ending discussions with the
unions on a wage concession and restructuring package and that it
would concentrate on reducing USAir's labor costs through tradi-
tional collective bargaining. See "Employees" USAir remains
committed to obtaining labor cost reductions.

Aircraft Commitments - In an attempt to reduce aircraft
ownership costs, facilitate its capacity rationalization plan and
reduce its fleet size and number of fleet types, USAir has deferred
certain new aircraft deliveries, pursued the sale or lease of
certain jet aircraft and declined to renew leases for certain other
aircraft upon lease expiry. In 1995, USAir sold, leased, retired
or disposed of 37 operating aircraft (including the sale of
thirteen Boeing 737-300 aircraft) and eliminated all Boeing 727-
200s from its operating fleet. USAir recorded a small financial
statement gain from the sales of the above-described 737-300
aircraft to leasing companies. USAir intends to lease, sublease,
retire or return to the lessors additional Fokker F28-4000s
and Douglas DC-9-30s in 1996 and 1997.

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<PAGE>

USAir has no current plans to add new aircraft to its fleet until January
1998. In May 1994, USAir reached an agreement with Boeing, to reschedule the
delivery of 40 737-series aircraft from the 1997 through 2000 time period to the
years 2003 through 2005. As part of the same agreement, USAir relinquished all
of its options to purchase 737-series, 757-series and 767-series aircraft during
the 1996 through 2000 time period. In June 1995, USAir reached agreements with
Boeing and Rolls Royce to reschedule the delivery dates for eight 757-200
aircraft from 1996 to 1998. As a result, USAir's capital commitments have been
substantially reduced for the 1996 to 2000 time period. In addition, with
application of the proceeds from the sale of the Old Notes on February 16, 1996,
USAir has committed financing for a substantial portion of the purchase price
for each of the scheduled 1998 deliveries.

In May 1991, USAir ceased operating its fleet of British Aerospace BAe-146
("BAe-146") aircraft and USAir has not resumed operation of these aircraft.
USAir owns one and leases or subleases 17 BAe-146 aircraft. USAir has continued
to pay rent, insure (or cause to be insured) the aircraft and perform (or cause
to be performed) its other obligations under the BAe-146 leases, except that,
for those BAe-146s that remain in storage, USAir has not performed mandatory
airworthiness directives on certain of those aircraft as required by such
leases. The stored BAe-146s are being preserved in accordance with FAA-approved
procedures and manufacturer guidelines. In the fourth quarter of 1994, USAir
recorded a non-recurring charge of approximately $132.8 million for the BAe-146
aircraft. During 1994, USAir again evaluated the secondary market for BAe-146
aircraft and determined that it was probable that USAir would not be successful
in its efforts to sublease or otherwise dispose of these aircraft prior to lease
expiry. Accordingly, USAir did not include a provision for any potential
subleasing activity in determining the amount of the 1994 charge. USAir has had
recent success, however, in remarketing the BAe-146 fleet. This change is based
in large part on a favorable change in market conditions attributible to, among
other factors, a shortage in certain markets of narrowbody aircraft that comply
with applicable noise regulations and the engine manufacturer recently offering
maintenance cost guarantees for the BAC-146's Avco-Lycoming engines. As of June
28, 1996, USAir has delivered seven BAe-146 aircraft to European airlines and
has entered into sublease agreements with foreign and domestic airlines for six
additional BAe-146 to be delivered in 1996. As a result of USAir's ability to
sublease some of the grounded aircraft, USAir reversed $4.1 million of the 1994
charge of $132.8 million for BAe-146s during the fourth quarter of 1995. USAir
intends to make additional reversals in the second quarter of 1996.

General Industry Conditions
- ---------------------------

Demand for air transportation historically has tended to mirror general
economic conditions. During the most recent economic recession in the United
States, the change in industry capacity

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<PAGE>

failed to mirror the reduction in demand for domestic air transpor-
tation due primarily to continued delivery of new aircraft and,
secondarily, to the operation of certain major U.S. carriers under
the protection of Chapter 11 of the Bankruptcy Code for extended
periods. While industry capacity has leveled off and the general
economy has improved, USAir expects that the airline industry will
remain extremely competitive for the foreseeable future, primarily
due to the dramatic change which has occurred in industry pricing
and which has resulted in generally lower fares. See "-Significant
Impact of Low Cost, Low Fare Competition."

In 1995, the U.S. airline industry had its best year since the
recession began in July 1990, with several airlines posting
profits, although many of the major carriers continue to be
burdened with large amounts of debt. Unlike the results of some of
its competitors, USAir's results did not improve in 1994. USAir
experienced a pre-tax loss of $716.2 million in 1994. The entire
airline industry experienced further improved results in 1995.
USAir's results improved in 1995 as well. Nonetheless, USAir
believes that for the foreseeable future, while the demand for
higher yield "business fares" will remain essentially flat and
relatively inelastic, the lower yield "leisure" market, which is
affected by the general economy, will remain highly price sensi-
tive. This trend will make it more difficult for the domestic
airlines, including USAir, to sustain meaningful yield increases in
the long run. In addition, USAir recorded a net loss in the first
quarter of 1996 while the other United States majors posted
positive earnings for the same period. Therefore, USAir believes
it must reduce its cost structure substantially in order to ensure
its long-term financial stability.

Significant Impact of Low Cost, Low Fare Competition
- ----------------------------------------------------

Most of USAir's operations are in competitive markets. USAir
experiences competition of varying degrees with other air carriers
and with all forms of surface transportation. USAir competes with
at least one major airline on most of its routes between major
cities. Vigorous price competition exists in the airline industry,
and competitors have frequently offered sharply reduced discount
fares in many of these markets. Airlines, including USAir, use
discount fares and other promotions to stimulate traffic during
normally slack travel periods, to generate cash flow and to
increase relative market share in selected markets. Discount and
promotional fares are often subject to various restrictions such as
minimum stay requirements, advance ticketing, limited seating and

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<PAGE>

refund penalties. USAir has often elected to match discount or promotional fares
in certain markets in order to compete vigorously in those discounted markets.

The dramatic expansion of low fare competitive service in many of USAir's
markets in the eastern United States during 1994 and USAir's competitive
response of reducing its fares up to 70% in certain affected primary and
secondary markets in order to preserve its market share contributed to large
losses in 1994. In particular, Continental created a high frequency, low fare
product called "Continental Lite." By late 1994, USAir competed with Continental
in primary and secondary markets from which USAir then generated 46% of its
passenger revenue with fare reductions of up to 70% in certain markets. As
discussed below, in 1995 the airline industry did not generally experience the
deep level of fare discounting prevalent during the last several years.
Continental abandoned its Continental Lite strategy in 1995 and fare levels have
somewhat recovered. Nonetheless, USAir does not believe that there has been a
reduction in the public demand for generally lower air fares. The growth of the
operations of low cost, low fare carriers in USAir's markets in domestic markets
represents an intense competitive challenge for USAir, which has higher
operating costs and fewer financial resources than many of its competitors. For
example, the expansion of Southwest into BWI, Florida and the Northeast poses a
competitive challenge for USAir. Southwest has a significant cost advantage over
USAir. USAir believes that it must reduce its operating costs substantially if
it is to ensure its long-term financial stability and that low-cost incursions
into markets served by USAir could have a material and adverse affect on USAir's
financial condition and results of operations.

In addition, other low cost carriers may enter other USAir markets. For
example, America West commenced service in April 1994 between Columbus, Ohio,
where it operates a hub, and Philadelphia, where USAir has a hub operation.
Other carriers, including some of the larger carriers, have also developed or
indicated their intent to develop similar low fare short-haul service, such as
United's low cost, low fare operation in the western United States discussed
below. Delta has procured concessions from its pilot union that would enable
Delta to start a low cost, short-haul service to compete with airlines such as
Southwest. Delta is presently the second largest airline on the East Coast of
the

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<PAGE>

United States. It is possible that this service might be
introduced in markets that USAir serves, which may result in
greater competition and lower fares in those markets. USAir has
stated that it will be competitive on routes that are important to
USAir and has underscored the necessity of cutting costs to remain
competitive with insurgents on these routes.

Industry Restructuring and Cost-Cutting
- ---------------------------------------

Major carriers that compete with USAir have implemented, or
are in the process of implementing, measures to reduce their
operating costs. For example, United has substantially reduced its
personnel costs as part of a recapitalization transaction completed
in July 1994. United initiated its low cost, low fare operation in
the western U.S. in October 1994. Delta reached agreement with
certain of its employees regarding concessions. Delta has also
recently turned over several of its former routes to Delta
Connection code-share carriers that have lower cost structures.
American announced a restructuring of its non-union workforce and
is still seeking substantial concessions and productivity gains
from its pilot group. TWA has negotiated productivity improvements
with its unionized employees and has recently emerged from
bankruptcy for the second time in less than two years pursuant to
a "pre-packaged" reorganization plan approved by a bankruptcy court
which reduces the carrier's debt by approximately 30%. Continental
has reduced capacity and returned non-productive aircraft to
lessors. In early 1995, Southwest announced that its pilots had
ratified a 10-year labor contract that provides for no wage
increases in the first five years, providing for grants of stock
options to the pilots instead. USAir expects that the
implementation of this labor contract will further enhance
Southwest's low cost advantage over USAir and other carriers.
These actions by certain of USAir's competitors illustrate the
trend among the major U.S. airlines to restructure in order to
reduce their operating costs and enable them to compete in a low
fare environment. See "Strategy" and "Capacity and Route Rational-
ization" above for a discussion of USAir's cost reduction initia-
tives.

- 97 -
<PAGE>

and board membership for certain employee groups in exchange for
concessions. In other cases, airlines have filed for bankruptcy
protection under Chapter 11 of the Bankruptcy Code, and some
airlines have ceased operation altogether when their operating
costs remained excessive in relation to their revenues, and their
liquidity became insufficient to sustain their operations.

In 1995, various carriers, including USAir, implemented
cutbacks in service in the eastern U.S. The "intra-east coast"
area represents approximately 64% of USAir's departures and
approximately 44% of its ASMs. USAir has implemented a plan to cut
capacity throughout its system and to emphasize the strength of its
hubs in Pittsburgh, Charlotte, Philadelphia and Baltimore, as well
as other major east coast urban centers. See "Strategy" and
"Capacity and Route Rationalization" above. The major carriers
decreased service in the East by approximately 9.8% year-over-year.
However, several smaller carriers increased the number of depar-
tures in this region during the same time period or have announced
plans to introduce or increase service in this region. The net
result was a decrease in jet capacity in the intra-east coast
region of approximately 3.5% for the full year 1995 from 1994
levels.

The trend toward globalization of the airline industry has
accelerated in recent years as certain U.S. carriers, including
USAir, have formed marketing and strategic alliances with foreign
carriers. Certain foreign carriers have made substantial invest-
ments in U.S. carriers which have frequently been tied to marketing
alliances or, less frequently, reciprocal investments by the U.S.
carrier in its foreign partner. Foreign investment in U.S. air
carriers is restricted by statute and may be subject to review by
the DOT and, on antitrust grounds, by the DOJ.

In February 1995, several major U.S. carriers, including
Delta, American, Northwest, United and USAir, imposed limits on the
base commissions they pay travel agents for domestic air fares.
Formerly, most major airlines paid a fixed base commission of
approximately 10% on the price of a ticket for the distribution of
all domestic tickets. The new cap limits base commission payments
to $50 for a round-trip domestic ticket with a base fare above $500
and $25 for a one-way domestic ticket with a base fare above $250.
The new limits on commissions are designed to reduce one of the
airlines' largest expenses. USAir has experienced cost savings
through its implementation of a limit on the commissions it pays
travel agents for domestic air fares. As a result of the new
limits on commissions, some travel agents have filed lawsuits
against the airlines that imposed commission caps, including USAir,
claiming that the airlines violated antitrust laws. See "Legal
Proceedings."

- 98 -
<PAGE>

Deferral of Dividends by USAir Group
- ------------------------------------

On September 29, 1994, USAir Group announced that it was
deferring the quarterly dividend payment due September 30, 1994 on
the 358,000 outstanding shares of its Series A Preferred Stock. The
Series A Preferred Stock is owned by affiliates of Berkshire.
USAir Group has also deferred quarterly dividend payments on all of
its other outstanding series of preferred stock, including the
Series F Preferred Stock and the Series T Preferred Stock which is
owned by BA, as well as on the publicly held Series B Preferred
Stock. On March 13, 1995, Berkshire announced that it had recorded
a pre-tax charge of $268.5 million to recognize a decline in the
value of its investment in the Series A Preferred Stock that had an
original cost of $358 million. On May 22, 1995, BA announced that
it had made a $200 million provision against its $400 million
investment in preferred stock of USAir Group. USAir Group has not
paid a dividend on its Common Stock, since the second quarter of
1990. As of June 28, 1996, the board of directors of USAir Group had
not authorized the resumption of any dividends on USAir Group's
preferred stock or Common Stock and there can be no assurance when
or if such dividend payments will resume.

Under the terms of the Series A Preferred Stock, Berkshire has
the right to elect two additional directors to the board of
directors of USAir Group after a scheduled dividend payment has not
been paid for thirty days. Berkshire has informed USAir Group that
it does not intend to exercise this right at this time. Berkshire's
Chairman Warren E. Buffett and Vice Chairman Charles T. Munger
served as directors on USAir Group's and USAir's boards of
directors from January 27, 1993 until November 28, 1995. They did
not stand for re-election as directors in November 1995. Under the
terms of the Series B Preferred Stock, the holders of that security
have the right to elect two additional directors to the board of
directors of USAir Group if six quarterly dividends are not paid.
That right became effective on February 15, 1996. In May 1996,
Berkshire offered to sell the Series A Preferred Stock to USAir
Group. Berkshire has advised that if USAir Group does not buy back
the shares from Berkshire, Berkshire may sell the Series A
Preferred Stock to third parties but Berkshire has stated it will
not knowingly sell the shares to any person who would own 3% or
more of a voting stake in USAir Group as a result of the purchase.
As of March 31, 1996, USAir believes that USAir Group was legally
prohibited from paying dividends on or redeeming its capital stock

- 99 -
<PAGE>

in accordance with Section 170 of the Delaware General Corporation
Law. A requisite percentage of Series B Preferred Stockholders
informed USAir Group that they would be pursuing the right to elect
two additional directors to the Company's board of directors and they
have provided the name of one such nominee to USAir Group. If
Berkshire were also to exercise its right to elect two directors,
BA would have the right to designate an additional nominee for
election as director to the board of directors of USAir Group
pursuant to the Investment Agreement.

Likelihood of No Future Investments by British Airways
- ------------------------------------------------------

As described in greater detail in "British Airways Investment
Agreement" below, on January 21, 1993, USAir Group and BA entered
into the Investment Agreement. BA invested approximately $400
million in certain preferred stock of USAir Group in accordance
with the Investment Agreement. The deadline for BA's election to
purchase a certain series of preferred stock of USAir Group and
therefore, to elect to make any further investment in USAir Group
pursuant to the Investment Agreement, was January 21, 1996 (except
that, if the DOT shall approve all of the transactions contemplated
by the Investment Agreement on or before January 21, 1998, BA may
make additional investments in USAir Group under certain circum
stances). BA declined to make any further investment on or before
the January 21, 1996 deadline. BA stated publicly that it was
precluded from making additional investments under existing DOT
policy and that it did not expect DOT approval to be forthcoming.
Pursuant to the Investment Agreement, BA has the right to maintain
its proportionate ownership of USAir Group's securities under
certain circumstances by purchasing additional shares of certain
series. British Airways has advised USAir Group that it would not
exercise the right (triggered by the issuances of USAir Group
Common Stock pursuant to certain USAir Group benefit plans during
the nine months ended March 31, 1996) to buy additional shares of
Series T Convertible Exchangeable Senior Preferred Stock. See
"Provisions Regarding Additional BA Investments; BA Announcement
Regarding No Additional Investment in USAir Group". In June 1996, BA
and American jointly announced that they intend to enter into an
extensive alliance and code-sharing arrangement, subject to regulatory
approvals in the United States and the United Kingdom. American is the
second largest domestic airline and a major competitor of USAir. USAir
has stated that it is reviewing the proposed alliance and how, if
approved, the BA/American alliance might affect USAir and its
relationship with BA. USAir has stated that it will act in the best
interests of its shareholders, employees and communities served.

- 100 -
<PAGE>

Employees
- ---------

At December 31, 1995, USAir employed approximately 39,900
full-time equivalent employees. USAir employed approximately 4,900
pilots, 9,200 maintenance and related personnel, 10,000 station
personnel, 3,900 reservations personnel, 7,700 flight attendants
and 4,200 personnel in other administrative and miscellaneous job
categories. Approximately 26,100, or 65%, of the employees of
USAir are covered by collective bargaining agreements with various
labor unions, or will be covered by a collective bargaining
agreement for which initial negotiations are in progress.

After negotiating with the leaders of its labor groups since
March 1994 in an attempt to reduce its annual personnel costs by
approximately $500 million, USAir Group had reached an agreement in
principle on March 29, 1995 with the negotiating committee of the
Airline Pilots Association ("ALPA"), which represents USAir's
pilots. During the second quarter of 1995, USAir Group reached
agreements in principle with the International Association of
Machinists and Aerospace Workers ("IAM"), the Association of Flight
Attendants ("AFA") and the Transport Workers Union (the "TWU").
The agreements in principle provided for wage and other concessions
in exchange for equity participation in USAir Group and representa-
tion on USAir Group's board of directors for USAir's employees.
The IAM represents USAir's mechanical and related employees and
USAir's fleet service employees. The AFA represents USAir's flight
attendants. The TWU represents USAir's flight crew training
instructors, flight simulator engineers and dispatch employees.
The tentative agreement with the TWU was with respect to only the
flight crew training instructors. Each of the tentative agreements
was subject to many significant conditions, including union
ratification, negotiation and ratification of acceptable agreements
between USAir and its other labor groups, the restructuring of
holdings by other parties and approval of the boards of directors
of USAir Group and USAir and the stockholders of USAir Group. In
July 1995, the members of the AFA voted against ratification of
their agreement in principle. ALPA made significant additional
demands which were unacceptable and negotiations were thereafter
terminated by USAir Group.

- 101 -
<PAGE>

USAir continues to believe that its long-term future depends
on reduced costs of operation, including especially lower personnel
costs. USAir remains committed to obtaining labor cost reductions.
Talks between USAir and the IAM's advisory counsel continued during
the first quarter of 1996. USAir's contract with ALPA became open
for negotiations on April 30, 1996 and collective bargaining talks
have begun. USAir cannot predict the outcome of these negotiations
at this time or if USAir will be able to secure meaningful wage and
benefit concessions and productivity improvements from its
unionized employee groups.

Historical Cost Reduction Programs
- ----------------------------------

In 1994, USAir implemented measures announced in September
1993 to reduce projected operating costs. These measures included
a workforce reduction of approximately 2,500 full time positions.
However, USAir's ability to implement additional workforce
reductions is currently limited by its existing labor contracts.
Due to the inclusion of "no furlough" provisions in its current
labor agreements with ALPA and the AFA, USAir may not furlough
employees covered by those agreements for specified periods of
time.

In 1992 and 1993, USAir reached agreement on new contracts
with ALPA with respect to USAir's pilot employees, the IAM with
respect to USAir's mechanics and related employees, the AFA with
respect to its flight attendant employees, and the TWU with respect
to 170 flight dispatch employees and approximately 60 USAir flight
simulator engineers. Each contract (except the contract covering
the flight dispatch employees) provided for wage reductions and
suspension of longevity/step increases for a twelve-month period
beginning shortly after the effective date of the contract. The
wages of each such group of employees reverted to pre-reduction
levels at the expiration of the relevant twelve-month period and
were subsequently increased in accordance with the relevant
contract. Pursuant to their contracts, the pilots, the IAM-repres-
ented employees, the flight attendants and the flight simulator
engineers also agreed to participate in contributory managed care
medical and dental programs. The flight dispatch employees also

- 102 -
<PAGE>

participated in wage reductions, suspensions of longevity/step
increases and contributory managed care medical and dental programs
because of their non-contract status when those measures were
implemented for non-contract employees, as described in the
following paragraph.

None of the above groups of employees, other than a small
group of flight simulator engineers, is currently scheduled to
receive further wage increases under the terms of its contract.
However, members of all such groups, including the mechanics and
related employees and the flight dispatch employees, are entitled
to wage increases based on longevity. Each contract provides for
productivity improvements. The defined benefit pension plans for
the flight dispatch employees and the flight simulator engineers
have been frozen.

In accordance with its previously announced policy, when ALPA
agreed to the cost reduction program described above, USAir
implemented wage reductions and suspension of longevity/step
increases on its non-contract employees for the twelve-month period
commencing in June 1992. Earlier in 1992, USAir had implemented
the contributory managed care medical and dental programs for
non-contract employees. Prior to January 1, 1992, USAir exclusive-
ly paid contributions to the basic defined benefit pension plan for
its non-contract employees. USAir froze this pension plan at the
end of 1991, which resulted in a one-time book gain of approximate-
ly $107 million for 1991. USAir implemented a defined contribution
pension plan for these employees on January 1, 1993, which is
composed of three components: contributions by USAir based on age
and a percentage of salary, a partial match by USAir of employee
contributions to a savings plan and a profit sharing plan.

Taken together, the above measures provided for temporary wage
reductions and suspension of longevity/step increases in wages that
USAir estimates saved approximately $120 million during the period
June 1992 through March 1994. These concessions provided for
productivity improvements which saved USAir approximately $55
million during the same period. All employees affected by these
changes also agreed to participate in contributory managed care
medical and dental programs which result in savings for USAir. In
exchange for the concessions agreed upon by its unionized employ-
ees, USAir included "no furlough" provisions in each of the new
labor agreements with ALPA, the IAM and the AFA, which prohibit (or
prohibited) USAir from furloughing employees hired on or before the
effective date of the agreements through September 30, 1995 in the

- 103 -
<PAGE>

case of the agreement with the IAM for mechanics and related
employees, through December 31, 1996 in the case of the agreement
with the AFA, and through June 30, 1997 in the case of the
agreement with ALPA.

USAir recorded a non-recurring charge of approximately $36.8
million in the fourth quarter of 1993 based on a projection of the
repayment of the amount of the temporary wage and salary reductions
discussed above in the event that the employees who sustained the
pay cuts leave the employ of USAir. USAir has adjusted and will
adjust this accounting charge in subsequent periods to reflect the
change in the present value of the liability and changes in
actuarial assumptions including, among other things, actual
experience with the rate of attrition for these employees and
whether such employees have received payments under the profit
sharing program discussed in the next paragraph.

In exchange for the temporary wage and salary reductions and
other concessions during a twelve month period in 1992 and 1993
described above, including the freeze of the defined benefit plan
for non-contract employees, affected employees participate in a
profit sharing program and have been granted options to purchase
USAir Group Common Stock. The profit sharing program is designed
to recompense those employees whose pay has been reduced in an
amount equal to (i) two times salary foregone plus; (ii) one times
salary foregone (subject to a minimum of $1,000) for the freeze of
the pension plans described above. Estimated savings of approxi-
mately $23 million attributable to the suspension of longevity/step
increases will not be subject to repayment through the profit
sharing program. Until the maximum payout has been made, annual
pre-tax profits, as defined in the program, of USAir Group would be
distributed to participating employees as follows:

25% of the first $100 million in pre-tax profits;
35% of the next $100 million in pre-tax profits; and
40% of the pre-tax profits exceeding $200 million.

Calculation of profits under the profit sharing plan excludes
charges for postretirement benefit expenses other than for pensions
(approximately $78.6 million for 1995) and certain unusual items.
This program will be in effect until USAir employees are recom-
pensed for two times salary foregone or three times for employees
who also had pension benefits foregone. The plan is independent of
the profit sharing plan which is an element of the new defined
contribution pension plan for non-contract employees discussed
above. Based on USAir Group's 1995 results and the provisions of

- 104 -
<PAGE>

the profit sharing plan, USAir recognized charges of approximately
$49.7 million under this plan in 1995. Since certain amounts have
been expensed in prior years, even though 1995 was USAir's first
profitable year since the inception of the plan, the cash payout
for 1995 will be approximately $73.7 million and will be made to
employees covered by the provisions of this plan in the first
quarter of 1996.

Under the stock option program, employees whose pay was
reduced received options to purchase 50 shares of USAir Group
Common Stock at $15 per share for each $1,000 of salary reduction.
The options became exercisable following the twelve-month period of
the salary reduction program for each group of employees.
Generally, participating employees have five years from the grant
date to exercise such options. As of December 31, 1995, USAir Group
had granted options to purchase approximately five million shares
of Common Stock to USAir employees under the program.

ALPA Contract: Effects of a Change of Control of USAir Group or
USAir
- -------------------------------------------------------------------

USAir's current labor contract with ALPA provides that in the
event of a "change of control" of USAir Group or USAir, ALPA will
have the right to extend the duration of the contract for one, two
or three years at its option beyond the amendable date of the
agreement with across-the-board wage increases of 4.5% on April 30,
1996 and on each anniversary thereof for the following three years.
A "change of control" is defined as a single transaction or
multi-step related transactions through which (i) securities which
constitute and/or are then currently exchangeable into, exercisable
for or convertible into 50% or more of the outstanding Common Stock
(and Common Stock then currently issuable upon the exchange,
exercise or conversion of securities) and/or (ii) 50% or more of
the value of the assets of USAir Group or USAir, are acquired or
held by a single purchaser or a group of purchasers acting in
concert.

- 105 -
<PAGE>

Unionizing Efforts
- ------------------

During 1994, certain unions engaged in efforts to unionize USAir's fleet
service employees. The RLA governs, and the NMB has jurisdiction over, campaigns
to unionize workers. After the IAM won a runoff election, on July 22, 1994 the
NMB certified the IAM to represent the fleet service class or craft. Under the
RLA, which governs labor relations in the airline industry, USAir is obligated
to negotiate a collective bargaining agreement with the IAM governing the terms
and conditions of employment for the fleet service employees. This obligation
does not require USAir to agree to any particular term or condition sought by
the IAM.

On June 3, 1994, after determining that the United Steel Workers of
America ("USWA") had submitted a sufficient number of authorization cards, the
NMB ordered an election among USAir's passenger service employees, a class or
craft of approximately 10,000 workers consisting primarily of USAir's ticket
counter/gate agents and reservations agents, to determine whether the USWA or
other union would represent these employees. The NMB mailed ballots to eligible
passenger service employees on July 19, 1994 and tabulated the ballots on August
18, 1994. Less than a majority of the eligible passenger service employees voted
in favor of representation and, as a result, no union represents the passenger
service employees at this time.

Certain unions are again engaged in efforts to unionize USAir's passenger
service employees. Under the RLA, the NMB could order an election among a class
or craft of eligible employees if a union submitted an application to the NMB
supported by the authorization cards from at least 35% of the applicable class
or craft of employees. If the NMB ordered an election and a majority of the
eligible employees voted for representation, USAir would be required to
negotiate a collective bargaining agreement with the union that wins the
election. On April 24 and 25, 1996, respectively, the IAM and the Communications
Workers of America filed applications with the NMB requesting that an election
be held among USAir's passenger service workers. The NMB is in the process of
determining whether these applications are supported by sufficient authorization
cards to warrant an election. USAir cannot predict whether an election will be
held among the passenger service class or craft, or the outcome of the election,
if held.

- 106 -
<PAGE>

Status of USAir's Labor Agreements
- ----------------------------------
<TABLE>
<CAPTION>

The following table presents the status of USAir's labor
agreements as of December 31, 1995:

Expiration
Approximate Date Date of
Number of Contract "No-Furlough"
Union Class or Craft Employees Amendable Clause
- ----- ----------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
AFA flight attendants 7,700 1/97 12/31/96

ALPA pilots 4,900 5/96 (2) 6/30/97

IAM mechanics and
related employees 7,800 10/95 (2) 9/30/95

IAM fleet service
employees 5,400 (1) (3) -

TWU flight crew training
instructors, flight
simulator engineers
and dispatch employees 270 8/96-8/97 (4) -

(1) Estimated number of employees who will be covered under this
new contract.
(2) Currently in negotiations.
(3) Initial contract in negotiation.
(4) Separate contracts cover the flight crew training instructors,
the flight simulator engineers and the dispatch employees.

</TABLE>

- 107 -
<PAGE>

Computerized Reservation Systems
- --------------------------------

At December 31, 1992, USAM Corp. ("USAM"), a subsidiary of
USAir, owned 11% of the Covia Partnership ("Covia") which owned and
operated a computerized reservation system ("CRS"). In September
1993, Covia purchased the assets of the corporation that owned and
operated the Galileo CRS which provided CRS services to travel
agent subscribers in Europe. Covia was then separated into three
entities. As a result, at December 31, 1995, USAM owned 11% of the
Galileo International Partnership, approximately 11% of the Galileo
Japan Partnership and approximately 21% of the Apollo Travel
Services Partnership. USAir's equity in the earnings of such partnerships
for the first quarter of 1996 and for the years 1995 and 1994
was as follows:

($ thousands) 1st QTR 1996 1995 1994
-------- ---- ----
<S> <C> <C> <C>
Apollo Travel Services (ATS) $5,338 $20,709 $20,089
Galileo International Partner-
ship (GIP) 5,500 14,032 6,081
Galileo Japan Partnership (GJP) 163 546 365

</TABLE>

The Galileo International Partnership owns and operates the
Galileo CRS. Galileo Japan Partnership markets CRS services in
Japan. Apollo Travel Services markets CRS services in the U.S. and
Mexico. Galileo CRS is the second largest of the four CRS systems
in the U.S. based on revenues generated by travel agency subscrib-
ers. A subsidiary of United controls 38% of the partnership, and
the other partners exclusive of USAir's interest are subsidiaries
of BA, Swissair, KLM Royal Dutch Airlines, Alitalia, Air Canada,
Olympic Airways, Austrian Airlines, Aer Lingus and TAP Air
Portugal.

CRSs play a significant role in the marketing and distribution
of airline tickets. Travel agents issue tickets which generate the
majority of USAir's passenger revenues. Most travel agencies use
one or more CRSs to obtain information about airline schedules and
fares and to book their clients' travel.

Frequent Traveler Program
-------------------------

Under USAir's FTP, participants generally receive mileage
credits equal to the greater of actual miles flown or 500 miles,
effective May 1, 1995 (750 miles before May 1, 1995), for each paid
flight segment on USAir or USAir Express, or actual miles flown on
one of USAir's FTP airline partners. Participants generally
receive a minimum of 500 mileage credits, effective May 1, 1995,
for each paid flight on USAir Shuttle (1,000 miles prior to May 1,
1995). Participants flying on first or business class tickets
generally receive additional credits. Participants may also earn
mileage credits by utilizing certain credit cards, staying at
participating hotels or by renting cars from participating car
rental companies. Mileage credits earned by FTP participants,
which do not expire under current program guidelines, can be
redeemed for various travel awards, including fare discounts, first
class upgrades and tickets on USAir or other airlines participating
in USAir's FTP. Certain awards also include hotel and car rental
awards. Awards may not be brokered, bartered or sold, and have no
cash value.

USAir and its airline partners limit the number of seats
allocated per flight for award recipients through inventory
management techniques. The number of seats available for frequent
travelers varies depending upon flight, day, season and destina-
tion. Award travel for all but USAir's most frequent travelers
generally is not permitted on blackout dates, which correspond to
certain holiday periods in the United States or peak travel dates
to foreign destinations. USAir reserves the right to terminate the
FTP or portions of the program at any time, and the FTP's rules,
partners, special offers, blackout dates, awards and mileage levels
are subject to change without prior notice.

USAir accounts for its FTP under the incremental cost method,
whereby estimated future travel awards are valued at the estimated
average incremental cost of carrying one additional passenger.
Incremental costs include unit costs for passenger food, beverages
and supplies, fuel, reservations, communications, liability
insurance and denied boarding compensation expenses. No profit or
overhead margin is included in the accrual for incremental costs.
The Company periodically reviews the assumptions made to calculate
its FTP liability for reasonableness and makes adjustments to these
assumptions as necessary. No liability is recorded for airline,
hotel or car rental award certificates that are to be honored by
other parties because there is no cost to USAir for such awards.

Effective January 1, 1995, USAir increased the minimum mileage
level required for a free domestic flight from 20,000 to 25,000.
FTP participants had accumulated mileage credits for approximately
3,350,000 awards and 3,697,000 awards at December 31, 1995 and
1994, respectively, at the 25,000 mile level required to earn an
award. Because USAir expects that some potential awards will never
be redeemed, the calculations of the accrued liability for
incremental costs at December 31, 1995 and 1994 were based on
approximately 87% and 86%, respectively, of the accumulated
credits. Mileage for FTP participants who have accumulated less
than the minimum number of mileage credits necessary to claim an
award is excluded from the calculation of the accrual. Incremental
changes in FTP liability resulting from redeemed or additional
mileage credits are recorded as part of the regular review process.

USAir's customers redeemed approximately 1,160,000, 927,000
and 841,000 awards for free travel on USAir in 1995, 1994 and 1993,
respectively, representing approximately 9.0%, 7.0% and 8.0% of
USAir's RPMs in those years, respectively. USAir does not believe
that usage of FTP awards results in any significant displacement of
revenue passengers. USAir's exposure to the displacement of
revenue passengers is not significant, as the number of USAir
flights that depart 100% full is minimal. In the second quarter of
1995, the quarter when the highest number of free frequent traveler
trips were flown for the year, for example, fewer than 6.5% of
USAir's flights departed 100% full. During this same quarterly
period, approximately 5.2% of USAir's flights departed 100% full
and also had one or more passengers on board who were traveling on
FTP award tickets.

During 1995, four members of USAir's FTP filed class action
lawsuits against USAir in Illinois, Pennsylvania, California and
New Jersey state courts, alleging breach of contract relating to
changes made to USAir's FTP effective December 31, 1989 and/or
January 1, 1995. A similar lawsuit has been pending in California
state court since 1989. The lawsuits seek unspecified damages and
an injunction against allegedly objectionable changes to USAir's
FTP and any subsequent retroactive changes to the FTP. See "Legal
Matters." USAir denies the allegations made in the lawsuits and
intends to vigorously defend itself. In addition, the DOT has
expressed concern about potential consumer fraud relating to
frequent traveler programs and their restrictions on the use of
awards. It is uncertain whether USAir will be named party in any
further litigation or if the DOT will take any action with respect
to frequent traveler programs. The ultimate resolution of these
lawsuits or potential lawsuits or possible DOT actions and the
potential impact on the Company's results of operations and
financial condition cannot be predicted at this time.

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<PAGE>

Maintenance Marketing Joint Venture with BA
- -------------------------------------------

USAir and an affiliate of BA jointly organized Airline
Technical Services L.L.C., a Delaware limited liability company,
on October 12, 1995. The goal of this venture is the joint
marketing in North America, Central America and South America of
contract maintenance, engineering and technical services for USAir
and BA. USAir hopes to enhance the utilization of maintenance
personnel by taking on outside maintenance work, generating revenues
associated with its excess maintenance capacity and BA's experience
with contract maintenance. USAir also hopes that exposure to the
competitive marketplace will lead to productivity improvements by
its own maintenance personnel.

Jet Fuel
- --------

All petroleum product prices continue to be subject to
unpredictable economic, political and market factors. Also, the
balance among supply, demand and price has become more reactive to
world market conditions. Accordingly, the price and availability
of jet fuel, as well as other petroleum products, continues to be
unpredictable. Because fuel costs constitute a major expenditure
for USAir (approximately 9% of its operating costs for fiscal year
1995), significant increases in fuel costs could materially and
adversely affect USAir's results of operations.

- 109 -
<PAGE>

USAir continues to adjust its jet fuel purchasing strategy to
take advantage of the best available prices while attempting to
ensure that supplies are secure. In addition, USAir has entered
into agreements to hedge the price of a portion of its jet fuel
needs, which may have the net effect of increasing or decreasing
USAir's fuel expense.

In August 1993, the United States increased taxes on domestic
fuel, including aircraft fuel used on domestic routes, by 4.3 cents
per gallon. Airlines were exempt from the tax increase until Octo-
ber 1, 1995, and pending legislation in Congress would reinstate
the exemption through September 30, 1997, subject to termination of
the exemption on September 30, 1996 if certain aviation trust funds
are not extended. These aviation trust funds expired on Decem-ber
31, 1995 and have not, as of May 20, 1996, been extended. There
can be no assurance that the fuel tax exemption will be reinstated,
or if reinstated, the terms on which and the period for which the
exemption will be effective. The additional fuel tax is currently
being paid. Non-reinstatement of the fuel tax exemption would
increase the annual operating expenses of USAir by approximately
$47 million based on projected domestic fuel consumption for 1996.

The following table sets forth statistics about USAir's jet
fuel consumption and cost for each of the last four fiscal years:

<TABLE>

Gallons Percentage of
Fiscal Consumed Total Cost Average Cost Operating
Year (Millions) (Millions)(1) Per Gallon(1) Expenses(2)
------ -------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
1995 1,137 $605.0 $0.53 9.0%
1994 1,205 $642.3 $0.53 9.4%
1993 1,161 $677.9 $0.58 10.2%
1992 1,183 $720.6 $0.61 11.1%

(1) Cost includes the base cost of fuel and transportation charges.

(2) Operating expenses have been adjusted to exclude non-recurring
and unusual items and expenses generated under the BA wet lease
arrangements.

The cost of jet fuel per gallon for the first quarter of 1996
(58.61c) increased by 12.6% from first quarter of 1995 levels
(52.06c).
</TABLE>
- 110 -
<PAGE>

Insurance
- ---------

USAir maintains insurance of the types and in amounts deemed
adequate to protect themselves and their property. Principal
coverage includes liability for bodily injury to or death of
members of the public, including passengers; damage to property of
USAir and others; loss of or damage to flight equipment, whether on
the ground or in flight; fire and extended coverage; and workers'
compensation and employer's liability. Coverage for environmental
liabilities is expressly excluded from USAir's insurance policies.
In the third quarter of 1995, USAir's liability insurance was
renewed. Rates increased due to a number of factors, including the
two aircraft accidents in 1994.

Industry Regulation and Airport Access
- --------------------------------------

USAir operates under a certificate of public convenience and
necessity issued by the DOT. Such certificate may be altered,
amended, modified or suspended by the DOT if the public convenience
and necessity so require, or may be revoked for intentional failure
to comply with the terms and conditions of a certificate. The
airline is also regulated by the FAA, a division of the DOT, under
Subtitle VII of 49 U.S.C. 40101 et seq. (the "Act"), primarily in
the areas of flight operations, maintenance, ground facilities and
other technical matters. Pursuant to these regulations, USAir has
established, and the FAA has approved, a maintenance program for
each type of aircraft operated by USAir that provides for the
ongoing maintenance of such aircraft, ranging from frequent routine
inspections to major overhauls.

Recently adopted regulations require phase-out of certain
aircraft and ageing aircraft modifications. Such types of
regulations can significantly increase costs and affect an
airline's ability to compete.

The DOT allows local airport authorities to implement
procedures designed to abate special noise problems, provided such
procedures do not unreasonably interfere with interstate or foreign
commerce or the national transportation system. Certain airports,
including the major airports at Boston, Washington, D.C., Chicago,
Los Angeles, San Diego and San Francisco, have established airport
restrictions to limit noise, including restrictions on aircraft

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<PAGE>

types to be used and limits on the number of hourly or daily
operations or the time of such operations. In some instances these
restrictions have caused curtailments in services or increases in
operating costs and such restrictions could limit the ability of
USAir to expand its operations at the affected airports. Local
authorities at other airports are considering adopting similar
noise regulations.

Several airports have recently sought to increase substantial-
ly the rates charged to airlines, and the ability of airlines to
contest such increases has been restricted by federal legislation,
DOT regulations and judicial decisions. In addition, legislation
which became effective June 1, 1992 allows public airports to
impose passenger facility charges of up to $3 per departing or
connecting passenger at such airports. With certain exceptions,
these charges are passed on to the airlines' passengers.

The FAA has designated John F. Kennedy, LaGuardia, O'Hare and
Washington National airports as "high density traffic airports" and
has limited the number of departure and arrival slots at those
airports. Currently, slots at the high density traffic airports
may be voluntarily sold or transferred between carriers. The DOT
has in the past reallocated slots to other carriers and reserves
the right to withdraw slots. Various amendments to the slot
system, proposed from time to time by the FAA, members of Congress
and others, could, if adopted, significantly affect operations at
the high density traffic airports or expand slot controls to other
airports. Certain of such proposals could restrict the number of
flights, limit the ownership transferability of slots, increase the
risk of slot withdrawal, or otherwise decrease the value of USAir
slots. USAir holds a substantial number of slots at LaGuardia and
Washington National. These slots are valuable assets and important
in USAir's overall business strategy. USAir cannot predict whether
any of these proposals will be adopted.

- 112 -
<PAGE>

The availability of international routes to United States carriers is
regulated by agreements between the United States and foreign governments. The
United States has in the past generally followed the practice of encouraging
foreign governments to accept multiple carrier designation on foreign routes,
although certain countries have sought to limit the number of carriers. Foreign
route authorities may become less valuable to the extent that the United States
and other countries adopt "open skies" policies liberalizing entry on
international routes. In February 1995, the United States and Canada reached a
formal agreement which deregulates airline services between Canada and the
United States and provides that Canadian airlines have immediate "open skies"
access to the United States and that U.S. airlines will have limited new route
rights to Vancouver and Montreal for two years and to Toronto for three years
and open skies thereafter. This agreement is expected to result in significant
increased traffic between the United States and Canada. The agreement provides
for two new Toronto designations in the first year. In October 1995, the DOT
granted to USAir route authority for non-stop service between Pittsburgh and
Toronto. On May 1, 1995, the DOT granted to USAir the temporary exemption
authority to begin twice-daily roundtrip nonstop service between Washington
National and Toronto once a Canadian carrier entered that market. Air Canada
initiated service on that route beginning in June 1995. In February 1996, the
DOT issued a show cause order awarding USAir final certification to serve the
Washington National to Toronto route. USAir's authority will be effective
pending the DOT's determination as to which U.S. carrier will receive the final
certification to operate the route. The route will be open to all carriers in
1997. In addition, in October 1995, the DOT granted USAir a two-year exemption
route authority to operate between Madrid, Spain and both Philadelphia and
Boston. USAir commenced service from Philadelphia to Madrid on June 15, 1996. In
April 1996, the DOT awarded USAir authority to institute service to Rome, Italy
from Philadelphia with through service from Los Angeles. USAir inaugurated its
service to Rome on June 1, 1996. In February 1996, USAir received final approval
from the DOT to institute service to Munich, Germany from Philadelphia. USAir
began its Munich service on May 23, 1996.

Many aspects of USAir's operations are subject to increasingly stringent
federal, state and local laws protecting the environment. Future regulatory
developments could affect operations and increase operating costs in the airline
industry, including for USAir.

- 113 -
<PAGE>

Additional laws and regulations have been proposed or are contemplated that
could significantly affect the cost of airline operations by, for example,
raising fuel taxes, imposing additional requirements or restrictions on
operations or impairing access to capital markets. For example, proposals are
being considered that would provide that a portion of the appropriations for the
FAA and other aviation governmental functions be funded pursuant to additional
taxes on ticket and cargo revenue or fees for use of the air traffic control
system. USAir cannot predict what laws and regulations may be adopted or their
impact, but the impact could be significant. Certain regulatory changes, if
proposed and adopted, could materially adversely affect USAir and could require
charges to USAir's financial statements.

British Airways Investment Agreement
- ------------------------------------

The following summary of certain terms of the Investment Agreement is
subject to the specific terms of the Investment Agreement and the exhibits
thereto, which have previously been filed with the Commission. BA has invested
approximately $400 million in USAir Group preferred stock in accordance with the
Investment Agreement. On March 7, 1994, BA announced it would make no additional
investments in USAir Group until the outcome of measures by USAir Group to
reduce costs and improve its financial results was known. On January 19, 1996,
BA announced that it would not exercise its option to make any further
investment in USAir prior to the January 21, 1996 deadline provided in the
Investment Agreement. See "Provisions Regarding Additional BA Investments; BA
Announcement Regarding No Additional Investment in USAir Group." As of December
31, 1995, BA owned preferred stock in USAir Group constituting approximately
21.0% of the total voting interest in USAir Group.

Terms of the Series F Preferred Stock
- -------------------------------------

On January 21, 1993, USAir Group sold, pursuant to the Investment
Agreement, 30,000 shares of USAir Group's Series F Preferred Stock to BA for an
aggregate purchase price of $300 million. The Series F Preferred Stock is
convertible into shares of Common Stock at a conversion price of $19.41 and has
a liquidation preference of $10,000 per share plus an amount equal to accrued
dividends. See "Miscellaneous" for a discussion of an

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<PAGE>

antidilution adjustment to the conversion price of the Series F
Preferred Stock. The Series F Preferred Stock may be converted at
the option of USAir Group at any time after January 21, 1998 if the
average composite closing market price of Common Stock during any
30-day calendar period is at least 133% of the conversion price.
The Series F Preferred Stock is entitled to cumulative quarterly
dividends of 7% per annum when and if declared and to share in
certain other distributions.

USAir Group has deferred quarterly dividend payments on all
its preferred stock beginning with payments due September 30, 1994.
See "Deferral of Dividends by USAir Group." The Series F Preferred
Stock must be redeemed by USAir Group on January 15, 2008. Each
share of the Series F Preferred Stock is entitled to a number of
votes equal to the number of shares of Common Stock into which it
is convertible and votes with the Common Stock and USAir Group's
Series A Preferred Stock and any other capital stock with general
voting rights for the election of directors, as a single class.
Subject to adjustment, 515.2950 shares of Common Stock are issuable
on conversion per share of Series F Preferred Stock (determined by
dividing the $10,000 liquidation preference per share of Series F
Preferred Stock by the $19.41 conversion price), and 15,458,851
shares of Common Stock would be issuable on conversion of all
Series F Preferred Stock. However, under the terms of any USAir
Group preferred stock that is or will be held by BA ("BA Preferred
Stock"), conversion rights (and as a result voting rights) may not
be exercised to the extent that doing so would result in a loss of
USAir Group's or any of its subsidiaries' operating certificates
and authorities under Foreign Ownership Restrictions, as defined
under "Board Representation" below, and it is assumed for this
purpose that Series F Preferred Stock will be fully converted
before any other BA Preferred Stock. Under Foreign Ownership
Restrictions, no more than 25% of USAir Group's voting interest may
be held by persons other than U.S. citizens, including BA. With
respect to dividend rights and rights on liquidation, dissolution
and winding up, the Series F Preferred Stock ranks senior to USAir
Group's Series B Preferred Stock, Junior Participating Preferred
Stock, Series D, no par value, and Common Stock, and pari passu
with BA Preferred Stock and Series A Preferred Stock. See
"Miscellaneous" for information regarding BA's purchase of two
additional series of preferred stock from USAir Group pursuant to
its exercise of optional and preemptive purchase rights under the
Investment Agreement.

- 115 -
<PAGE>

DOT Order Regarding BA's Investment in USAir Group
- --------------------------------------------------

On March 15, 1993, the DOT issued an order (the "DOT Order")
finding, among other things, that "BA's initial investment of $300
million does not impair USAir's citizenship" under Foreign
Ownership Restrictions as defined under "Board Representation"
below. However, the DOT instituted a proceeding to consider
whether USAir will remain a U.S. citizen if the transactions and
acts contemplated by the Investment Agreement, including the
transactions discussed under "Provisions Regarding Additional BA
Investments; BA Announcement Regarding No Additional Investment in
USAir Group" and "Certain Governance Matters" below, are consummat-
ed. The DOT has suspended indefinitely the period for comments
from interested parties to the proceeding pending its resolution of
requests by other airlines for production of additional documents
from USAir. The DOT Order states that the DOT expects and advises
USAir Group and BA not to proceed with the Second Purchase and
Final Purchase, as such terms are defined under "Provisions
Regarding Additional BA Investments; BA Announcement Regarding No
Additional Investment in USAir Group," until the DOT has completed
its review of USAir's citizenship. In any event, on March 7, 1994,
BA announced that it would make no additional investments in USAir
Group until the outcome of measures by USAir Group to reduce its
costs and improve its financial results was known and on January
19, 1996, BA announced that it would not proceed with the Second
Purchase.

Board Representation
- --------------------

USAir Group increased the size of its board of directors by
three on January 21, 1993 and the board filled the newly created
directorships with designees of BA (the size of the board of
directors was subsequently decreased to 15 in 1995). Under the
terms of the Investment Agreement, USAir Group must use its best
efforts to cause BA to be proportionally represented on the board
of directors (on the basis of its voting interest), up to a maximum

- 116 -
<PAGE>

representation of 25% of the total number of authorized directors
("Entire Board"), assuming that such proportional representation is
permitted by then applicable U.S. statutory and DOT regulatory or
interpretative foreign ownership restrictions ("Foreign Ownership
Restrictions"), until the later of the closing of the Second
Purchase, as defined under "Provisions Regarding Additional BA
Investments; BA Announcement Regarding No Additional Investment in
USAir Group" below, and the date on which BA may exercise under
Foreign Ownership Restrictions the rights described under "Certain
Governance Matters" below.

U.S.-U.K. Routes
- ----------------

Under the Investment Agreement, USAir Group agreed that as
promptly as commercially practicable it would divest or, if
divestiture were not possible, relinquish, all licenses, certifi-
cates and authorities for each of its routes between the U.S. and
the U.K. (the "U.K. Routes") at such time as BA and USAir imple-
mented the code sharing arrangement contemplated by the Investment
Agreement discussed below. USAir Group and BA have agreed that
they should attempt to mitigate any negative impact on USAir
employees or communities served by the U.K. Routes and to share any
losses suffered as a result of such divestiture or relinquishment
with due regard to their respective interests. Accordingly, BA has
been operating and marketing certain routes formerly operated by
USAir under a "wet lease." USAir has completed the wet lease
arrangements with BA. Under the wet lease arrangements, USAir had
leased three Boeing 767-200ER aircraft, along with cockpit and cabin
crews, to BA in order to serve three routes between the U.S. and
London. USAir is utilizing the previously wet leased aircraft as
part of its 1996 expansion of international service (See
"Capacity and Route Rationalization" above). In conjunction with the
termination of the wet lease arrangements and related to USAir's
relinquishment or divestiture of the U.K. Routes, BA has agreed to
pay USAir a total of $47 million in the form of periodic payments
commencing with the termination of the three wet leases and continuing
annually for nine years. The route authorities which USAir was
required to

- 117 -
<PAGE>

sell or relinquish were the Philadelphia-London and BWI-London
route authorities purchased by USAir from TWA in April 1992 for $50
million, and its route authority between Charlotte and London.
Assets related to the U.K. Routes were carried on USAir's books at
approximately $45 million at December 31, 1995.

Code Sharing
- ------------

BA and USAir Group entered into a code share agreement on
January 21, 1993 (the "Code Share Agreement") pursuant to which
certain USAir flights carry the airline designator code of both BA
and USAir. Code sharing is a common practice in the airline
industry whereby one carrier places its designator code and sells
tickets on the flights of another carrier (its code sharing
partner). These flights are intended by USAir Group and BA
eventually to include all routes provided for under the bilateral
air services agreement between the U.S. and the U.K. to the extent
possible, consistent with commercial viability and technical
feasibility.

The DOT initially granted approval of the code sharing
agreement between USAir and BA on March 17, 1993 for a period of
one year. The authorizations to USAir and BA were expanded by a
supplemental DOT order on November 12, 1993 to permit code sharing
on flights serving an additional number of U.S. points through
additional U.S. gateways for BA's transatlantic flights. In June
1995, the DOT renewed its approval of USAir's and BA's authority to
operate code share service on flights serving 66 U.S. cities and
Mexico City. USAir has ceased serving Mexico City. In addition,
the DOT approved an expansion of the USAir/BA code share authority
to 65 new U.S. cities, Bermuda, Nassau and five Canadian cities.
The approval is valid for two years. As of December 31, 1995,
USAir and BA had implemented code sharing to 70 of the 138 airports
authorized by the DOT. BA has publicly stated that its relation-
ship with USAir has contributed over $150 million in annual
additional revenues and cost savings. USAir believes that the code
share arrangements have also brought benefits to USAir through
domestic feed from international BA flights.

- 118 -
<PAGE>

USAir believes that (i) the code share cities in the U.S. receive greater
access to international markets; (ii) it has greater access to international
traffic; and (iii) BA's and its customers benefit from better on-line
connections as well as coordinated check-in and baggage checking procedures.
USAir believes that the code sharing arrangements may continue to generate
increased revenues although USAir is unable to quantify the magnitude of any
such benefit or what the effect on USAir may be of the proposed alliance between
BA and American, if consummated. The DOT may continue to link further renewals
of the code share authorization to the U.K.'s liberalization of U.S. air carrier
access to the U.K.; however, the code sharing arrangements contemplated by the
Code Share Agreement are expressly permitted under the bilateral air services
agreement between the U.S. and U.K. Accordingly, USAir expects that the existing
code share authorization will continue to be renewed; however, there can be no
assurance that this will occur. USAir does not believe that the DOT's failure to
renew further the authorization would result in a material adverse change in its
financial condition.

Provisions Regarding Additional BA Investments; BA Announcement
Regarding No Additional Investment in USAir Group
- -------------------------------------------------------------------

On March 7, 1994, BA announced that it would not make any additional
investments in USAir Group until the outcome of measures by USAir Group to
reduce costs and improve its financial results was known. Under the terms of the
Investment Agreement, assuming the Series F Preferred Stock or any shares issued
upon conversion thereof were outstanding and BA had not sold any shares of
preferred stock issued to it by USAir Group or any Common Stock or other
securities received upon conversion or exchange of the preferred stock, BA had
been entitled at its option to elect to purchase from USAir Group, on or prior
to January 21, 1996, 50,000 shares of Series C Cumulative Convertible Senior
Preferred Stock, without par value ("Series C Preferred Stock"), at a purchase
price of $10,000 per share, to be paid by BA's surrender of the Series F
Preferred Stock and a payment of $200 million (the "Second Purchase"). BA did
not exercise that option.

The Investment Agreement provides that, on or prior to January 21, 1998,
assuming that BA had purchased (or was purchasing simultaneously in accordance
with the terms of the Investment Agreement) Series C Preferred Stock, BA would
have the option to purchase 25,000 (or more in certain circumstances) shares of
Series E Cumulative Convertible Exchangeable Senior Preferred Stock, without par
value ("Series E Preferred Stock"), at a purchase price of $10,000 per share
(the "Final Purchase"). Series E Preferred

- 119 -
<PAGE>

Stock is exchangeable under certain circumstances at the option of
USAir Group into certain USAir Group debt securities ("BA Notes").
Because BA did not elect prior to January 21, 1996, to make the
Second Purchase, it cannot make the Final Purchase, except that if
the DOT approves all the transactions and acts contemplated by the
Investment Agreement on or prior to January 21, 1998, at the
election of either BA or USAir Group, BA's purchase of the Series
C Preferred Stock and the Series E Preferred Stock would be
consummated under certain circumstances. Because BA did not elect
to purchase the Series C Preferred Stock by January 21, 1996, USAir
Group may at its option redeem, in whole or in part, Series F
Preferred Stock and a like percentage of Series T Preferred Stock
held by BA at the higher of market value or the price of $10,000
per share, plus accrued dividends. As of March 31, 1996, USAir
believes that USAir Group was legally prohibited from paying
dividends on or redeeming its capital stock in accordance with
Section 170 of the Delaware General Corporation Law. USAir cannot
predict whether or when the Second Purchase and Final Purchase will
be consummated or whether or when it will repurchase or redeem its
shares of capital stock.

Terms of the Series C Preferred Stock and Series E Preferred Stock
- ------------------------------------------------------------------

The Series C Preferred Stock and Series E Preferred Stock are
substantially similar to Series F Preferred Stock, except as
follows. Series C Preferred Stock will be convertible into shares
of Class B Common Stock or Non-Voting Class C Stock (as such terms
are defined under "Terms of BA Common Stock" below) at an initial
conversion price of approximately $19.79, subject to Foreign
Ownership Restrictions. Each share of Series C Preferred Stock
will be entitled to a number of votes equal to the number of shares
of Class B Common Stock into which it is convertible, subject to
Foreign Ownership Restrictions. If shares of Series C Preferred
Stock are transferred to a third party, they convert automatically
at the seller's option into either shares of Common Stock or a like
number of shares of Series G Cumulative Convertible Senior
Preferred Stock. Series E Preferred Stock will be convertible into
shares of Common Stock or Non-Voting Class ET Stock (as defined
under "Terms of BA Common Stock" below) at an initial conversion
price of approximately $21.74, subject to increase if the Series E
Preferred Stock is originally issued on or after January 21, 1997,
subject to Foreign Ownership Restrictions. Each share of Series E
Preferred Stock will be entitled to a number of votes equal to the
number of shares of Common Stock into which it is convertible,
subject to Foreign Ownership Restrictions.

- 120 -
<PAGE>

Terms of BA Common Stock
- ------------------------

To the extent permitted by Foreign Ownership Restrictions, an
amendment to USAir Group's charter, which would be filed with the
Delaware Secretary of State immediately prior to the Second
Purchase, which BA has announced it will not complete, would create
three new classes of common stock: Class B Common Stock, par value
$1.00 per share ("Class B Common Stock"), Non-Voting Class C Common
Stock, par value $1.00 per share ("Non-Voting Class C Stock"), and
Non-Voting Class ET Common Stock, par value $1.00 per share
("Non-Voting Class ET Common Stock," collectively with Class B
Common Stock and Non-Voting Class C Common Stock, "BA Common
Stock"), all of which may be held only by BA or one of its
wholly-owned subsidiaries. Except with respect to voting and
conversion rights, the BA Common Stock would be identical to the
Common Stock. Shares of BA Common Stock would convert automatical-
ly to shares of Common Stock upon their transfer to a third party.
Subject to Foreign Ownership Restrictions, Class B Common Stock
would be entitled to one vote per share. After the effectiveness of
the above charter amendment, to the extent permitted by Foreign
Ownership Restrictions, Class B Common Stock would vote as a single
class with Series C Preferred Stock on the election of one-fourth
of the directors and the approval of the holders of Class B Common
Stock and Series C Preferred Stock voting as a single class would
be required for certain matters.

Certain Governance Matters
- --------------------------

Following the Second Purchase, which BA has announced it will
not complete, and assuming these changes are permitted under
Foreign Ownership Restrictions, the above charter amendment would
fix the size of USAir Group's board of directors at 16, one-fourth
of whom would be elected by BA. In addition, the vote of 80% of
the Entire Board of USAir Group would be required for approval of
the following (with certain limited exceptions): (i) any agreement
with the DOT regarding citizenship and fitness matters; (ii) any
annual operating or capital budgets or financing plans; (iii)
incurring capital expenditures not provided for in a budget
approved by the vote of 80% of the Entire Board in excess of $10
million in the aggregate during any fiscal year; (iv) declaring and
paying dividends on any capital stock of USAir Group or any of its
subsidiaries (other than dividends paid only to USAir Group or any

- 121 -
<PAGE>

wholly-owned subsidiary of USAir Group and any dividends on
preferred stock); (v) making investments in other entities not
provided for in approved budgets in excess of $10 million in the
aggregate during any fiscal year; (vi) incurring additional debt
(other than certain debt specified in the Investment Agreement) not
in an approved financing plan in excess of $450 million in the
aggregate during any fiscal year; (vii) incurring off-balance sheet
liabilities (e.g., operating leases) not in an approved financing
plan in excess of $50 million in the aggregate during any fiscal
year; (viii) appointment, compensation and dismissal of certain
senior executives; (ix) acquisition, sale, transfer or relinquish-
ment of route authorities or operating rights; (x) entering into
material commercial or marketing agreements or joint ventures; (xi)
issuance of capital stock (or debt or other securities convertible
into or exchangeable for capital stock), other than (A) the stock
options granted to employees in return for pay reductions under the
USAir Group 1992 Stock Option Plan, as described under "Employees"
above, (B) to USAir Group or any direct or indirect wholly owned
subsidiary of USAir Group, (C) pursuant to the terms of USAir Group
securities outstanding when a certain amendment to USAir Group's
charter required in connection with consummation of the Second
Purchase becomes effective, or (D) pursuant to the terms of
securities the issuance of which was previously approved by the
vote of 80% of the Entire Board; (xii) acquisition of its own
equity securities other than from USAir Group or its subsidiaries,
or pursuant to sinking funds or an approved financing plan; and
(xiii) establishment of a board committee with power to approve any
of the foregoing. This supermajority vote requirement would allow
four directors, including those elected by BA, to withhold approval
of the actions described above if they believe them to be contrary
to the best interests of USAir. The supermajority vote would not
be required with regard to the foregoing actions to the extent they
involve the enforcement by USAir Group of its rights under the
Investment Agreement.

Following the Second Purchase, which BA has indicated it will
not complete, to the extent permitted under Foreign Ownership
Restrictions, USAir Group and BA would integrate certain of their
respective business operations pursuant to certain "Integration
Principles" included in the Investment Agreement. In addition, to
the extent permitted by Foreign Ownership Restrictions or pursuant
to specific DOT approval, an "Integration Committee," headed by the
chief executive officers of USAir Group and BA and by an Executive
Vice President-Integration of USAir Group, would oversee the
integration subject to the ultimate discretion of USAir Group's
board of directors. As of the Final Purchase, which BA has

- 122 -
<PAGE>

indicated it will not complete, to the extent permitted by Foreign
Ownership Restrictions, the Investment Agreement provides for the
establishment of a committee ("Appointments Committee") of the
board of directors of USAir Group, composed of USAir Group's chief
executive officer, BA's chief executive officer and another
director serving on both USAir Group's and BA's board of directors,
to handle all employment matters relating to managers at the level
of vice president and above, except for certain senior executives.

BA's governance rights after the Second Purchase and the Final
Purchase, which BA has indicated it will not complete, would be
subject to reduction if BA reduced its holding in USAir Group under
the following circumstances. If BA sold or transferred, in one or
more transactions, BA Preferred Stock, Common Stock or BA Common
Stock (collectively, Common Stock and BA Common Stock are
hereinafter referred to as "Non-Preferred Stock") issued directly
or indirectly upon the conversion thereof such that the aggregate
purchase price of the BA Preferred Stock, BA Notes, Non-Preferred
Stock or other equity securities of USAir Group held by BA and its
directly or indirectly wholly owned subsidiaries following such
sale or transfer (the "BA Holding") was less than both two-thirds
of the aggregate purchase price of all BA Preferred Stock, BA
Notes, Non-Preferred Stock or other equity securities of USAir
Group acquired by BA and its subsidiaries following January 21,
1993 and $750 million (or $500 million if the Final Purchase had
not occurred), then (i) the number of directors elected by the
Class B Common Stock and the Series C Preferred Stock, voting
together as a single class, would be limited to two; (ii) the
directors elected by the Common Stock, Series A Preferred Stock,
Series E Preferred Stock, Series T Preferred Stock, as defined
under "Miscellaneous" below, and other capital stock with voting
rights would no longer be required to include two directors
selected from among the outside directors on the board of directors
of BA; (iii) special class voting rights applicable to the Class B
Common Stock and Series C Preferred Stock would no longer apply;
and (iv) BA would no longer participate in the Appointments
Committee. In addition, if the BA Holding became less than both
one-third of the aggregate purchase price of all BA Preferred
Stock, BA Notes, Non-Preferred Stock or other equity securities of
USAir Group acquired by BA and its subsidiaries following January
21, 1993 and $375 million (or $250 million if the Final Purchase
had not occurred), then the number of directors elected by the
Class B Common Stock and the Series C Preferred Stock, voting
together as a single class, would be reduced to one. If the BA
Holding became less than $100 million, then the Class B Common

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<PAGE>

Stock and the Series C Preferred Stock would no longer vote
together as a single class with respect to the election of any
directors of USAir Group, but would vote together with the Common
Stock, the Series A Preferred Stock and any other class or series
of capital stock with voting rights with respect to the election of
directors of USAir Group.

Miscellaneous
- -------------

Under the terms of the Investment Agreement, BA has the right
to maintain its proportionate ownership of USAir Group's securities
under certain circumstances by purchasing shares of certain series
of Series T Preferred Stock, Common Stock or BA Common Stock.
Pursuant to these provisions, on June 10, 1993, BA purchased (i)
152.1 shares of Series T-1 Preferred Stock for approximately $1.5
million as a result of certain issuances during the period January
21 through March 31, 1993 of Common Stock in connection with the
exercise of certain employee stock options and to certain defined
contribution retirement plans; and (ii) 9,919.8 shares of Series
T-2 Preferred Stock for approximately $99.2 million as a result of
USAir Group's issuance on May 4, 1993 of 11,500,000 shares of
Common Stock for net proceeds of approximately $231 million
pursuant to a public underwritten offering. Because BA partially
exercised its preemptive right in connection with the Common Stock
offering and the offering price was below a certain level, the
conversion price of the Series F Preferred Stock was antidilutively
adjusted on June 10, 1993 from $19.50 to $19.41 per share. As a
result, the Series F Preferred stock is convertible into 15,458,851
shares of Common Stock or Non-Voting Class ET Common Stock. BA
advised USAir Group that it would not exercise
its optional purchase rights under the Investment Agreement to buy
additional series of Series T Preferred Stock triggered by
issuances of Common Stock of USAir Group pursuant to certain USAir
Group benefit plans during 1994 and 1995.

The Investment Agreement also imposes certain restrictions on
BA's right to acquire additional voting securities, participate in
solicitations with respect to USAir Group securities or otherwise
propose or discuss extraordinary transactions concerning USAir
Group. These restrictions remain in effect as long as BA or any of
its affiliates or associates beneficially owns any BA Preferred
Stock, BA Notes or BA Common Stock, and for two years thereafter.

- 124 -
<PAGE>

In addition, the Investment Agreement restricts BA's right to
transfer certain securities and requires that prior to transferring
such securities, BA must, in most cases, first offer to sell the
securities to USAir Group. BA has certain rights to require USAir
Group to register for sale USAir Group securities sold to it
pursuant to the Investment Agreement.

Pursuant to the Investment Agreement, BA has the right to
maintain its proportionate ownership of USAir Group's securities
under certain circumstances by purchasing additional shares of
certain series. British Airways has advised USAir Group that it
would not exercise the right (triggered by the issuances of USAir
Group Common Stock pursuant to certain USAir Group benefit plans
during the nine months ended March 31, 1996) to buy additional
shares of Series T Convertible Exchangeable Senior Preferred Stock.

[remainder of page left blank intentionally]

- 125 -
<PAGE>

Operating Statistics
- --------------------

<TABLE>

USAir's operating statistics during the years 1991 through
1995 and for the first quarter of 1996 (compared to first quarter
1995) are set forth in the following tables (1):

Years Ended December 31, 1995 1994 1993 1992 1991
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue Passengers
(Thousands)* 56,674 59,495 53,678 54,655 55,600
Average Passenger
Journey (Miles)* 663.7 637.7 656.2 642.2 613.7
Revenue Passenger
Miles (Millions)* 37,618 37,941 35,221 35,097 34,120
Total Available
Seat Miles** 58,678 61,540 59,841 60,052 58,574
Available Seat Miles
(Millions)* 58,163 61,027 59,485 59,667 58,261
Passenger Load
Factor (2)* 64.7% 62.2% 59.2% 58.8% 58.6%
Break Even Load
Factor (3)(5)** 64.9% 67.3% 61.7% 63.2% 62.7%
Passenger Revenue
Per ASM* 10.78c 9.70c 10.22c 9.70c 9.76c
Total Revenue Per
ASM (4)(5)** 11.80c 10.59c 11.04c 10.38c 10.33c
Cost per ASM (4)(5) 11.40c 11.02c 11.12c 10.85c 10.80c
(6)**
Yield (Revenue Per
RPM)* 16.66c 15.61c 17.27c 16.49c 16.67c
* Scheduled service only (excludes charter flights).
** All service.
c = cents

</TABLE>

- 126 -
<PAGE>

Three Months Ended March 31, 1996 1995
- ---------------------------- -------- --------
<S> <C> <C>
Revenue Passengers
(Thousands)* 12,938 13,767
Average Passenger
Journey (Miles)* 673 659
Revenue Passenger
Miles (Millions)* 8,709 9,079
Total Available
Seat Miles** 13,583 15,334
Available Seat Miles
(Millions)* 13,493 15,206
Passenger Load
Factor (2)* 64.6% 59.7%
Break Even Load
Factor (3)(5)** 67.1% 64.0%
Passenger Revenue
Per ASM* 11.50c 9.78c
Total Revenue Per
ASM (4)(5)** 12.74c 10.75c
Cost per ASM (4)(5)
(6)** 12.81c 11.08c
Yield (Revenue Per
RPM)* 17.81c 16.37c

* Scheduled service only (excludes charter flights).
** All service.
c = cents

(1) Statistics include free frequent travelers and the related
miles flown.
(2) Passenger load factor is the percentage of aircraft seating
capacity that is actually utilized (RPMs/ASMs).
(3) Break even load factor represents the percentage of aircraft
seating capacity that must be utilized, based on fares in effect
during the period, for USAir to break even at the pre-tax income
level, adjusted to exclude non-recurring and unusual items.
(4) Adjusted to exclude non-recurring and unusual items.
(5) Financial statistics for 1996, 1995, 1994 and 1993 exclude
revenue and expense generated under the BA wet lease arrangement.
(6) Certain statistics have been recalculated to reflect expense
reclassifications.

</TABLE>

- 127 -
<PAGE>

Flight Equipment
- ----------------

At December 31, 1995, USAir operated the following jet
aircraft:
<TABLE>
<CAPTION>

Passenger Avg. Age Owned Leased
Type Capacity (Years) (1) (2) Total
---- --------- -------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Boeing 767-200ER(3) 214 7.1 4 5 9
Boeing 757-200 182 5.3 23 11 34
Boeing 737-400 146 6.1 19 35 54
McDonnell Douglas
MD-80 141 13.9 15 16 31
Boeing 737-300 127 8.8 11 74 85
Boeing 737-200 109 13.7 48 16 64
Douglas DC-9-30 101 22.2 48 14 62
Fokker 100 98 5.1 36 4 40
Fokker F28-4000 68 11.2 1 14 15
---- --- --- ---
11.1 205 189 394
==== === === ===
(1) Of the owned aircraft, 123 were pledged as collateral for
various secured financing obligations aggregating $2.3 billion at
December 31, 1995.
(2) The terms of the leases expire between 1996 and 2015.
(3) The above table excludes one owned and one leased 767-200ER
aircraft which USAir leased to BA under a wet lease arrangement at
December 31, 1995.

</TABLE>

USAir is a party to purchase agreements with Boeing and Rolls
Royce that provide for the future acquisition of new jet aircraft
and jet engines. USAir maintains inventories of spare engines,
spare parts, accessories and other maintenance supplies sufficient
to meet its operating requirements.

USAir owned or leased the following aircraft as of December
31, 1995, which were parked in storage facilities and not included
in the operating fleet table presented above.

- 128 -
<PAGE>

<TABLE>

Avg. Age
Type (Years) Owned Leased Total
---- -------- ----- ------ -----
<S> <C> <C> <C> <C>
British Aerospace
BAe-146-200 10.8 1 14 15
Boeing 727-200 17.1 - 6 6
Boeing 737-200 27.0 4 - 4
Boeing 767-200ER (1) 5.7 - 1 1
Douglas DC-9-30 27.3 10 - 10
Fokker F28-1000 24.0 1 - 1
Fokker F28-4000 12.1 1 1 2
---- -- -- --
17.9 17 22 39
==== == == ==

(1) The 767-200ER aircraft presented in the above table was returned to USAir by
BA during December 1995 in connection with the phase-out of the wet lease
arrangements with BA (See "Management's Discussion and Analysis of Financial
Condition and Results of Operations"). The aircraft was returned to USAir's
operating fleet in January 1996.

</TABLE>

In addition, as of December 31, 1995, USAir leased or subleased 16 owned
F28-1000 aircraft; two leased Embraer EMB-120 aircraft; ten owned 737-200
aircraft; one owned and one leased 767-200ER; two owned F28-4000 aircraft, and;
three leased BAe-146-200 ("BAe-146") aircraft to third parties. In the first
half of 1996, the two 767s were returned to USAir's operating fleet. USAir
also subsequently leased or subleased two F28-4000 aircraft and four BAe-146-
200s.

USAir recorded substantial charges in 1994 associated with repair parts,
inventory and future lease payments for certain parked aircraft (See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations").

- 129 -
<PAGE>

USAir is a participant in the Civil Reserve Air Fleet ("CRAF"), a voluntary
program administered by the Air Mobility Command (the "AMC"). The General
Services Administration of the United States government also requires that
airlines participate in CRAF in order to receive United States government
business. The United States government is the largest customer of USAir. USAir
will commit at least four 767-200ER aircraft in support of military operations,
probably for aeromedical missions, as specified by the AMC. To date, the AMC has
not requested USAir to activate any of its aircraft under CRAF.

Ground Facilities
- -----------------

USAir leases the majority of its ground facilities, including executive and
administrative offices in Arlington, Virginia adjacent to Washington National;
its principal operating, overhaul and maintenance bases at the Pittsburgh and
Charlotte/Douglas International Airports; major training facilities in
Pittsburgh and Charlotte; central reservations offices in several cities; and
line maintenance bases and local ticket, cargo and administrative offices
throughout its system. USAir owns a building and vacant land in Fairfax,
Virginia, a training facility in Winston-Salem, North Carolina and reservations
facilities in San Diego, California and Orlando, Florida. USAir's building in
Fairfax, Virginia, which is leased to the U.S. government, and the vacant land
are currently for sale.

Terminal Construction Projects
- ------------------------------

USAir utilizes public airports for its flight operations under lease
arrangements with the government entities that own or control these airports.
Airport authorities frequently require airlines to execute long-term leases to
assist in obtaining financing for terminal and facility construction. Any future
requirements for new or improved airport facilities and passenger terminals are
likely to require additional expenditures and long-term commit-ments. Several
significant projects which affect large airports on USAir's route system are
discussed below.

- 130 -
<PAGE>

The new terminal at Pittsburgh International Airport commenced
operation in October 1992. The construction cost of the new
terminal, approximately $800 million, was financed largely through
the issuance of airport revenue bonds. As the principal tenant of
the new facility, USAir pays a substantial portion of the cost of
the new terminal through rents and other charges pursuant to a use
agreement which expires in 2018. USAir's terminal rental expense
at Pittsburgh was approximately $44 million annually in 1995. The
new facility has provided additional gate capacity for USAir and
has enhanced the efficiency and quality of its hub services at
Pittsburgh. In addition to the annual terminal rental expense,
USAir is recognizing approximately $13 million in annual rental
expense for property and equipment typically owned by USAir at
other airports. The annual terminal rental expense is subject to
adjustment, depending on the actual airport operating costs, among
other factors.

The East End Terminal at LaGuardia, which cost approximately
$173 million to construct, opened in the third quarter of 1992.
USAir, USAir Express and the USAir Shuttle operations at LaGuardia
are conducted from this terminal and the adjoining USAir Shuttle
terminal. The East End Terminal has 12 jet gates. USAir recogniz-
es approximately $31 million in annual rental expense for this
terminal and is responsible for all maintenance and operating
costs.

In 1993, USAir and the City of Philadelphia reached an
agreement to proceed with certain capital improvements at Philadel-
phia International Airport, where USAir has its third largest hub.
The improvements include approximately $109 million in various
terminal renovations and a new $220 million commuter airline runway
expansion project, exclusive of financing costs. Depending on the
timing of certain federal environmental reviews, USAir expects
construction on the terminal project will be completed in 1998.
The runway expansion project is not expected to be completed until
2000. USAir expects that its annual costs of operations at
Philadelphia International Airport will increase by approximately
$14 million once construction is complete, representing more than
a 40% increase.

The Washington National Airport Authority is currently
undertaking a $1 billion capital development project at Washington
National, which includes construction of a new terminal currently
expected to commence operation in the second quarter of 1997.
Based on current projections, USAir estimates that its annual
operating expenses at Washington National will increase by
approximately $10 million to $12 million.

- 131 -
<PAGE>

Legal Proceedings
- -----------------

USAir is involved in legal proceedings arising out of its two
aircraft accidents that occurred in July and September 1994 near
Charlotte, North Carolina and Pittsburgh, Pennsylvania, respective-
ly. The National Transportation Safety Board ("NTSB") held
hearings beginning in September 1994 relating to the July accident
and January 1995 relating to the September accident. In April
1995, the NTSB issued its finding of probable causes with respect
to the accident near Charlotte. It assigned as probable causes
flight crew errors and the failure of air traffic control to convey
weather and windshear hazard information. The NTSB has not yet
issued its final accident investigation report for the accident
near Pittsburgh. The NTSB, Boeing, the FAA and USAir jointly
conducted flight tests in October 1995 as part of the ongoing
investigation into the cause of this accident. In this regard,
USAir provided a 737-300 aircraft in the collective effort to
simulate the conditions at the time of the accident. More public
hearings were conducted in November 1995. The NTSB has indicated
that a determination of the cause of the accident is not likely
until sometime in 1996. USAir expects that it will be at least two
to three years before the accident litigation and related settle-
ments will be concluded. USAir believes that it is fully insured
with respect to this litigation. Therefore, USAir believes that
the litigation will not have a material adverse effect on USAir's
financial condition or results of operations, although any finding
of fault on USAir's part could create negative publicity and could
tarnish USAir's image.

In December 1995, USAir received a Civil Investigative Demand
("CID") from the DOJ relating to USAir's compliance with the terms
of a consent decree entered into in December 1992, as amended in
September 1994. The consent decree was entered into to resolve
litigation concerning USAir's methods of disseminating fare data to
the Airline Tariff Publishing Company. A CID is a request for
information in the course of an antitrust investigation and does
not constitute the institution of a civil or criminal action. The
CID issued in December 1995 seeks information concerning USAir's
use of travel dates in its fare filings, among other things.

- 132 -
<PAGE>

On March 19, 1993, the U.S. District Court in Atlanta, Georgia
entered a settlement involving USAir and five other U.S. air
carrier defendants in the Domestic Air Transportation Antitrust
Litigation class action lawsuit. The class action suit, which was
filed in July 1990, alleged that the airlines used ATPCo to signal
and communicate carrier pricing intentions and otherwise limit
price competition for travel to and from numerous hub airports.
Under the terms of the settlement, the six air carriers paid $45
million in cash and issued $396.5 million in certificates valid for
purchase of domestic air travel on any of the six airlines.
USAir's share of the cash portion of the settlement, $5 million,
was recorded in results of operations for the second quarter of
1992. The certificates, mailed to approximately 4.1 million
claimants between December 15 and 31, 1994, provide a dollar-for-
dollar discount against the cost of a ticket generally of up to a
maximum of 10% per ticket, depending on the cost of the ticket. It
is possible that this settlement could have a dilutive effect on
USAir's passenger transportation revenue and associated cash flow.
However, due to the interchangeability of the certificates among
the six carriers involved in the settlement, the possibility that
carriers not party to the settlement will honor the certificates,
and the potential stimulative effect on travel created by the
certificates, USAir cannot reasonably estimate the impact of this
settlement on further passenger revenue and cash flows. USAir has
employed the incremental cost method to estimate a range of costs
attributable to the exercise of the certificates, based on the
assumption that the estimated maximum number of certificates to be
redeemed for travel on USAir will be related to USAir's market
share relative to the total market share of the six carriers
involved in the settlement. USAir's estimated percentage of such
market share is less than 9%. Incremental costs include unit costs
for passenger food, beverages and supplies, fuel, reservations,
communications, liability insurance, and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis.
USAir has estimated that its incremental cost will not be material
based on the equivalent free trips associated with the settlement.

- 133 -
<PAGE>

million, whichever first occurs. On May 10, 1995, a U.S. federal district court
judge approved the settlement. USAir does not expect that this settlement will
have a material adverse effect on its financial condition or results of
operations. As was the case with the settlement of the private antitrust
litigation, it is difficult to predict the amount of discounted state travel
that will occur on USAir. Thus, a dollar impact of the settlement cannot be
estimated.

In February and March 1995, several class action lawsuits were filed in
various federal district courts by travel agencies and a travel agency trade
association alleging that most of the major U.S. airlines, including USAir,
violated the antitrust laws when they individually capped travel agent base
commissions at $50 for round-trip domestic tickets with base fares above $500
and at $25 for one-way domestic tickets with base fares above $250. The lawsuits
have been consolidated in the federal district of Minnesota. The plaintiffs are
seeking unspecified treble damages for restraint of trade. The case is expected
to go to a jury trial in 1996. While USAir believes that its actions in
establishing a commission cap were in full compliance with the antitrust laws,
the Company is unable to predict at this time the ultimate resolution of the
litigation or the potential impact on its financial condition and results of
operations.

In March 1992, USAir entered into an agreement with In-Fight Phone-
Corporation ("IFPC") which contemplated the installation of IFPC's telephone and
data system on substantially all of USAir's aircraft (although only 80 aircraft
were in fact equipped). The phone system did not perform as required and IFPC
otherwise breached the March 1992 agreement. Accordingly in October 1995, USAir
terminated its agreement with IFPC for cause. On December 6, 1995, IFPC
filed suit in Cook County (Chicago), Illinois, against USAir seeking equitable
relief and damages in excess of $186 million. On December 7, 1995, USAir
successfully defended IFPC's emergency motion for a temporary restraining order.
On December 13, 1995, IFPC's motion for a preliminary injunction was denied and
IFPC has relinquished its right to appeal that decision. IFPC's claim for
damages remains pending. In June 1996, USAir filed a counterclaim against IFPC
seeking in excess of $25 million in damages. USAir is unable to predict at this
time the ultimate resolution or potential financial impact on USAir's financial
condition and results of operations of this lawsuit. In June 1996, USAir entered
into an agreement with GTE Airfone to equip 397 aircraft with GTE Airfone's on-
board telephone systems.

- 134 -
<PAGE>

USAir has received notices from the U.S. Environmental
Protection Agency and various state agencies that they are
potentially responsible parties with respect to the remediation of
existing sites of environmental concern. Only two of these sites
have been included on the Superfund National Priorities List.
USAir continues to negotiate with various governmental agencies
concerning known and possible cleanup sites. USAir has made
financial contributions for the performance of remedial investiga-
tions and feasibility studies at sites in Moira, New York;
Escondido, California; and Elkton, Maryland. The contributions
totalled approximately $200 thousand for 1995, 1994 and 1993 combined.

[remainder of page left blank intentionally]

- 135 -
<PAGE>

Also, USAir has been identified as a potentially responsible
party ("PRP") for environmental contamination at Boston Logan
Airport. There are a number of other PRPs at the site. The Company
is presently unable to assess its proportionate share of contribu-
tion, but does not expect any such contribution to have a material
adverse effect on its financial condition or results of operations.

Because of changing environmental laws and regulations, the
large number of other potentially responsible parties and certain
pending legal proceedings, it is not possible to reasonably
estimate the amount or timing of future expenditures related to
environmental matters. The Company provides for costs related to
environmental contingencies when a loss is probable and the amount
is reasonably estimable. Although management believes adequate
reserves have been provided for all known contingencies, it is
possible that additional reserves could be required in the future
which could have a material effect on results of operations.
However, the Company believes that the ultimate resolution of known
environmental contingencies should not have a material adverse
effect on its financial position or results of operations based on
its experience with similar environmental sites.

The Equal Employment Opportunity Commission and various state
and local fair employment practices agencies are investigating
charges by certain job applicants, employees and former employees
of USAir involving allegations of employment discrimination in
violation of Federal and state laws. The plaintiffs in these cases
generally seek declaratory and injunctive relief and monetary
damages, including back pay. In some instances they also seek
classification adjustment, compensatory damages and punitive
damages. Such proceedings are in various stages of litigation and
investigation, and the outcome of these proceedings is difficult to
predict. In the Company's opinion, however, the disposition of
these matters is not likely to have a material adverse effect on
its financial condition or results of operations.

[remainder of page left blank intentionally]

- 136 -
<PAGE>

MANAGEMENT
----------

Directors and Executive Officers
- --------------------------------

The Directors and executive officers of USAir as of May 20,
1996 are as follows:

Name Age Position
- -------------------------- --- ---------------------------------
<S> <C> <C>

Bruce R. Aubin............ 65 Senior Vice President-
Maintenance Operations

Robert Ayling............. 49 Director

Robert W. Bogle........... 57 Director

Edwin I. Colodny.......... 69 Director

Mathias J. DeVito......... 65 Director

Robert L. Fornaro......... 43 Senior Vice President-Planning

Rakesh Gangwal............ 42 Director; President and Chief
Operating Officer

George J.W. Goodman....... 65 Director

John W. Harper............ 55 Senior Vice President-Finance and
Chief Financial Officer

John W. Harris............ 48 Director

Edward A. Horrigan, Jr.... 66 Director

W. Thomas Lagow........... 54 Executive Vice President-Marketing

Robert LeBuhn............. 64 Director
</TABLE>

[table continued on following page]

- 137 -

<PAGE>

Name Age Position
- -------------------------- --- ---------------------------------
<S> <C> <C>
John R. Long, III......... 47 Executive Vice President-
Human Resources and Training

Roger P. Maynard.......... 53 Director

John G. Medlin, Jr........ 62 Director

Hanne M. Merriman......... 54 Director

Lawrence M. Nagin......... 55 Executive Vice President-Corporate
Affairs and General Counsel

Robert C. Oaks............ 60 Senior Vice President-Operations

Nancy R. Rohrbach......... 50 Senior Vice President-Public &
Community Relations

Raymond W. Smith.......... 58 Director

Derek M. Stevens.......... 57 Director

Stephen M. Wolf........... 54 Director; Chairman of the Board
and Chief Executive Officer

</TABLE>

Certain Information Concerning Directors and Officers
- -----------------------------------------------------

There are no family relationships among any of the officers
listed above. No officer was selected pursuant to any arrangement
between him or her and any other person. Officers are elected
annually to serve for the following year or until the election and
qualification of their successors. All the executive officers
except Ms. Rohrbach and Messrs. Wolf, Gangwal, Nagin, Lagow, Aubin,
Fornaro and Harper have been actively engaged in the business and
affairs of USAir during the past five years. See "Management" for
the business experience of the officers listed above since at least
January 1, 1991.

- 138 -
<PAGE>

Each of the Directors of USAir is also a Director of USAir
Group. Messrs. Harper, Nagin and Wolf each holds the same office
at USAir Group as each does at USAir. Ms. Rohrbach is Vice Presi-
dent-Public and Community Relations of USAir Group. Information
with respect to the business experience and affiliations of the
Directors and executive officers of USAir since at least January 1,
1991 is set forth below:

Mr. Aubin was Executive Advisor to the Vice Chairman,
President and Chief Executive Officer of Air Canada prior to
joining USAir and, prior to that position, he served as Senior Vice
President Technical Operations and Chief Technical Officer of Air
Canada. He was elected Senior Vice President-Maintenance Opera-
tions of USAir in January 1994.

Mr. Ayling was appointed Chief Executive of BA in January
1996. He was Director of Marketing and Operations of BA from
September 1991 until his appointment as Group Managing Director of
BA in February 1993 and has been a member of the BA Board of
Directors since 1991. Mr. Ayling is a Director of Sun Alliance and
London Insurance Plc, and is a lawyer by profession.

Mr. Bogle is President and Chief Executive Officer of The
Philadelphia Tribune, the nation's oldest newspaper addressed to
the African American community. He assumed his position in May
1989 and previously held other high-level positions at the
newspaper. In June 1995, Mr. Bogle completed his tenure as
President of the National Newspaper Publishers Association, a trade
association comprising the publishers of 205 Black-owned newspapers
from across the nation. Mr. Bogle is Chairman of the Council of
Trustees at Cheyney University, serves on the Executive Committee
of the greater Philadelphia Chamber of Commerce and is a board
advisor to the United Negro College Fund. He is also a member of
the Executive Committee of the Boy Scouts of America, a member of
the Union League of Philadelphia and a life member of Kappa Alpha
Psi fraternity. Mr. Bogle is Vice Chairman of The Hospitals and
Higher Education Authority of Philadelphia and Vice Chairman of
Amalgamated Publishers, Inc. He serves on the Board of Directors
of The American Red Cross, Presbyterian Medical Center of Philadel-
phia, the Police Athletic League, the Christian Street YMCA and The
American Heart Association. Mr. Bogle is also a founding member of
United Media of Philadelphia, an organization comprised of media
owned and operated by African Americans.

- 139 -
<PAGE>

Mr. Colodny is of counsel to the law firm of Paul, Hastings,
Janofsky & Walker. Paul, Hastings, Janofsky & Walker provides
legal services to USAir. Mr. Colodny retired as Chairman of the
Board of USAir and USAir Group in July 1992. He served as Chief
Executive Officer of USAir from 1975 until retiring as an employee
of USAir in June 1991. Mr. Colodny is a Director of Lockheed
Martin Corporation, Comsat Corporation and Esterline Technologies,
Inc., and is a member of the Board of Trustees of the University of
Rochester.

Mr. DeVito is Chairman of the Board of The Rouse Company (real
estate development and management). He also serves as a Director
of First Maryland Bancorp, Allied Irish Bank plc, and subsidiaries
of The Rouse Company. He is a member of the Board of the Maryland
Institute, College of Art, Chairman of the Board of Empower
Baltimore Management Corporation and former Chairman of the Greater
Baltimore Committee.

Mr. Fornaro was Vice President-Research of Jesup & Lamont
Securities until February 1988, when he became Senior Vice
President-Marketing of Braniff, Inc. In August 1988, Mr. Fornaro
became Senior Vice President-Market Planning of Northwest, the
position he held until February 1992. He was elected Senior Vice
President-Planning of USAir in March 1992.

Mr. Gangwal became President and Chief Operating Officer of
USAir and USAir Group on February 19, 1996. Mr. Gangwal had served
as Executive Vice President-Planning and Development of Air France
since November 1994. Mr. Gangwal previously served in a variety of
management roles at United over an eleven-year period, culminating
in the role of Senior Vice President-Planning.

Mr. Goodman is President of Continental Fidelity, Inc., which
provides editorial and investment services. He is the author of a
number of books and articles on finance and economics under the pen
name "Adam Smith" and is the host of a television series of that
name seen on public broadcasting stations in the U.S. and on other
networks abroad. He is a Director of Cambrex Corporation. Mr.
Goodman also serves as a member of the Advisory Committee of the
Center for International Relations at Princeton University and is
a Trustee of the Urban Institute.

- 140 -
<PAGE>

Mr. Harper was Senior Vice President-Marketing and Information Systems
at Axe-Houghton Management (investment management) until his election as Vice
President and Controller of USAir in December 1991. He was elected Senior Vice
President-Information Systems of USAir in October 1992 and Senior Vice
President-Finance and Chief Financial Officer of USAir and USAir Group in 1994.

Mr. Harris is President of The Harris Group (real estate development).
From 1972 through 1991, he was President of The Bissell Companies, Inc. (real
estate development). He is a Director of Southern Bell Telephone and Telegraph
Company and Dominion Resources, Inc. Mr. Harris is former Chairman of the
Greater Charlotte Chamber of Commerce and a member of the Board of Trustees of
the University of North Carolina and serves on the boards of several community
service organizations.

Mr. Horrigan is the former Chairman of the Board of Directors of Liggett
Group Inc. (consumer products), a position he had held from May 1993 until his
retirement in December 1994. He is also the retired Vice Chairman of the Board
of RJR Nabisco, Inc. and retired Chairman and Chief Executive Officer of R. J.
Reynolds Tobacco Company (consumer products). He is a Director of the Haggai
Foundation.

Mr. Lagow was Senior Vice President-Market Planning of Northwest until
February 1988, when he became Senior Vice Presi-dent-Planning of United. Mr.
Lagow held that position until he was elected Executive Vice President-Marketing
of USAir in February 1992.

Mr. LeBuhn was the Chairman of Investor International (U.S.), Inc.
(investments) until his retirement in January 1995. He is now a private investor
and is a Director of Acceptance Insurance Companies, Lomas Financial Corp.,
Cambrex Corporation and Enzon, Inc. He is Trustee and President of the Geraldine
R. Dodge Foundation, Morristown, New Jersey, and is a member of the New York
Society of Security Analysts.

Mr. Long served as Senior Vice President-Administration of USAir until
his election as Senior Vice President-Customer Operations of USAir in June 1989.
He was elected Senior Vice President-Customer Services in March 1991 and
Executive Vice President-Customer Services in May 1992 and appointed Executive
Vice President-Human Resources and Training in May 1996.

- 141 -
<PAGE>

Mr. Maynard has been Director of Investments and Acquisitions
of BA since December 1995. Previously, from 1987, he held various
positions at BA, including Director of Corporate Strategy, Director
of Investor Relations & Marketplace Performance and Executive Vice
President North America. Mr. Maynard is a Director of Qantas
Airways Limited.

Mr. Medlin is Chairman of the Board and, until December 31,
1993, was Chief Executive Officer of Wachovia Corporation (bank
holding company). Mr. Medlin also serves as a Director of
BellSouth Corporation, Burlington Industries, Inc., Media General,
Inc., National Services Industries, Inc., RJR Nabisco Holdings
Corp. and Nabisco Holdings Corp.

Mrs. Merriman is the Principal in Hanne Merriman Associates
(retail business consultants). Previously, she served as President
of Nan Duskin, Inc. (retailing), President and Chief Executive
Officer of Honeybee, Inc., a division of Spiegel, Inc., and
President of Garfinckel's, a division of Allied Stores Corporation.
Mrs. Merriman is a Director of CIPSCO, Inc., Central Illinois
Public Service Company, State Farm Mutual Automobile Insurance
Company, The Rouse Company, Ann Taylor Stores Corporation and T.
Rowe Price Mutual Funds. She is a member of the National Women's
Forum and a Trustee of The American-Scandinavian Foundation. She
was a member of the board of directors of the Federal Reserve Bank
of Richmond, Virginia from 1984 to 1990 and served as Chairman in
1989-1990.

Mr. Nagin practiced law with Skadden, Arps, Slate, Meagher &
Flom from August 1994 until he joined USAir in February 1996. He
previously served in several executive positions at UAL and United
from September 1988 to July 1994, culminating in the role of
Executive Vice President-Corporate Affairs and General Counsel of
UAL and United. From 1980-1988, Mr. Nagin was Senior Vice
President and General Counsel of Flying Tigers.

General Oaks is a retired United States Air Force General. He
was commander of the Air Training Command, the service's organiza-
tion responsible for all initial training, including flight
training, prior to his last post in his 35-year career with the Air
Force, as commander of U.S. Air Forces in Europe. He retired from
the Air Force in 1994 and joined USAir in December 1994 as its Vice
President-Corporate Safety and Regulatory Compliance. He was
elected to his present position in February 1995.

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<PAGE>

Ms. Rohrbach served as a member of the White House legislative
liaison team (1981 to 1986) and as Assistant to the President and
Secretary to the Cabinet (1987 to 1988). In 1989 and 1990, she was
a resident fellow at Harvard University's Institute of Politics and
a consultant to the Department of Energy. She was Assistant
Secretary of Labor for Policy during 1991 and 1992 and a public
policy and communications consultant during 1993. Ms. Rohrbach was
elected Vice President-Public and Community Relations of USAir
Group and Senior Vice President-Public and Community Relations of
USAir in January 1994.

Mr. Smith is Chairman of the Board and Chief Executive Officer
of Bell Atlantic Company (telecommunications). Previously, Mr.
Smith had served as Vice Chairman and President of Bell Atlantic
and Chairman of The Bell Telephone Company of Pennsylvania. He is
a member of the Board of Directors of CoreStates Financial Company,
a trustee of the Carnegie Mellon University and is active in many
civic and cultural organizations.

Mr. Stevens has been Chief Financial Officer and a Director of
BA since 1989. From 1981 to 1989, he was Finance Director of TSB
Group plc (financial institution). He is a Director of Commercial
Union Plc.

Mr. Wolf is Chairman of the Board of Directors and Chief
Executive Officer of USAir Group and USAir and was elected to those
positions in January 1996. Immediately prior to joining USAir, Mr.
Wolf was a senior advisor to the investment bank Lazard Freres &
Co. From 1987 to July 1994, Mr. Wolf was chief executive officer
of UAL and United and became Chairman of each in 1988. From 1986
to 1987, Mr. Wolf was Chief Executive Officer of Tiger Internation-
al, Inc. and Flying Tigers. From 1984 to 1986, Mr. Wolf was
President and Chief Executive Officer of Republic. Prior to that
time Mr. Wolf held senior management positions at Continental, Pan
Am and American. Mr. Wolf is a Director of Philip Morris Compa-
nies, R.R. Donnelley & Sons Co. and the Alzheimer's Disease and
Related Disorders Association. He is also a trustee of Northwest-
ern University and Rush-Presbyterian-St. Luke's Medical Center.

[remainder of page left blank intentionally]

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<PAGE>

Compensation of Executive Officers
- ----------------------------------

The Summary Compensation Tables below set forth the compen-
sation paid during the years indicated to each of the Chief
Executive Officer and the four remaining most highly compensated
executive officers of USAir Group and USAir:

Summary Compensation Tables
- ---------------------------
<TABLE>
Annual Compensation
-------------------
<CAPTION>

Other
Name and Principal Annual Compen-
Position Year Salary Bonus sation(E)
- -------------------- ---- ----------- ----------- --------
<S> <C> <C> <C> <C>
Seth E. Schofield 1995 $417,908(B) $212,500(D) $228,949
Chairman and Chief 1994 $500,000 $ 0 $116,136
Executive Officer of 1993 $475,635(C) $ 0 $275,601
USAir Group and USAir

Frank L. Salizzoni(A) 1995 $335,600(B) $136,000(D) $ 96,970
President and Chief 1994 $385,769 $ 0 $ 11,020
Operating Officer of 1993 $317,558(C) $ 0 $ 45,374
USAir Group and USAir

W. Thomas Lagow 1995 $325,000 $ 96,688(D) $ -
Executive Vice Presi- 1994 $325,000 $ 0 $ -
dent-Marketing of 1993 $310,058(C) $ 0 $ -
USAir

James T. Lloyd 1995 $275,000 $ 81,813(D) $ 22,417
Executive Vice Presi- 1994 $275,000 $ 0 $ 18,705
dent, General Counsel 1993 $257,365(C) $ 0 $ 73,215
and Secretary of USAir
Group; Executive Vice
President and General
Counsel of USAir

John R. Long III 1995 $275,000 $ 81,813(D) $ 21,847
Executive Vice Presi- 1994 $275,000 $ 0 $ 36,458
dent-Customer 1993 $254,808(C) $ 0 $133,772
Services of USAir

</TABLE>
- 144 -
<PAGE>

<TABLE>
Long-Term Compensation
-----------------------
<CAPTION>

Restricted
Name and Principal Stock All Other
Position Year Awards(F) Options Compensa-
tion(H)
- ------------------- ---- ---------- --------- ----------
<S> <C> <C> <C> <C>
Seth E. Schofield 1995 -- -- $ 89,967
Chairman and Chief 1994 -- -- $ 74,821
Executive Officer 1993 -- -- $ 64,302
of USAir Group
and USAir

Frank L. Salizzoni(A) 1995 -- -- $134,926
President and Chief 1994 -- 100,000(G) $167,160(I)
Operating Officer of 1993 -- -- $ 52,222
USAir Group and USAir

W. Thomas Lagow 1995 $223,125 -- $301,410(J)
Executive Vice Presi- 1994 -- -- $286,225(J)
dent-Marketing of 1993 -- -- $282,521(J)
USAir

James T. Lloyd 1995 $223,125 -- $ 35,441
Executive Vice 1994 -- -- $ 40,424
President, General 1993 -- -- $ 36,188
Counsel and Secretary
of USAir Group; Execu-
tive Vice President
and General Counsel
of USAir

John R. Long III 1995 $223,125 -- $ 31,467
Executive Vice Presi- 1994 -- -- $ 10,693
dent-Customer 1993 -- -- $ 652
Services of USAir
</TABLE>

(A) Mr. Salizzoni was named President and Chief Operating
Officer of the USAir Group and USAir effective April 1,
1994.
(B) Amounts disclosed reflect a voluntary pay reduction
incurred by Messrs. Schofield and Salizzoni during 1995 of
$82,092 and $64,400, respectively.

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<PAGE>

(C) Amounts disclosed reflect reductions in salary during 1993
of $24,365, $12,250, $14,942, $10,904 and $7,508 for
Messrs. Schofield, Salizzoni, Lagow, Lloyd and Long,
respectively, which were implemented for all USAir officers
for a fifteen-month period commencing on January 1, 1992
and ending on March 29, 1993 pursuant to a comprehensive
cost reduction program at USAir.
(D) Earned in 1995 but paid in 1996.
(E) Amounts disclosed include for (i) 1995, $221,911, $88,210,
$22,417 and $16,870, (ii) 1994, $108,633, $10,391, $18,705,
and $29,410 and (iii) 1993, $271,288, $33,259, $73,215, and
$133,772, received by Messrs. Schofield, Salizzoni, Lloyd
and Long, respectively, to cover incremental tax liability
resulting from income derived from the lapsing of restric-
tions on the disposition of Restricted Stock. Restricted
Stock is Common Stock subject to certain restrictions on
disposition. Any amounts disclosed in the column that are
in excess of the amounts disclosed in the preceding sen-
tence represent income derived from personal travel on
USAir.
(F) On November 28, 1995, each of Messrs. Lagow, Lloyd and Long
were awarded 17,500 shares of Restricted Stock. Amount
shown is based on closing price ($12.75) on such date.
(G) Non-qualified stock option grant on April 1, 1994, the date
Mr. Salizzoni was named President and Chief Operating Offi-
cer of USAir Group and USAir.
(H) Under USAir's split dollar life insurance plan, individual
life insurance coverage is available to the named officers.
In 1993, USAir commenced paying the premium associated with
this coverage. In 1993, 1994 and 1995, USAir paid the re-
mainder of the premium associated with the whole life
component of the coverage. If all assumptions as to life
expectancy and other factors occur in accordance with
projections, USAir expects to recover the premiums it pays
with respect to the whole life component of the coverage.
The following amounts reflect the value of the benefits
accrued during the years indicated, calculated on an
actuarial basis, ascribed to the insurance policies pur-
chased on the lives of the named officers (plus the dollar
value of premiums paid by USAir with respect to term life
insurance): 1995 Mr.Schofield - $54,135, Mr. Salizzoni
- $38,111, Mr. Lagow - $36,780, Mr. Lloyd - $25,441 and Mr.
Long - $20,794; 1994 - Mr. Schofield - $31,194; Mr.
Salizzoni - $27,722; Mr. Lagow - $10,225; Mr. Lloyd -
$18,424 and Mr. Long - $644; 1993 - Mr. Schofield -
$29,328, Mr. Salizzoni - $26,010, Mr. Lagow - $9,716, Mr.
Lloyd - $17,291 and Mr. Long - $652. During 1993, 1994 and
1995, USAir made contributions to the accounts of Messrs.
Schofield, Salizzoni, Lagow, Lloyd and Long in certain
- 146 -

<PAGE>

defined contribution pension plans in the following
amounts: 1995 $35,652, $96,815, $14,630, $10,000 and
$10,673, respectively, 1994 - $43,627, $38,192, $26,000,
$22,000 and $10,049, respectively, and 1993 - $34,974,
$26,212, $22,805, $18,897 and $0, respectively.
(I) Amount disclosed also reflects $101,246 for reimbursement
of relocation expenses.
(J) Upon the commencement of his employment, USAir agreed to
pay Mr. Lagow $1 million over four years, which amount was
intended to compensate him for restricted stock and stock
options which he forfeited when he left his former employ-
er. The amount disclosed includes the annual installment,
$250,000, of the total payment.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
- --------------------------------------------------------------

The following table provides information on the number of
USAir Group options held by the named executive officers at
fiscal year-end 1995. None of the officers exercised any options
during 1995. The unexercised options held by one officer was in-
the-money based on the fair market value of the Common Stock on
December 29, 1995 ($13.25).

<TABLE>
<CAPTION>
Number of
Unexercised
Options/SARs at
Year End (#)

Name Exercisable Unexercisable
<S> <C> <C>
Seth E. Schofield 390,569 0
Frank L. Salizzoni 177,800 75,000
W. Thomas Lagow 153,211 0
James T. Lloyd 169,742 0
John R. Long III 100,722 0

</TABLE>

- 147 -
<PAGE>

<TABLE>
Value of
Unexercised
In-the-Money
Options/SARs at
Year End ($)(1)

Name Exercisable Unexercisable
- ---------------------- ------------- -------------
<S> <C> <C>
Seth E. Schofield $ 0 $ 0
Frank L. Salizzoni $ 137,500 $ 412,500
W. Thomas Lagow $ 0 $ 0
James T. Lloyd $ 0 $ 0
John R. Long III $ 0 $ 0

</TABLE>

Retirement Benefits
- -------------------

Prior to 1993, USAir's Retirement Plan (the "Retirement
Plan") for its salaried employees was comprised of two qualified
plans. The Retirement Plan was designed so that the two plans,
when aggregated, would provide noncontributory benefits based
upon both years of service and the employee's highest three-year
average annual compensation during the last ten calendar years of
service. The primary plan is a defined benefit plan which pro-
vides a benefit based on the factors mentioned above. The primary
plan is integrated with the Social Security program so that the
benefits provided thereunder are reduced by a portion of the
employee's benefits from Social Security. USAir's contributions
to the primary plan are not allocated to the account of any
particular employee. The primary plan was frozen on December 31,
1991, and accordingly, retirement benefits payable under the plan
were determinable on that date.

The secondary plan is a target benefit defined contribution
plan. The secondary plan was established in 1983 as a result of
changes to the Internal Revenue Code of 1986, as amended (the
"Code"), which lowered the maximum benefit payable from a defined
benefit plan. In the event that the benefit produced under the
primary plan formula cannot be accrued for any employee covered
by such plan because of the limit on benefits payable under
defined benefit plans, contributions were made on behalf of such
employee to the secondary plan. Such contributions were calculat-
ed to provide the benefit produced under the formula in the

- 148 -
<PAGE>

primary plan in excess of such limit, to the extent permitted
under the Code's limitation on the contributions to defined
contribution plans. USAir's contributions to the secondary plan
are allocated to individual employees' accounts. During 1995, no
contributions were made to any executive officer's account. The
secondary plan was also frozen on December 31, 1991.

Under the Retirement Plan, benefits usually begin at the
normal retirement age of 65. The Retirement Plan also provides
benefits for employees electing early retirement from ages 55
through 64. If such an election is made, the benefits may be
reduced to reflect the longer interval over which the benefits
will be paid. Executive officers participate in the Retirement
Plan on the same basis as other employees of USAir.

Contributions to and benefits payable under the Retirement
Plan must be in compliance with the applicable guidelines or
maximums established by the Code. USAir has adopted an unfunded
supplemental plan which will provide those benefits which would
otherwise be payable to officers under the Retirement Plan, but
which, under the Code, are not permitted to be funded or paid
through the qualified plans maintained by USAir. Benefit accruals
under the supplemental plan also ceased upon the freezing of the
Retirement Plan on December 31, 1991. Such supplemental plan
provides that any benefits under the unfunded supplemental plan
will be paid in the form of a single, lump sum payment. Such
supplemental plans are specifically provided for under applicable
law and have been adopted by many corporations under similar
circumstances. Messrs. Schofield, Salizzoni, Lloyd and Long are
currently entitled to receive retirement benefits in excess of
the limitations established by the Code.

- 149 -
<PAGE>

The following table presents the noncontributory benefits
payable per year for life to employees under the Retirement Plan
and the unfunded supplemental plan described above, assuming
normal retirement in the current year. The table also assumes the
retiree would be entitled to the maximum Social Security benefit
in addition to the amounts shown.

<TABLE>

Final Earn-
ings as
defined in Noncontributory Pension Based on Years of Service
the Plan 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
- ---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 19,507 $ 29,261 $ 39,014 $ 48,768 $ 53,768 $ 53,768

$200,000 43,507 65,261 87,014 108,768 118,768 118,768

$300,000 67,507 101,261 135,014 168,768 183,768 183,768

$400,000 91,507 137,261 183,014 228,768 248,768 248,768

$500,000 115,507 173,261 231,014 288,768 313,768 313,768

$600,000 139,507 209,261 279,014 348,768 378,768 378,768

$700,000 163,507 245,261 327,014 408,768 443,768 443,768

$800,000 187,507 281,261 375,014 468,768 508,768 508,768

The values reflected in the above chart represent the
application of the Retirement Plan formula to the specified
amounts of compensation and years of service. The compensation
covered by the Retirement Plan is salary and bonus, as reported
in the Summary Compensation Table. The credited years of service
under the Retirement Plan through the date of freezing of the
plan (December 31, 1991) for each of the individuals included in
the Summary Compensation Table are as follows: Mr. Schofield-30
years, Mr. Salizzoni-1 year, Mr. Lagow-none, Mr. Lloyd-5 years,
and Mr. Long-16 years.

</TABLE>

- 150 -
<PAGE>

USAir has entered into agreements with Messrs. Schofield,
Salizzoni, Lagow, Lloyd and Long which provide for a supplement
to their retirement benefits under the Retirement Plan. This
supplement is designed to provide such persons with those bene-
fits they would have received had they been employed by USAir for
the minimum number of years to be entitled to full retirement
benefits under the Retirement Plan and provides for pension
benefits to be calculated using their salary of record rather
than the salary in effect under various salary reduction pro-grams.

Employment Arrangements with Messrs. Wolf, Gangwal and Nagin
- ------------------------------------------------------------

Under his employment arrangements with USAir Group, Mr. Wolf
is entitled to an annual base salary of $500,000. In addition,
Mr. Wolf is eligible for an annual bonus pursuant to the terms of
the Executive Incentive Plan. Bonus eligibility will be based on
performance criteria established by the Human Resources Committee
or payable at the Committee's discretion if they believe perfor-
mance and circumstances are appropriate for such payment. If Mr.
Wolf achieves his target, he will receive a bonus of 50% of
annual base salary, which may be increased for results in excess
of the target up to a maximum bonus of 100% of base salary.

Mr. Wolf is entitled to an award of stock options and
restricted stock, as follows: (i) 1,300,000 stock options effec-
tive January 16, 1996, at an exercise price based on the fair
market value of the stock on January 16, 1996 ($12.1875) with
500,000 options vesting immediately on January 16, 1996, 575,000
options vesting on January 16, 1997, 75,000 options vesting on
January 16, 1998, 75,000 options vesting on January 16, 1999, and
the remaining 75,000 options vesting on January 16, 2000, and
(ii) 325,000 shares of restricted stock, effective January 16,
1996, vesting ratably on the first through fourth anniversaries
of the effective grant date.

USAir Group has entered into a supplemental retirement
agreement with Mr. Wolf which will provide him with a pension
benefit under the formula contained in USAir's frozen defined
benefit pension plan for salaried employees, on the basis that he
had "deemed credited service" under the plan for all of his 29
years of service within the airline industry and without regard
to certain limitations set forth in the Code. Benefits will be

- 151 -
<PAGE>

calculated on the assumption that Mr. Wolf's annual compensation
has been and will remain at the rate of the annual base salary
set forth above and the maximum bonus described above has been
earned. Mr. Wolf became vested in 25% of this supplemental
benefit on the date of his employment and will become incre-
mentally vested in the remainder of this supplemental benefit
ratably over a period of three years from the date of his employ-
ment. This benefit is subject to an offset for benefits payable
as a result of contributions from USAir to the tax-qualified and
non-qualified defined contribution retirement program for sala-
ried employees of USAir.

Under their employment arrangements with USAir Group,
Messrs. Gangwal and Nagin are entitled to annual base salaries of
$400,000 and $340,000, respectively. Upon employment, Mr. Gangwal
became entitled to the purchase and assignment by USAir of an
annuity with an after-tax value of $1 million and Mr. Nagin
received a $275,000 signing bonus. Both Mr. Gangwal and Mr. Nagin
are eligible for an annual bonus pursuant to the terms of USAir
Group's Executive Incentive Plan. Bonus eligibility will be based
on performance criteria to be established by the Human Resources
Committee or payable at the Committee's discretion if they
believe performance and circumstances are appropriate for such
payment. If Mr. Gangwal and Mr. Nagin achieve their targets, they
will receive a bonus of 50% and 35% of their annual base salary,
respectively, which may be increased for results in excess of the
target up to a maximum bonus of 100% and 70% of their base
salaries, respectively. Messrs. Gangwal and Nagin are entitled to
awards of 850,000 and 225,000 stock options, respectively,
effective January 31, 1996, at an exercise price of $14.875 (the
fair market value on January 31, 1996), with 20% of the respec
tive options vesting immediately on such dates and an additional
20% vesting on the first through fourth anniversaries of such
dates.

Messrs. Gangwal and Nagin received 250,000 and 50,000
shares, respectively, of restricted stock, with 50,000 and 10,000
shares, respectively, vesting immediately on February 19 and 6,
1996, respectively, and 20% of each such grant vesting on the
first through fourth anniversaries of such dates.

USAir has entered into supplemental retirement agreements
with Messrs. Gangwal and Nagin which will provide each
with a pension benefit under the formula contained in USAir's
frozen defined benefit pension plan for salaried employees, on
the basis that each had "deemed credited service" under the plan
accruing at the rate of: (1) five (Mr. Gangwal) or four (Mr.

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<PAGE>

Nagin) years of "deemed service" for each year of actual service
up through the fifth year of employment of each; and (2) one year
of service for each year of actual service after five years of
employment; up to a maximum of 30 years of credited service. The
benefits will be calculated on actual base salary and the assump-
tion that the maximum bonus described above has been earned. This
benefit is subject to an offset for benefits payable as a result
of contributions from USAir to the tax-qualified and non-quali-
fied defined contribution retirement program for salaried employ
ees of USAir.

In connection with their employment arrangements, each of
Messrs. Wolf, Gangwal and Nagin also received relocation assis-
tance (and, in the case of Messrs. Gangwal and Nagin, tax reim-
bursement related thereto) and became entitled to reimbursement
of fees for certain tax and financial planning advice. Each of
Messr. Wolf's, Gangwal's and Nagin's stock options and restricted
stock and benefits under the supplemental retirement agreement
will vest immediately upon a change-of-control, a termination of
employment without cause or upon resignation for good reason.

USAir Group will enter into agreements substantially similar
to the Employment Contracts (described below) with each of
Messrs. Wolf, Gangwal and Nagin.

Arrangements Concerning Termination of Employment and Change of
Control
- ----------------------------------------------------------------

In connection with their respective retirements, USAir Group
entered into certain arrangements with Messrs. Schofield, Saliz-
zoni and Lloyd.

Pursuant to an agreement approved by the Board of Directors,
in consideration for his past services to USAir and for services
between the date of the letter agreement and the time of his
retirement, USAir agreed to provide Mr. Schofield with (i)
payments required under his employment agreement with USAir Group

- 153 -
<PAGE>

for termination upon mutual agreement paid as if such termination
was by Mr. Schofield for "good reason", (ii) a six-month consult-
ing arrangement and (iii) supplemental pension benefits based on
his salary of record, as described below.

Upon his retirement, Mr. Schofield received an aggregate of
$1,719,231 pursuant to the terms of his Employment Agreement and
became entitled to receive payment for his six-month consulting
arrangement at his salary rate in effect on the date of his
retirement ($500,000).

Mr. Schofield's supplemental pension benefit will be calcu-
lated as follows: (a) the pension benefit calculated under the
benefit formula set forth in the USAir Retirement Plan as if the
Retirement Plan had not been frozen in 1991 and using Mr. Scho-
field's salary of record, rather than reduced salary, for the
years 1992, 1993, 1994 and 1995, less (b) the benefits payable to
Mr. Schofield in the aggregate under any qualified and non-
qualified pension plans of USAir (the "Pension Plans"), to the
extent such benefits are attributable to contributions made by
USAir, and (c) without regard to certain limitations set forth in
the Code. The supplemental benefit payable shall be unfunded and
shall be paid directly from USAir's general assets.

In connection with their resignations as executive officers
effective February 19, 1996 and February 5, 1996, respectively,
Mr. Salizzoni and Mr. Lloyd agreed to remain employees of USAir
through March 31, 1996 and April 4, 1996, respectively, to assist
their successors in transition. During the period of employment
from February 19 through March 31, 1996 in the case of Mr.
Salizzoni and February 5, 1996 through April 4, 1996 in the case
of Mr. Lloyd, each received (or will receive) his base salary and
all other compensation and benefits applicable to his previous
position as a senior officer. Upon their retirements, Mr. Sali-
zzoni received an amount equal to his base salary payable from
April 1, 1996 through the remainder of the "employment period"
ending on November 12, 1999 (an aggregate of $1,446,000) and Mr.
Lloyd received an amount equal to his base salary payable from
April 4, 1996 through the remainder of the "employment period"
ending on June 29, 1999 (an aggregate of $953,077).

USAir agreed to provide Mr. Salizzoni and Mr. Lloyd with (a)
service credit, (b) age credit, and (c) earnings credit at their
respective 1996 base salary rates, through the remainder of the
Employment Period under their Employment Agreements (i.e.,
through November 12, 1999 for Mr. Salizzoni and June 29, 1999 for

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<PAGE>

Mr. Lloyd) under their respective supplemental pension arrange-
ments. In addition, certain options held by Mr. Salizzoni lapsed
and certain unvested options (with respect to 75,000 shares)
vested and certain shares of restricted stock held by Mr. Lloyd
were forfeited and the restrictions on certain shares of re-
stricted stock (with respect to 5,250 shares) lapsed.

USAir currently has employment contracts (the "Employment
Contracts") with the executive officers (the "Executives") named
in the Summary Compensation Table who remain employees of USAir
Group. The terms of the Employment Contracts extend until the
earlier of the fourth anniversary thereof or the Executive's
normal retirement date and are subject to automatic one-year
annual extensions on each anniversary date (to the fourth anni-
versary of such anniversary date) unless advance written notice
is given by USAir. In exchange for each Executive's commitment to
devote his or her full business efforts to USAir, the agreements
provide that each Executive will be re-elected to a responsible
executive position with duties substantially similar to those in
effect during the prior year and will receive (1) an annual base
salary at a rate not less than that in effect during the previous
year, (2) incentive compensation as provided in the contract and
(3) insurance, disability, medical and other benefits generally
granted to other officers. In the event of a change of control,
as defined in each Employment Contract, the term of each Employ-
ment Contract is automatically extended until the earlier of the
fourth anniversary of the change of control date or the Execu-
tive's normal retirement date.

The Employment Contracts provide that, should USAir or any
successor fail to re-elect the Executive to his or her position,
assign the Executive to inappropriate duties which result in a
diminution in the Executive's position, authority or responsibil-
ities, fail to compensate the Executive as provided in the
Employment Contract, transfer the Executive in violation of the
Employment Contract, fail to require any successor to USAir to
comply with the Employment Contract or otherwise terminate the
Executive's employment in violation of the Employment Contract,
the Executive may elect to treat such failure as a breach of the
Employment Contract if the Executive then terminates employment.
As liquidated damages as the result of an event not following a
change of control that is deemed to be a breach of the Employment
Contracts, USAir or its successor would be required to pay the
Executive a lump sum equal to his or her annual base salary for
the then remaining term of the Employment Contract, and to
continue granting certain employee benefits for the then remain-
ing term of the Executive's Employment Contract. If the breach

- 155 -
<PAGE>

follows a change of control, the Executive would be entitled to
receive (i) an amount equal to the product of three times the sum
of the Executive's annual base salary plus an annual bonus, (ii)
a lump sum equal to the actuarial equivalent of the pension
benefits which the Executive would have received had he or she
remained employed by USAir until the end of the term of the
Employment Contract, (iii) medical benefits until such time as
the Executive qualifies for group medical benefits from another
employer, (iv) travel benefits for the Executive's life, (v)
reimbursement of reductions in salary sustained by the Executive
as a result of a comprehensive cost reduction program initiated
by USAir in October 1991, and (vi) continuation of certain other
benefits during the remainder of the term of the Employment
Contract. In addition, except under certain circumstances, during
the 30-day period immediately following the first anniversary of
a change of control any Executive could elect to terminate his or
her Employment Contract for any reason and receive the liquidated
damages described in the immediately preceding sentence. Each
Employment Contract provides that if USAir breaches the Employ-
ment Contract, as described above, each Executive shall be
entitled to recover from USAir reasonable attorney's fees in
connection with enforcement of such Executive's rights under the
Employment Contract. Each Employment Contract also provides that
any payments the Executive receives in the event of a termination
after a change of control shall be increased, if necessary, such
that, after taking into account all taxes he or she would incur
as a result of such payments, the Executive would receive the
same after-tax amount he or she would have received had no excise
tax been imposed under Section 4999 of the Code.

Currently, under USAir Group's 1984 Stock Option and Stock
Appreciation Rights Plan (the "1984 Plan") and 1988 Stock Incen-
tive Plan (the "1988 Plan," and together with the 1984 Plan, the
"Plans"), pursuant to which employees of USAir Group and its
subsidiaries have been awarded stock options and stock apprecia-
tion rights with respect to Common Stock and, in the case of the
1988 Plan, shares of Restricted Stock, the occurrence of a change
of control, as defined, would make all granted options immediate-
ly exercisable without regard to the vesting provisions thereof.
In addition, grantees would be able, during the 60-day period
immediately following a change of control, to surrender all
unexercised stock options under the Plans to USAir Group for a
cash payment equal to, in the case of options not issued in
tandem with stock appreciation rights, the excess, if any, of the
fair market value of the Common Stock over the exercise prices of
such stock options or, in the case of options issued in tandem
with stock appreciation rights, the positive value of such stock
appreciation rights.

- 156 -
<PAGE>

BENEFICIAL SECURITY OWNERSHIP
-----------------------------

USAir Group owns all the outstanding stock of USAir. The
following information pertains to Common Stock, Series A Pre-
ferred Stock, Series F Preferred Stock, Series T Preferred Stock
and Depositary Shares ("Depositary Shares"), each representing
1/100 of a share of USAir Group's $437.50 Series B Cumulative
Convertible Preferred Stock, without par value ("Series B Pre-
ferred Stock"), beneficially owned by all directors, nominees for
director and executive officers of USAir Group as of January 31,
1996. Unless indicated otherwise, the information refers to
ownership of Common Stock of USAir Group. Unless indicated
otherwise by footnote, the owner exercises sole voting and
investment power over the securities (other than unissued securi-
ties, the ownership of which has been imputed to such owner).

<TABLE>
<CAPTION>
Number of Percent of
Owner Shares Class(1)
----- --------- ----------
Directors
- ---------
<S> <C> <C>
Robert J. Ayling --(2) (2)
Robert W. Bogle 1,500
Edwin I. Colodny 84,512(3)
Mathias J. DeVito 700
Rakesh Gangwal --(4)
George J. W. Goodman 200 Depositary Shares(5)
John W. Harris 400
Edward A. Horrigan, Jr. 500
Robert LeBuhn 8,000
Roger P. Maynard --(2) (2)
John G. Medlin, Jr. 2,000
Hanne M. Merriman 1,500
Raymond W. Smith 500
Derek M. Stevens --(2) (2)
Stephen M. Wolf --(6)
</TABLE>
- 157 -
<PAGE>

<TABLE>
<CAPTION>
Number of Percent of
Owner Shares Class(1)
----- --------- ----------
Executive Officers
- ------------------
<S> <C> <C>
Seth E. Schofield 482,889(7)
Frank L. Salizzoni 192,800(8)
W. Thomas Lagow 185,711(9)
James T. Lloyd 208,992(10)
John R. Long III 129,539(11)

25 directors and
executive officers
of USAir Group as a group 1,687,872.5(12) 2.7%
</TABLE>
_________

(1) Percentages are shown only where they exceed one percent of
the number of shares outstanding and, in the case of Common Stock
holdings, are based on shares of Common Stock outstanding on
January 31, 1996.

(2) A wholly-owned subsidiary of BA is recordholder of 30,000 or
100% of the outstanding shares of Series F Preferred Stock, 152.1
or 100% of the outstanding shares of the Series T-1 Preferred
Stock and 9,919.8 or 100% of the outstanding shares of the Series
T-2 Preferred Stock pursuant to the Investment Agreement dated as
of January 21, 1993 with USAir Group (as amended, the "Investment
Agreement"). Messrs. Ayling, Maynard and Stevens are Chief
Executive, Director of Investments and Acquisitions and Chief
Financial Officer, respectively, of BA and have been designated
by BA to act as directors of USAir and USAir Group pursuant to
the Investment Agreement. Messrs. Ayling, Maynard and Stevens
each disclaims beneficial ownership of Series F Preferred Stock
and Series T Preferred Stock. See the following table for infor-
mation concerning the voting power of Series F Preferred Stock
and Series T Preferred Stock.

(3) The listing of Mr. Colodny's holding includes 40,000 shares
of Common Stock issuable within 60 days of January 31, 1996 upon
exercise of stock options.

(4) See "Management" for a description of Mr. Gangwal's rights
to obtain shares of Common Stock subject to certain restrictions
upon disposition ("Restricted Stock") and stock options.

- 158 -

<PAGE>

(5) Mr. Goodman's holding of Depositary Shares is convertible
into 498.5 shares of Common Stock.
(6) See page 15 for a description of Mr. Wolf's rights to obtain
certain shares of Restricted Stock and stock options.
(7) The listing of Mr. Schofield's holdings includes 390,569
shares of Common Stock issuable within 60 days of January 31,
1996 upon exercise of stock options.
(8) The listing of Mr. Salizzoni's holdings includes 177,800
shares of Common Stock issuable within 60 days of January 31,
1996 upon exercise of stock options.
(9) The listing of Mr. Lagow's holding includes 153,211 shares
of Common Stock issuable within 60 days of January 31, 1996 upon
exercise of stock options.
(10) The listing of Mr. Lloyd's holding includes 163,992 shares
of Common Stock issuable within 60 days of January 31, 1996 upon
exercise of stock options.
(11) The listing of Mr. Long's holding includes 96,472 shares of
Common Stock issuable within 60 days of January 31, 1996 upon
exercise of stock options.
(12) The listing of all directors' and officers' holdings in-
cludes, in the case of Depositary Shares, the number of shares of
Common Stock into which the Depositary Shares are convertible,
and also includes 1,292,893 shares of Common Stock issuable
within 60 days of January 31, 1996 upon exercise of stock options
and 135,500 shares of Restricted Stock.

Effective December 31, 1995 the retirement Plan for Outside
Directors of USAir Group was terminated and the value of the
accrued benefits for past service was converted into units of
phantom stock of the Corporation ("Deferred Stock Units") based
on the average price of the stock in the month of December 1995.
Set forth below are the number of Deferred Stock Units held by
each director and nominee for director. Although each Deferred
Stock Unit represents the economic equivalent of a share of
Common Stock, no voting rights are attached thereto and the
Deferred Stock Units lack certain other attributes of Common
Stock.

The only persons known to USAir (from Company records and
reports on Schedules 13D and 13G filed with the Commission which
owned, as of April 26, 1996, more than 5% of USAir Group's Common
Stock, Series A Preferred Stock, Series F Preferred Stock and
Series T Preferred Stock are listed below:

- 159 -
<PAGE>

<TABLE>
<CAPTION>
Amount and Percent
Name and Address nature of beneficial of
Title of Class of beneficial owner ownership Class(1)
- ---------------- ----------------------- -------------------- ----------
<S> <C> <C> <C>
Series A Berkshire Hathaway Inc. 358,000(2) 100%(3)
Preferred Stock 1440 Kiewit Plaza
Omaha, Nebraska 68131

Series F BritAir Acquisition Corp. Inc. 30,000(4) 100%(5)
Preferred Stock 75-20 Astoria Blvd.
Jackson Heights, NY 11370

Series T BritAir Acquisition Corp. Inc. 9,919.8(6) 100%(5)
Preferred Stock 75-20 Astoria Blvd.
Jackson Heights, NY 11370

Common Stock Tiger Management Corp. 6,000,000 9.36%
101 Park Avenue, 48th Floor
New York, New York 10178
</TABLE>

(table continued on following page)

- 160 -
<PAGE>

<TABLE>
<CAPTION>
Amount and Percent
Name and Address nature of beneficial of
Title of Class of beneficial owner ownership Class(1)
- ---------------- ----------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock FMR Corp. 4,147,883(7) 6.47%
82 Devonshire Street
Boston, Massachusetts 02109

Common Stock Waddell & Reed 4,766,800(8) 7.44%
6300 Lamar
Shawnee Mission, Kansas 66201

Common Stock The Equitable Companies 5,657,125(9) 9.0%
Incorporated
787 Seventh Avenue
New York, New York 10019

Series B Ryback Management 427,900 10.0%
Preferred Stock 7711 Carondelet
St. Louis, Missouri 63105

Series B Global Bermuda Limited/ 408,000 9.57%
Preferred Stock Merced Partners, MN
601 Carlson Parkway, Ste. 200
Minnetonka, Minnesota 55305
</TABLE>

- 161 -
<PAGE>

<TABLE>
<CAPTION>
Amount and Percent
Name and Address nature of beneficial of
Title of Class of beneficial owner ownership Class(1)
- ---------------- ----------------------- -------------------- --------
<S> <C> <C> <C>
Series B Everest Capital Limited 252,399 5.92%
Preferred Stock Comer House
20 Parliament Street
P.O. Box HM 2458
Hamilton, Bermuda HMJX

Series B Soros Fund Management 218,600 5.13%
Preferred Stock 888 Seventh Avenue, 32nd Flr.
Suite 3300
New York, New York 10106
</TABLE>

- 162 -

<PAGE>

(1) Represents percent of class of stock outstanding on April 26,
1996.
(2) Number of shares as to which such person has shared voting
power-358,000; shared dispositive power-358,000.
(3) These shares of Series A Preferred Stock are owned directly by
affiliates of Berkshire, are convertible, under certain circum-
stances and subject to certain antidilution adjustments, into
9,239,944 shares of Common Stock and represent approximately 10.2%
of the combined voting power of the outstanding Common Stock,
Series A Preferred Stock, Series F Preferred Stock and Series T
Preferred Stock, voting as a single class, at the meeting. A number
of Rights, equal to the number of shares of Common Stock into which
the Series A Preferred Stock is convertible, is also owned by this
person.
(4) Number of shares as to which BA has sole voting power and sole
dispositive power - 30,000.
(5) BritAir Acquisition Corp. Inc. is a wholly-owned subsidiary of
BA and owns Series F Preferred Stock and Series T Preferred Stock
pursuant to the Investment Agreement. Series F Preferred Stock and
Series T Preferred Stock are convertible, under certain circum-
stances on or after January 21, 1997 and subject to certain
antidilution adjustments and Foreign Ownership Restrictions, into
a total of 15,458,851 and 3,831,695 shares of Common Stock,
respectively. Together, the Series F Preferred Stock and Series T
Preferred Stock represent approximately 21.2% of the combined
voting power of the outstanding Common Stock, Series A Preferred
Stock, Series F Preferred Stock and Series T Preferred Stock,
voting as a single class, at the meeting. A number of Rights, equal
to the number of shares of Common Stock into which the Series F
Preferred Stock and Series T Preferred Stock are convertible, are
also owned by this person. As disclosed above, three directors of
the Company, Messrs. Ayling, Maynard and Stevens, have been
designated by BA to act as directors of USAir and USAir Group
pursuant to the Investment Agreement and disclaim beneficial
ownership of Series F Preferred Stock and Series T Preferred Stock.
(6) Reflects 152.1 or 100% of the outstanding shares of Series T-1
Preferred Stock and 9,919.8 or 100% of the outstanding shares of
Series T-2 Preferred Stock. BA has sole voting power and sole
dispositive power as to all these outstanding shares of Series T
Preferred Stock.
(7) As set forth in a Schedule 13D amendment dated February 28,
1996, FMR beneficially owns, through Fidelity Management & Research
Company ("Fidelity"), as advisor to fifteen investment companies
and other funds (the "Fidelity Funds"), 6,418,794 shares (including
shares issuable upon the conversion of 71,000 Depositary Shares),
and through Fidelity Management Trust Company, as trustee or
managing agent for various private investment accounts (the
"Accounts"), 733,218 shares (including shares issuable upon the
conversion of 238,500 Depositary Shares). FMR has the sole power to
dispose of the shares held by the Fidelity Funds and the Accounts.

- 163 -

<PAGE>

The power to vote or direct the voting of the shares held by the
Fidelity Funds resides within the boards of trustees of such funds.
Fidelity carries out the voting of such shares under written
guidelines established by such trustees. FMR has sole power to vote
or direct the voting of the shares held by the Accounts.
(8) As set forth in a Schedule 13G dated February 14, 1996, as of
December 31, 1995, Waddell & Reed Investment Management Company has
sole voting power and sole dispositive power over 3,880,300 of
these shares. Each of Waddell & Reed, Inc., Waddell & Reed
Financial Services, Inc., United Investors Management Company,
Liberty National Life Insurance Company and Torchmark Corporation
claims sole voting and dispositive power over 5,385,301 shares.
(9) As set forth in a Schedule 13G dated February 9, 1996, as of
December 31, 1995, the Equitable Life Assurance Society of the
United States has sole voting power and sole dispositive power over
1,379,300 of these shares and Alliance Capital Management L.P. has
sole voting power and sole dispositive power over 4,277,825 of
these shares. Each of the Equitable Life Assurance Society of the
United States and Alliance Capital Management L.P. is an indirect
subsidiary of The Equitable Companies Incorporated.

[remainder of page left blank intentionally]

- 164 -
<PAGE>

THE EXCHANGE OFFER
------------------

Purpose of the Exchange Offer
- -----------------------------

The Old Notes were originally issued and sold on February 16,
1996 to initial purchaser, who resold the Old Notes to "qualified
institutional buyers" (as defined in Rule 144A under the Securities
Act). In connection with the sale of the Old Notes, USAir and the
Initial Purchasers entered into the Registration Rights Agreement
pursuant to which, USAir agreed to file with the Commission a
registration statement relating to an exchange offer pursuant to
which new notes covered by such registration statement and
containing terms identical in all respects to the terms of the
Notes would be offered in exchange for Notes tendered at the option
of the holders thereof or, if applicable interpretations of the
staff of the Commission did not permit USAir to effect such an
exchange offer, USAir agreed, at its cost, to file a shelf
registration statement covering resales of the Notes (the "Shelf
Registration Statement") and use best efforts to have such Shelf
Registration Statement declared effective and kept effective for a
period of three years from the effective date thereof.

The purpose of the Exchange Offer is to fulfill the Company's
obligations with respect to the Registration Rights Agreement.
Except as otherwise noted herein, this Prospectus may not be used
by any holder of the Old Notes or any holder of the New Notes to
satisfy the registration and prospectus delivery requirements under
the Securities Act that may apply in connection with any resale of
such Old Notes or New Notes. See "Terms of the Exchange" below.

Terms of the Exchange
- ---------------------

The Company hereby offers to exchange, subject to the
conditions set forth herein and in the Letter of Transmittal
accompanying this Prospectus, $1,000 in principal amount of New
Class A Notes for each $1,000 in principal amount of Old Class A
Notes, $1,000 in principal amount of New Class B Notes for each
$1,000 in principal amount of Old Class B Notes and $1,000 in
principal amount of New Class C Notes for each $1,000 in principal
amount of Old Class C Notes. The terms of the New Notes are

- 165 -
<PAGE>

identical in all respects to the terms of the Old Notes for which
they may be exchanged pursuant to this Exchange Offer, except that
the New Notes will generally be freely transferable by holders
thereof and will not be subject to any covenant regarding registra-
tion. The New Notes will evidence the same debt as the Old Notes
and will be entitled to the benefits of the Indenture. See "-
Description of the Exchange Notes".

The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Old Notes being tendered for
exchange.

USAir has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to
whether the New Notes issued pursuant to the Exchange Offer in
exchange for the Old Notes may be offered for sale, resold or
otherwise transferred by any holder without compliance with the
registration and prospectus delivery provisions of the Securities
Act. Instead, based on an interpretation by the staff of the
Commission set forth in a series of no-action letters issued to
third parties, USAir believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for sale,
resold and otherwise transferred by any holder of such New Notes
(other than any such holder which is an "affiliate" of USAir within
the meaning of Rule 405 under the Securities Act) without compli-
ance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and such holder has
no arrangement or understanding with any person to participate in
the distribution of such New Notes. Any holder who tenders in the
Exchange Offer for the purpose of participating in a distribution
of the New Notes cannot rely on such interpretation by the staff of
the Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."

Interest on the Exchange Notes will accrue from the last
Interest Payment Date on which interest was paid on the Old Notes
so surrendered or, if no interest has been paid on such Notes, from
February 16, 1996.

- 166 -
<PAGE>

Tendering holders of the Old Notes shall not be required to
pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the
exchange of the Old Notes pursuant to the Exchange Offer.

Expiration Date; Extensions; Termination; Amendments
- ----------------------------------------------------

The Exchange Offer will expire on the Expiration Date. The
term "Expiration Date" means 5:00 p.m., New York City time, on
___________________, 1996, unless USAir in its sole discretion
extends the period during which the Exchange Offer is open, in
which event the term "Expiration Date" shall mean the latest time
and date on which the Exchange Offer, as so extended by USAir,
shall expire. USAir reserves the right to extend the Exchange
Offer at any time and from time to time by giving oral or written
notice to Wilmington Trust Company (the "Exchange Agent") and by
timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to an
appropriate news agency. During any extension of the Exchange
Offer, all Old Notes previously tendered pursuant to the Exchange
Offer will remain subject to the Exchange Offer.

The Exchange Date will be the first business day following the
Expiration Date. USAir expressly reserves the right to (i)
terminate the Exchange Offer and not accept for exchange any Old
Notes if any of the events set forth below under "Conditions to the
Exchange Offer" shall have occurred and shall not have been waived
by USAir and (ii) amend the terms of the Exchange Offer in any
manner which, in its good faith judgment, is advantageous to the
holders of the Old Notes, whether before or after any tender of the
Old Notes. Unless the Company terminates or extends the Exchange
Offer prior to 5:00 p.m., New York City time, on the Expiration
Date, USAir will exchange the New Notes for the Old Notes on the
Exchange Date.

How to Tender
- -------------

The tender to USAir of Old Notes by a Noteholder pursuant to
one of the procedures set forth below will constitute an agreement
between such holder and USAir in accordance with the terms and
subject to the conditions set forth herein and in the Letter of
Transmittal.

- 167 -
<PAGE>

A Noteholder may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) and delivering the same,
together with the certificate or certificates representing the
Notes being tendered and any required signature guarantees, to the
Exchange Agent at its address set forth in the Letter of Transmit-
tal on or prior to the Expiration Date (or complying with the
procedure for book-entry transfer described below) or (ii)
complying with the guaranteed delivery procedures described below.

If tendered Old Notes are registered in the name of the signer
of the Letter of Transmittal and the New Notes to be issued in
exchange therefor are to be issued in the name of the registered
holder (which term, for the purposes described herein, shall
include any participant in The Depository Trust Company (also
referred to as a "book-entry transfer facility") whose name appears
on a security listing as the owner of Old Notes), the signature of
such signer need not be guaranteed. In any other case, the
tendered Old Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to USAir and duly
executed by the registered holder and the signature on the
endorsement or instrument of transfer must be guaranteed by a
commercial bank or trust company located or having an office,
branch, agency or correspondent in the United States, or by a
member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. (any of the
foregoing, an "Eligible Institution"). If the New Notes are to be
delivered to an address other than that of the registered holder
appearing on the note register for the Old Notes, the signature in
the Letter of Transmittal must be guaranteed by an Eligible
Institution.

The method of delivery of Old Notes and all other documents is
at the election and risk of the Noteholder. If sent by mail, it is
recommended that registered mail, return receipt requested, be
used, proper insurance obtained, and the mailing be made suffi-
ciently in advance of the Expiration Date to permit delivery to the
Exchange Agent on or before the Expiration Date.

The Exchange Agent will make a request promptly after the date
of this Prospectus to establish accounts with respect to the Notes
at the book-entry transfer facility for the purpose of facilitating
the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the book-entry
transfer facility's system may make book-entry delivery of Old

- 168 -
<PAGE>

Notes by causing such book-entry transfer facility to transfer such
Old Notes into the Exchange Agent's accounts with respect to the
Old Notes at the book entry transfer facility in accordance with
the book entry transfer facility's procedures for such transfer.
Although delivery of Old Notes may be effected through book-entry
transfer into the Exchange Agent's account at the book-entry
transfer facility, an appropriate Letter of Transmittal with any
required signature guarantee and all other required documents must
in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth on the back cover page of
this Prospectus on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with,
within the time period provided under such procedures.

If a Noteholder desires to accept the Exchange Offer and time
will not permit a Letter of Transmittal or Old Notes to reach the
Exchange Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender
may be effected if the Exchange Agent has received at its office
listed on the back cover hereof on or prior to the Expiration Date
a letter, telegram or facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight
courier) from an Eligible Institution setting forth the name and
address of the tendering holder, the names in which the Old Notes
are registered and, if possible, the certificate numbers of the Old
Notes to be tendered, and stating that the tender is being made
thereby and guaranteeing that within five New York Stock Exchange
trading days after the date of execution of such letter, telegram
or facsimile transmission by the Eligible Institution, the Old
Notes, in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
book-entry transfer facility), will be delivered by such Eligible
Institution together with a properly completed and duly executed
Letter of Transmittal (and any other required documents). Unless
Old Notes being tendered by the above-described method are
deposited with the Exchange Agent with the time period set forth
above (accompanied or preceded by a properly completed Letter of
Transmittal and any other required documents), USAir may, at its
option, reject the tender. Copies of a Notice of Guaranteed
Delivery which may be used by Eligible Institutions for the
purposes described in this paragraph are available from the
Exchange Agent.

- 169 -
<PAGE>

A tender will be deemed to have been received as of the date
when (i) the tendering Noteholder's properly completed and duly
signed Letter of Transmittal accompanied by the Old Notes (or a
confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at the book-entry transfer facility) is
received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram, or facsimile transmission to similar
effect (as provided above) from an Eligible Institution is received
by the Exchange Agent. Issuances of New Notes in exchange for Old
Notes tendered pursuant to a Notice of Guaranteed Delivery or
letter, telegram or facsimile transmission to similar effect (as
provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other
required documents) and the tendered Old Notes.

All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of Old
Notes will be determined by USAir, whose determination will be
final and binding. USAir reserves the absolute right to reject any
or all tenders not in proper form or the acceptance for exchange of
which may, in the opinion of USAir, be unlawful. USAir also
reserves the absolute right to waive any condition to the Exchange
Offer or any defect or irregularity in the tender of any Old Notes.
None of USAir, the Exchange Agent or any other person will be under
any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such
notification.

Terms and Conditions of the Letter of Transmittal
- -------------------------------------------------

The Letter of Transmittal contains, among other things, the
following terms and conditions, which are part of the Exchange
Offer.

The party tendering Old Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Old Notes to USAir and
irrevocably constitutes and appoints the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause the Old Notes to
be assigned, transferred and exchanged. The Transferor represents

- 170 -
<PAGE>

and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire New
Notes issuable upon the exchange of such tendered Old Notes, and
that, when the same are accepted for exchange, USAir will acquire
good and unencumbered title to the tendered Old Notes, free and
clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim. The Transferor also warrants that it
will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or USAir to be necessary or desirable
to complete the exchange, assignment and transfer of tendered Old
Notes or transfer ownership of such Old Notes on the account books
maintained by a book-entry transfer facility. The Transferor
further agrees that acceptance of any tendered Old Notes by USAir
and the issuance of New Notes in exchange therefor shall constitute
performance in full by USAir of its obligations under the Registra-
tion Rights Agreement and that USAir shall have no further
obligations or liabilities thereunder. All authority conferred by
Transferor will survive the death or incapacity of the Transferor
and every obligation of the Transferor shall be binding upon the
heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.

The Transferor certifies that it is not an "affiliate" of
USAir within the meaning of Rule 405 under the Securities Act and
that it is acquiring the New Notes offered herein in the ordinary
course of such Transferor's business and that such Transferor has
no arrangement with any person to participate in the distribution
of such New Notes. Each transferor which is a broker-dealer
receiving New Notes for its own account must acknowledge that it
will deliver a prospectus in connection with any resale of such New
Notes. By so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwrit-
er" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by
a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other
trading activities. USAir will, for a period of 90 days after the
Expiration Date, make this Prospectus available to any broker-
dealer for use in connection with any such resale.

- 171 -
<PAGE>

Withdrawal Rights
- -----------------

Tenders of Old Notes pursuant to the Exchange Offer are
irrevocable, except that Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration
Date.

To be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the
Exchange Agent at its address set forth on the back cover of this
Prospectus, and with respect to a facsimile transmission, must be
confirmed by telephone and an original delivered by guaranteed
overnight delivery. Any such notice of withdrawal must specify the
person named in the Letter of Transmittal as having tendered Old
Notes to be withdrawn, the certificate numbers of Old Notes to be
withdrawn, the principal amount of Old Notes to be withdrawn, a
statement that such holder is withdrawing his election to have such
Old Notes exchanged, and the name of the registered holder of such
Old Notes, and must be signed by the Noteholder in the same manner
as the original signature on the Letter of Transmittal (including
any required signature guarantees) or be accompanied by evidence
satisfactory to USAir that the person withdrawing the tender has
succeeded to the beneficial ownership of the Old Notes being
withdrawn. The Exchange Agent will return the properly withdrawn
Old Notes promptly following receipt of notice of withdrawal. If
Old Notes have been tendered pursuant to the procedure for book-
entry transfer, any notice of withdrawal must specify the name and
number of the account at the book-entry transfer facility to be
credited with the withdrawn Old Notes or otherwise comply with the
book-entry transfer facility procedure. Any questions as to the
validity of notice of withdrawals, including time of receipt, will
be determined by USAir, and such will be final and binding on all
parties.

Acceptance of Old Notes for Exchange; Delivery of New Notes
- -----------------------------------------------------------

Upon the terms and subject to the conditions of the Exchange
Offer, the acceptance for exchange of Old Notes validly tendered
and not withdrawn and issuance of the New Notes will be made on the
Exchange Date. For the purposes of the Exchange Offer, the Company
shall be deemed to have accepted for exchange validly tendered Old
Notes when, as and if USAir has given oral or written notice
thereof to the Exchange Agent.

- 172 -
<PAGE>

The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purposes of receiving New Notes from USAir and
causing Old Notes to be assigned, transferred and exchanged. Upon
the terms and subject to the conditions of the Exchange Offer,
delivery of New Notes to be issued in exchange for accepted Old
Notes will be made by the Exchange Agent promptly after acceptance
of the tendered Old Notes. Tendered Old Notes not accepted for
exchange by USAir will be returned without expense to the tendering
Noteholders promptly following the Expiration Date or, USAir
terminates the Exchange Offer prior to the Expiration Date,
promptly after the Exchange Offer is so terminated.

Conditions to the Exchange Offer
- --------------------------------

Notwithstanding any other provisions of the Exchange Offer or
any extension of the Exchange Offer, the Company will not be
required to accept for exchange or exchange Old Notes for New Notes
and may terminate the Exchange Offer (by oral or written notice to
the Exchange Agent and by timely public announcement communicated,
unless otherwise required by applicable law or regulation, by
making a release to any appropriate news agency), or, at its
option, modify or otherwise amend the Exchange Offer, if any event
shall occur, which occurrence, in the sole judgment of the Company
and regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such event, makes it
inadvisable to proceed with the Exchange Offer or with such
acceptance for exchange or such exchange, including, but not
limited to, the following:

(a) (i) there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order, or decree
shall have been issued by, any court or governmental agency or
other governmental regulatory or administrative agency or commis-
sion (x) seeking to restrain, restrict or prohibit the making or
consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (y) resulting in a material delay
in the ability of the Company to accept for exchange or exchange
all or some of the Old Notes, or (ii) any statute, rule, regula-
tion, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or
any of the transactions contemplated by

- 173 -
<PAGE>

the Exchange Offer by any domestic or foreign government or govern-
mental authority or any action shall have been taken, proposed or
threatened by any domestic or foreign government or governmental
authority or agency or court, that, in the sole judgment of the
Company, might directly or indirectly result in any of the
consequences referred to in clauses (x) or (y) above or, in the
sole judgment of the Company, might result in the Transferors
having obligations with respect to resales and transfers of the New
Notes that are greater than those described in the interpretation
of the SEC described above under the caption "-Terms of the
Exchange" or would otherwise make it inadvisable to proceed with
the Exchange Offer,

(b) there shall have occurred (i) any general suspension of
or general limitation on prices for or trading in securities on any
national securities exchange or the over-the-counter market, (ii)
any limitation by any governmental agency or authority which
adversely affects the ability of the Company to complete the
transactions contemplated by the Exchange Offer, (iii) a declara-
tion of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the
extension of credit, or (iv) a commencement of a war, armed
hostilities, or other similar international calamity directly or
indirectly involving the United States, or, in the case of any of
the foregoing existing at the time of the commencement of the
Exchange Offer, a material escalation or worsening thereof; or

(c) any change (or any development involving a prospective
change) shall have occurred or be threatened in the business,
properties, assets, liabilities, financial condition, operation,
results of operations or prospects of the Company that, in the sole
judgment of the Company, is or may be adverse to the Company, or
the Company shall have become aware of facts that, in the sole
judgment of the Company, could adversely affect the value of the
Old Notes or the New Notes.

The Company expressly reserves the right to terminate the
Exchange Offer and not accept for exchange any Old Notes upon the
occurrence of any of the foregoing conditions. In addition, the
Company may amend the Exchange Offer at any time prior to the
Expiration Date if any of the conditions set forth above occur.
Moreover, regardless of whether any of such conditions has
occurred, the Company may amend the Exchange Offer in any manner
which, in its good faith judgment, is advantageous to holders of
the Old Notes.

- 174 -
<PAGE>

The foregoing conditions are for the sole benefit of the
Company and may be waived by the Company, in whole or in part, in
its sole discretion. Any determination made by the Company
concerning an event, development or circumstance described or
referred to above will be final and binding on all parties.

Wilmington Trust Company has been appointed as the Exchange
Agent for the Exchange Offer. All correspondence in connection
with the Exchange Offer and the Letter of Transmittal should be
addressed as follows: By Hand, Overnight Courier or Mail:
Wilmington Trust Company, 1100 North Market Street, Rodney Square
North, Wilmington, Delaware 19890, Attention: David A. Vanaskey,
Jr., Corporate Trust Administration.

Solicitation of Tenders; Expenses
- ---------------------------------

USAir has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments
to brokers, dealers or others for soliciting acceptances of the
Exchange Offer. USAir will, however, pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
it for reasonable out-of-pocket expenses in connection therewith.
USAir will also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by
them in forwarding copies of this and related documents to the
beneficial owners of the Old Notes and in handling or forwarding
tenders for their customers.

No person has been authorized to give any information or to
make any representation in connection with the Exchange Offer other
than those contained in this Prospectus. If given or made, such
information or representations should not be relied upon as having
been authorized by USAir. Neither the delivery of this Prospectus
nor any exchange made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs
of USAir since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Old Notes in
any jurisdiction in which the making of the Exchange Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, USAir may, at its discretion, take such
action as it may deem necessary to make the Exchange Offer in any
such jurisdiction and extend the Exchange Offer to holders of Old

- 175 -
<PAGE>

Notes in such jurisdiction. In any jurisdiction in which the
securities laws or blue sky laws of which require the Exchange
Offer to be made by a licensed broker or dealer, the Exchange Offer
is being made on behalf of USAir by one or more registered brokers
or dealers which are licensed under the laws of such jurisdiction.

Other
- -----

Participation in the Exchange Offer is voluntary and holders
should carefully consider whether to accept. Noteholders are urged
to consult their financial and tax advisors in making their own
decisions on what action to take.

As a result of the making of, and upon acceptance for exchange
of all validly tendered Old Notes pursuant to the terms of, this
Exchange offer, USAir will have fulfilled a covenant contained in
the Registration Rights Agreement. Noteholders who do not tender
their certificates in the Exchange Offer will continue to hold such
certificates and will be entitled to all the rights, and limita-
tions applicable thereto, under the Indentures, except for any such
rights under the Registration Rights Agreement which by their terms
terminate or cease to have further effectiveness as a result of the
making of this Exchange Offer. See "Description of the Notes".
All untendered Old Notes will continue to be subject to the
restrictions on transfer set forth in the Indentures. To the
extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered Old Notes could be
adversely affected.

USAir may in the future seek to acquire untendered Old Notes
in open market or privately negotiated transactions, through subse-
quent exchange offers or otherwise. USAir has no present plan to
acquire any Old Notes which are not tendered in the Exchange Offer.

DESCRIPTION OF THE NOTES
------------------------

The following summaries of certain provisions of the Notes,
the Indentures, the Collateral Agency Agreement, the Liquidity
Agreements and the Registration Rights Agreement do not purport to
be complete and are subject to, and qualified in their entirety by
reference to, all of the provisions thereof. Copies of the
foregoing documents have been filed with the Commission as exhibits
to the Exchange Offer Registration Statement.

- 176 -
<PAGE>

Payment of Principal and Interest
- ---------------------------------

The outstanding principal amount of each class of Notes will
be due and payable on the Legal Maturity Date. Based upon the
expected principal payments described below, it is expected that
the principal amount of the Notes will have been paid in full on or
prior to April 15, 2008. Interest on each Note will accrue from
February 16, 1996 or the most recent date to which interest has
been paid or provided for and will be payable on each Interest
Payment Date. Payments of principal of the Notes are expected to
be made on each Principal Payment Date. Payments by USAir of
principal of and interest and premium, if any, on the Notes will be
made by wire transfer in immediately available funds to the
Collateral Agent. If any Payment Date is not a Business Day,
payments to be made on such Payment Date will be made on the next
Business Day, without additional interest.

Except as provided in the applicable Indenture or in the
Collateral Agency Agreement, all payments to be made by USAir,
including all payments in respect of principal, interest, premium,
Events of Loss and redemptions of the Notes, are payable to the
Collateral Agent for application in accordance with the Collateral
Agency Agreement. All payments on the Notes will be made in the
order of priority described below under "Description of the
Notes-Priority of Distributions."

- 177 -
<PAGE>

Principal Amortization of Class A, Class B and Class C Notes
------------------------------------------------------------

Principal of the Notes of each Class will be due and payable
on the applicable Legal Maturity Date, although it is expected that
payments of principal will be made prior to such date on the dates
and in the amounts set forth below (to the extent that the
Collateral Agent receives funds therefor from USAir):

<TABLE>

Class A Notes
- -------------
<CAPTION>
Class A
Notes
Expected Principal Principal Expected
Payment Date Payments Pool Factor
- ---------------------- ------------- --------------
<S> <C> <C>
April 15, 1996......... $0 1.0000000
October 15, 1996....... 3,697,000 0.9740379
April 15, 1997......... 1,691,500 0.9621594
October 15, 1997....... 1,691,500 0.9502809
April 15, 1998......... 1,522,350 0.9395902
October 15, 1998....... 1,522,350 0.9288996
April 15, 1999......... 1,379,890 0.9192093
October 15, 1999....... 1,379,890 0.9095191
April 15, 2000......... 1,011,840 0.9024135
October 15, 2000....... 1,011,840 0.8953079
April 15, 2001......... 834,663 0.8894465
October 15, 2001....... 1,660,300 0.8777871
April 15, 2002......... 1,154,304 0.8696810
October 15, 2002....... 861,775 0.8636292
April 15, 2003......... 2,353,758 0.8471000
October 15, 2003....... 1,341,440 0.8376798
April 15, 2004......... 5,650,400 0.7980000
October 15, 2004....... 3,281,400 0.7749565
April 15, 2005......... 6,430,280 0.7298000
October 15, 2005....... 7,115,916 0.6798287
April 15, 2006......... 7,950,004 0.6240000
October 15, 2006....... 9,052,800 0.5604270
April 15, 2007......... 6,650,400 0.5137247
October 15, 2007....... 9,506,400 0.4469663
April 15, 2008......... 63,648,000 0.0000000
-------------
$142,400,000
=============
</TABLE>
- 178 -
<PAGE>

<TABLE>

Class B Notes
- -------------

Class B Notes
Expected Class B Notes
Expected Principal Principal Expected
Payment Date Payments Pool Factor
- ------------------- ------------- -------------
<S> <C> <C>
April 15, 1996........ $0 1.0000000
October 15, 1996...... 1,422,722 0.9740379
April 15, 1997........ 650,942 0.9621594
October 15, 1997...... 650,942 0.9502809
April 15, 1998........ 585,848 0.9395902
October 15, 1998...... 585,848 0.9288996
April 15, 1999........ 531,025 0.9192093
October 15, 1999...... 531,025 0.9095191
April 15, 2000........ 389,388 0.9024135
October 15, 2000...... 389,388 0.8953079
April 15, 2001........ 321,205 0.8894465
October 15, 2001...... 638,936 0.8777871
April 15, 2002........ 444,212 0.8696810
October 15, 2002...... 331,638 0.8636292
April 15, 2003........ 905,800 0.8471000
October 15, 2003...... 516,228 0.8376798
April 15, 2004........ 2,174,452 0.7980000
October 15, 2004...... 1,262,786 0.7749565
April 15, 2005........ 2,474,574 0.7298000
October 15, 2005...... 2,738,428 0.6798287
April 15, 2006........ 3,059,412 0.6240000
October 15, 2006...... 3,483,802 0.5604270
April 15, 2007........ 2,559,283 0.5137247
October 15, 2007...... 3,658,362 0.4469663
April 15, 2008........ 24,493,754 0.0000000
--------------
$ 54,800,000
==============

</TABLE>

- 179 -
<PAGE>

Class C Notes
- -------------
Class C Notes
Expected Class C
Expected Principal Principal Expected
Payment Date Payments Pool Factor
- ----------------------- --------------- -------------
<S> <C> <C>
April 15, 1996........ $0 1.0000000
October 15, 1996...... 1,708,305 0.9740379
April 15, 1997........ 781,606 0.9621594
October 15, 1997...... 781,606 0.9502809
April 15, 1998........ 703,445 0.9395902
October 15, 1998...... 703,445 0.9288996
April 15, 1999........ 637,618 0.9192093
October 15, 1999...... 637,618 0.9095191
April 15, 2000........ 467,550 0.9024135
October 15, 2000...... 467,550 0.8953079
April 15, 2001........ 385,680 0.8894465
October 15, 2001...... 767,189 0.8777871
April 15, 2002........ 533,379 0.8696810
October 15, 2002...... 398,208 0.8636292
April 15, 2003........ 1,087,621 0.8471000
October 15, 2003...... 619,851 0.8376798
April 15, 2004........ 2,610,929 0.7980000
October 15, 2004...... 1,516,265 0.7749565
April 15, 2005........ 2,971,295 0.7298000
October 15, 2005...... 3,288,113 0.6798287
April 15, 2006........ 3,673,527 0.6240000
October 15, 2006...... 4,183,106 0.5604270
April 15, 2007........ 3,073,008 0.5137247
October 15, 2007...... 4,392,704 0.4469663
April 15, 2008........ 29,410,382 0.0000000
-------------
$65,800,000
=============

</TABLE>

- 180 -
<PAGE>

Ratings of the Old Notes
- ------------------------

At the time of issuance, the Old Class A Notes were rated A2
by Moody's and A+ by S&P, the New Class B Notes were rated Baa1 by
Moody's and A- by S&P and the New Class C Notes were rated Ba2 by
Moody's and BBB- by S&P. The ratings of the Notes address the
likelihood of the timely payment of interest on and the ultimate
repayment of principal of the Notes. The ratings of the Notes were
based primarily on the collateral value of the Aircraft, the
availability of the Liquidity Facilities, the subordination
provisions described herein, the protections afforded creditors
under Section 1110 of the Bankruptcy Code and the ability of USAir
to make expected payments of principal of and interest on the
Notes. Ratings of Notes are not a recommendation to purchase, hold
or sell Notes and do not comment as to market price or suitability
for a particular investor. There is no assurance that the ratings
of any Class of Notes will remain for any given period of time or
that such ratings will not be lowered or withdrawn entirely by
either rating agency. In the event that the rating initially
assigned to any Note is subsequently lowered for any reason, there
is no obligation for USAir to provide any additional credit
enhancement. The reduction, suspension or withdrawal of the
ratings of the Notes will not, in and of itself, constitute a
Collateral Access Event.

Redemption
- ----------

Upon 30 days' written notice to the Collateral Agent and the
applicable Indenture Trustee, USAir may redeem, in whole or from
time to time in part, any Class of Notes at a redemption price
equal to the outstanding principal amount of such Class together
with premium, if any, and accrued interest thereon if, on the
redemption date, there is no Event of Loss with respect to an
Aircraft and no Collateral Access Event has occurred and is
continuing. Each partial redemption shall be effected by a pro
rata reduction of the remaining principal payments of the Class of
Notes being redeemed. The redemption price of any Notes redeemed
before February 20, 2006 will include a Make Whole Premium.
Thereafter, the Notes shall be redeemable at par.

- 181 -
<PAGE>

"Make Whole Premium" means, with respect to any Note (or
portion thereof), the amount (as determined by an independent
investment banker) by which (a) the present value of the remaining
expected payments of principal and interest to the Final Expected
Payment Date of such Note (or portion thereof) computed by
discounting such payments on a semiannual basis on each Interest
Payment Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the Treasury Yield exceeds (b) the
outstanding principal amount of such Note (or portion thereof) plus
accrued interest.

For purposes of determining the Make Whole Premium, "Treasury
Yield" means, at the time of determination with respect to any Note
(or portion thereof), the interest rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to
be the per annum rate equal to the semiannual yield to maturity for
United States Treasury securities maturing on the Average Life Date
of such Note (or portion thereof), as defined below, and trading in
the public securities markets either as determined by interpolation
between the most recent weekly average yields to maturity for two
series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but
earlier than, the Average Life Date of such Note (or portion
thereof) and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Note (or portion
thereof), in each case as published in the most recent H.15(519)
or, if a weekly average yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Note
(or portion thereof) is reported in the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination
of a Make Whole Premium shall be the third Business Day prior to
the applicable Redemption Date and the "most recent H.15(519)"
means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable Redemption Date.

The "Average Life Date" for any Note shall be the date which
follows the time of determination by a period equal to the
Remaining Weighted Average Life. The "Remaining Weighted Average
Life" on a given date with respect to any Note shall be the number
of days which is equal to the quotient obtained by dividing (a) the
sum of each of the products obtained by multiplying (i) the amount

- 182 -
<PAGE>

of each then remaining expected payment of principal of such Note
by (ii) the number of days from and including such determination
date to but excluding the date on which such payment of principal
is expected to be made by (b) the then outstanding principal amount
of such Note.

Following an Event of Loss and so long as no Collateral Access
Event has occurred and is continuing, Notes of every Class shall be
redeemed, at par plus accrued interest, in a pro rata amount (based
upon the ratio borne by the initial Appraised Value of the Aircraft
subject to such Event of Loss to the initial Aggregate Appraised
Value) resulting from such Event of Loss.

All amounts paid to any Class of Notes in connection with any
partial redemption shall be applied (i) to each Note within each
Class pro rata in accordance with the then outstanding principal
amount thereof and (ii) pro rata to each of the then unpaid
installments of principal of such Notes expected to be paid on each
Principal Payment Date.

Prior to any redemption (whether optional or after an Event of
Loss), all amounts (if any) then owing to the Liquidity Providers
shall be paid in full. If a Collateral Access Event has occurred
and is continuing, the proceeds may be subject to distribution as
provided in the second paragraph of "Priority of Distributions."

Substitution of Collateral
- --------------------------

On five days' notice to the Collateral Agent and so long as,
on the date of substitution, no Collateral Access Event has
occurred and is continuing, USAir shall have the option to replace
one or more Aircraft as Collateral under the Collateral Agency
Agreement by substituting either cash or United States Treasury
obligations (the "Alternative Collateral") for such replaced
Aircraft, provided that the ratings of the Notes at such time are
affirmed or raised by S&P and Moody's after taking into account
such substitution. Upon any such substitution, the Alternative
Collateral shall be deemed to be Collateral under the Collateral
Agency Agreement. The amount of Alternative Collateral to be
substituted for each Aircraft shall be equal to (i) an amount
sufficient to pay expected principal, interest and Make Whole
Premium until the Final Expected Payment Date of the Notes (or
redemption date, if applicable), divided by (ii) the quotient
obtained by dividing (x) the sum of the initial Appraised Values of
the Aircraft then comprising the Collateral by (y) the initial
Appraised Value of the Aircraft for which the Alternative Collater-
al is being substituted.
- 183 -
<PAGE>

Liquidity Facilities
- --------------------

USAir has entered into three separate Liquidity Agreements
(one for each Class of Notes) with a Liquidity Provider pursuant to
which such Liquidity Provider has agreed to make advances from time
to time in an aggregate outstanding amount not to exceed three
times the amount of interest due on the respective class of Notes
on the next Interest Payment Date. Except as otherwise provided
below, the Liquidity Facilities will enable the Collateral Agent to
request Interest Advances on the fifth day following any Interest
Payment Date in an amount sufficient to pay interest due on such
Interest Payment Date on the applicable Class of Notes to the
extent that the amount, if any, received by the Collateral Agent on
or prior to such fifth day from USAir is not sufficient to pay such
interest. The amounts initially available under the Class A, the
Class B and the Class C Liquidity Facilities was $14,439,360,
$6,165,000 and $8,813,910, respectively. Each Interest Advance by
a Liquidity Provider under the applicable Liquidity Facility will
reduce pro tanto the amount available to be advanced under such
Liquidity Facility, until such Interest Advance is repaid by USAir
thereunder. The available amount of the Liquidity Facility for
each Class of Notes will be automatically reduced following a
payment of principal of the Notes of such Class to an amount equal
to three times the next interest payment due on such Class of
Notes.

The Collateral Agency Agreement provides that if at any time
the short-term unsecured debt obligations of a Liquidity Provider
are then revised to a rating lower than A-1 by S&P or lower than
P-1 by Moody's, such Liquidity Provider must be replaced by a new
liquidity provider whose short-term unsecured debt obligations are
rated at least A-1 by S&P and P-1 by Moody's. In the event that
any such Liquidity Facility is not replaced within 30 days of such
downgrading and as otherwise provided in the Collateral Agency
Agreement, the Collateral Agent shall request a Downgrade Advance
in an amount equal to all available amounts under such Liquidity
Facility and shall hold the proceeds thereof in the Cash Collateral
Account for the same purposes and under the same circumstances as
Interest Advances under the Liquidity Facility are to be used.

The Collateral Agency Agreement will also provide for the
replacement of each Liquidity Facility (other than a Liquidity
Facility that expires no earlier than 15 days after the Legal
Maturity Date of the applicable Class of Notes) in the event that

- 184 -
<PAGE>

it is not extended at least 30 days prior to its then scheduled
expiration. In the event a Liquidity Facility is not so extended
or replaced within 30 days prior to its then scheduled expiration
date, the Collateral Agent shall request a Non-Extension Advance in
an amount equal to all available amounts thereunder and hold the
proceeds thereof in the Cash Collateral Account to be used for the
same purposes and under the same circumstances as Interest Advances
under the Liquidity Facilities are to be used.

Each of the Liquidity Facilities provides that the Liquidity
Provider's obligations thereunder will expire on the earliest of
(i) February 14, 1997; (ii) the date on which such Liquidity
Provider is provided with certification from the Collateral Agent
that all of the Notes of such Class shall have been paid in full;
(iii) the date on which the applicable Liquidity Provider is
provided with certification from the Collateral Agent that a
replacement liquidity facility has been substituted for the
applicable Liquidity Facility; and (iv) the date on which no amount
is, or may become, available for borrowing under such Liquidity
Facility, due to unreimbursed utilization thereof in accordance
with the terms of such Liquidity Facility. Each Liquidity Facility
provides that the scheduled expiration thereof may be extended, by
agreement of the applicable Liquidity Provider and USAir, for
additional periods of 364 days.

Any replacement liquidity facility shall be an irrevocable
liquidity facility for the same amount and in substantially the
form of the Liquidity Facility being replaced thereby, or in such
other form as shall permit Moody's and S&P to confirm their
respective ratings of the Notes (before downgrading of such
ratings, if any, as a result of a downgrading of a Liquidity
Provider). The short-term unsecured debt of any replacement
liquidity provider will be rated not lower than the above-described
minimums for the Liquidity Facilities.

Upon payment by a Liquidity Provider of the amount specified
in any borrowing under a Liquidity Facility, such Liquidity
Provider will be fully discharged of its obligations under the
Liquidity Facility with respect to such advance and will not
thereafter be obligated to make any further payments under such
Liquidity Facility in respect of such advance to the Collateral
Agent or any other person or entity who makes a demand for payment
in respect of interest on the Notes.

- 185 -
<PAGE>

In the event of an acceleration of any Class of Notes, the
Liquidity Provider for such Class of Notes shall advance the entire
available amount under such Liquidity Agreement as an Acceleration
Advance. The proceeds of an Acceleration Advance shall be held in
the Cash Collateral Account as cash collateral to be used for the
same purposes and under the same circumstances as Interest Advances
under such Liquidity Facility are to be used.

Amounts borrowed under a Liquidity Facility as an Interest
Advance or Acceleration Advance will accrue interest at a rate
equal to the sum of (i) 2.00% per annum and (ii) an interest rate
determined on a daily basis pursuant to the terms of such Liquidity
Facility or, at the option of USAir upon an Interest Advance,
LIBOR, until repaid as specified therein. Amounts borrowed under
a Liquidity Facility as a Downgrade Advance or a Non-Extension
Advance will, until applied by the Collateral Agent in payment of
interest due but unpaid on the applicable Notes, bear interest at
a rate equal to LIBOR or, if greater, at a rate equivalent to the
investment yield earned thereon while on deposit in the Cash
Collateral Account. Any amounts in the Cash Collateral Account
that are applied in payment of interest due but unpaid on the
applicable Notes will, upon being so applied, bear interest until
repaid at the rate described in the first sentence of this
paragraph.

The right of the Liquidity Providers to be repaid for Interest
Advances and, following an acceleration of the Notes, Downgrade
Advances, Non-Extension Advances and Acceleration Advances will
rank senior in right of payment and distributions to the Notes,
except to the extent described under "Priority of Distributions."

The Liquidity Facilities are intended to enhance the likeli-
hood of timely receipt by the Noteholders of the full amount of
interest due on the Notes. The Liquidity Facilities will not
provide protection against risks of loss with respect to the
Collateral and will not provide for payment of any principal of or
premium on the Notes, or more than three times the amount of
interest due on the Notes on the next Interest Payment Date. If
interest payment defaults occur which exceed the amount covered by
or available under the Liquidity Facilities or the Cash Collateral
Account, Noteholders will bear their allocable share of the
deficiencies to the extent that there are no other sources of funds
(including proceeds arising from the exercise of remedies under the
Collateral Agency Agreement) and would need to pursue other
remedies against USAir.

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<PAGE>

Liquidity Provider
- ------------------

Westdeutsche Landesbank Girozentrale ("WestLB"), provides
commercial and investment banking services regionally, nationally
and internationally to public, corporate and bank customers.
WestLB is the largest of the German State Banks and, on the basis
of total assets at December 31, 1994, was the third largest bank in
Germany. At December 31, 1994, WestLB had total assets of approxi-
mately DM 276.3 billion ($178.4 billion).

WestLB New York is licensed and subject to supervision and
regulation by the Superintendent of Banks of the State of New York.
WestLB New York is examined by the New York State Banking Depart-
ment and is subject to banking laws and regulations applicable to
a foreign bank that operates a New York branch.

Collateral
- ----------

Under the Collateral Agency Agreement, USAir's obligations to
the Noteholders and to the Liquidity Providers is secured by a
security interest in, among other things, (i) each of the Aircraft;
(ii) all insurance and requisition proceeds and other similar
payments with respect to each of the Aircraft; (iii) all monies and
securities deposited or required to be deposited with the Collater-
al Agent; (iv) the purchase agreements and related documentation to
the extent assignable for each of the Aircraft; (v) all logs,
records and data relating to the Aircraft; and (vi) all proceeds of
the foregoing. See "Description of the Aircraft and Appraisals"
and "-Collateral Agency Agreement."

Registration
- ------------

USAir is required, except under certain circumstances, to keep
the Aircraft registered under the provisions of the Act, and to
record the Collateral Agency Agreement at the FAA registry or the
aircraft registry of other Aeronautics Authorities. The Collateral
Agency Agreement was filed at the FAA on February 16, 1996. Such
recordation of the Collateral Agency Agreement and certain other
documents (including supplements to the Collateral Agency Agree-
ment) afforded the Collateral Agent a perfected first priority

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<PAGE>

security interest in each of the Aircraft whenever any such
Aircraft is located in the United States or any of its territories
and possessions and, with certain exceptions, in those jurisdic-
tions that have ratified or adhered to the Convention on the
International Recognition of Rights in Aircraft (the "Convention").
There are no general geographical restrictions on the operation of
the Aircraft by USAir (or by any lessee of USAir). Although USAir
has no current intention to do so, USAir will also have the right,
subject to certain conditions, to register, at its own expense, any
of the Aircraft in certain countries other than the United States.
Prior to any such change in the jurisdiction of registry, the
Collateral Agent shall have received an opinion of counsel to the
effect that (i) the laws of the new country of registration will
recognize USAir's right of ownership and repossession and will give
effect to the security interest in the Aircraft created by the
Collateral Agency Agreement and (ii) the right to repossession by
the Collateral Agent upon the exercise of remedies is valid under
the laws of the country of registration. In addition, subject to
certain limitations, the Aircraft may also be operated by persons
other than USAir under lease or interchange arrangements with USAir
in countries that are not parties to the Convention. In the case
of a Collateral Access Event, the ability of the Collateral Agent
to realize upon its security interest in any such Aircraft could be
adversely affected as a legal or practical matter if such Aircraft
is registered or located outside the United States. See "The
Collateral Agency Agreement-Registration, Leasing and Possession."
The extent to which the Collateral Agent's security interest would
be recognized in an Aircraft located in a country that is not a
party to the Convention, and the extent to which such security
interest would be recognized in a jurisdiction adhering to the
Convention (including the United States) if such Aircraft is
registered in a jurisdiction not a party to the Convention, is
uncertain. Certain jurisdictions may not accord recognition to, or
recognize the priority of, the Collateral Agency Agreement or may
have no specific laws providing for the creation, recognition or
registration of mortgages over aircraft such as the Collateral
Agency Agreement, or may accord higher priority to certain other
liens or other third party rights over the Aircraft. See "Risk
Factors-Limitations Regarding Aircraft Collateral-Foreclosure."

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<PAGE>

Intercreditor Rights
- --------------------

At any time, only the Controlling Party may direct and control
the exercise of remedies in respect of the Collateral. Such
control will include the ability to direct the Collateral Agent or
applicable Indenture Trustee as to when and in what manner to
exercise remedies under the applicable Indenture or the Collateral
Agency Agreement, including the remedy of foreclosing on the
Collateral, for the benefit of the Noteholders or the Liquidity
Providers. The New Class A Indenture Trustee will be the Control
ling Party until all amounts outstanding and owing in respect of
the New Class A Notes shall have been paid in full, whereupon the
Class B Indenture Trustee shall be the Controlling Party until all
amounts outstanding and owing in respect of the New Class B Notes
shall have been paid in full, whereupon the Class C Indenture
Trustee will be the Controlling Party. Notwithstanding the
foregoing, if none of the Indenture Trustees acting as Controlling
Party has taken action to exercise remedies in respect of the
Collateral within 24 months following the earlier of the accelera-
tion of the Notes and the unreimbursed utilization of the entire
available amount under any of the Liquidity Facilities, the
Liquidity Provider for the New Class A Notes shall thereupon become
the Controlling Party for all purposes under the Collateral Agency
Agreement until all amounts outstanding in respect of the Liquidity
Facility for the New Class A Notes shall have been paid in full,
whereupon the Liquidity Provider for the New Class B Notes shall
become the Controlling Party until all amounts outstanding in
respect of the Liquidity Facility for the New Class B Notes shall
have been paid in full, whereupon the Liquidity Provider for the
New Class C Notes shall become the Controlling Party until all
amounts outstanding in respect of the Liquidity Facility for the
New Class C Notes shall have been paid in full, whereupon the
Controlling Party shall be the appropriate Indenture Trustee.

For a period of nine months after the acceleration of the
Notes, without the consent of the holders of a majority of the
aggregate unpaid principal amount of each Class, if the Indenture
Trustee for such Class is not the Controlling Party, no Aircraft
may be sold if the net proceeds from such sale would be less than
the Minimum Sale Price for such Aircraft.

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<PAGE>

Priority of Distributions
- -------------------------

Amounts received by the Collateral Agent from USAir shall be
promptly distributed on each Payment Date in the following order or
priority:

(i) such payments as shall be required to pay all accrued and
unpaid fees owed to the Liquidity Providers; (ii) such payments as
shall be required to pay in full the aggregate amount of interest
accrued under the Liquidity Agreements; (iii) such payments as
shall be required to reimburse the Liquidity Providers for any
Interest Advances or, if applicable, to replenish the Cash
Collateral Account up to their maximum required amounts; (iv) such
payments as shall be required to pay in full the amount of interest
then due on or in respect of the New Class A Notes and the amount
of principal expected to be paid in respect of the New Class A
Notes; (v) such payments as shall be required to pay in full the
amount of interest then due on or in respect of the New Class B
Notes and the amount of principal expected to be paid in respect of
the New Class B Notes; (vi) such payments as shall be required to
pay in full the amount of interest then due on or in respect of the
New Class C Notes and the amount of principal expected to be paid
in respect of the New Class C Notes; (vii) such payments as shall
be required to pay in full the aggregate unpaid amounts of fees and
expenses then payable to the Collateral Agent and each Indenture
Trustee pursuant to the terms of the Collateral Agency Agreement
and the applicable Indenture, as the case may be; and (viii) the
balance, if any, to USAir.

Amounts held or received by the Collateral Agent after the
Collateral Agent shall have received a Notice of Acceleration shall
be promptly distributed in the following order of priority:

(i) such payments as shall be required to reimburse the
Collateral Agent for any tax, expense, charge or other loss
incurred by the Collateral Agent in its capacity as such; (ii) such
payment as shall be required to pay all accrued and unpaid fees
owed to the Liquidity Providers; (iii) such payment as shall be
required to pay in full the aggregate amount of interest owed to
the Liquidity Providers; (iv) such payments as shall be required to
pay in full all other amounts owed under the Liquidity Agreements;
(v) such payments as shall be required to reimburse (a) the
Indenture Trustees for any tax, expense, charge or other loss
incurred by the Indenture Trustees in their capacity as such and
(b) the Noteholders for certain payments owed under the Indenture;

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<PAGE>

(vi) such payments as shall be required to pay in full the
aggregate amount of fees and expenses payable to the Collateral
Agent and each Indenture Trustee pursuant to the terms of the
Collateral Agency Agreement and the Indentures, other than those
amounts referred to under (i) and (v) above; (vii) such payments as
shall be required to pay in full the aggregate amount of all
accrued and unpaid interest on the New Class A Notes and then to
pay in full the aggregate outstanding principal of the New Class A
Notes and all other amounts due and owing to the Class A Note-
holders; (viii) such payments as shall be required to pay in full
the aggregate amount of all accrued and unpaid interest on the New
Class B Notes and then to pay in full the aggregate outstanding
principal of the New Class B Notes and all other amounts due and
owing to the Class B Noteholders; and (ix) such payments as shall
be required to pay in full the aggregate amount of all accrued and
unpaid interest on the New Class C Notes and to pay in full the
aggregate outstanding principal of the New Class C Notes and to pay
in full the aggregate outstanding principal of the New Class C
Notes and all other amounts due and owing to the Class C Note-
holders. The balance, if any, shall be distributed to USAir.

Interest Advances under the Liquidity Facilities and withdraw-
als from the Cash Collateral Account in respect of interest on the
Notes will be distributed to the Noteholders notwithstanding the
priority of distributions set forth above and otherwise described
herein.

Under certain circumstances, USAir shall have the right to
redeem all or a portion of any Class of Notes without giving effect
to the above-described priority of distributions. Upon the
occurrence of an Event of Loss, Notes of each Class shall, except
under certain circumstances, be redeemed on a pro rata basis. See
"Description of Notes-Redemption."

Merger, Consolidation and Transfer of Assets
- --------------------------------------------

USAir will be prohibited from consolidating with or merging
into any other corporation or conveying, transferring or leasing
substantially all its assets as an entirety to any corporation or
person, unless, among other things, (i) such corporation or person
is a U.S. citizen and a U.S. certificated air carrier within the
meaning of the Act; (ii) such corporation or person assumes the due

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<PAGE>

and punctual performance and observance of each agreement and
condition of the Operative Documents to be performed or observed by
USAir; (iii) no Collateral Access Event would arise as a result of
such transaction; and (iv) USAir shall have delivered to the
Collateral Agent an opinion of counsel concerning certain matters.
There are no provisions in the Indentures, Collateral Agency
Agreement or other documents that would afford the Noteholders
additional protection in the event of a highly leveraged transac-
tion, including transactions effected by management or affiliates,
which may or may not result in a change of control of USAir.

Collateral Access Events
- ------------------------

Collateral Access Events under each Indenture include: (a) the
failure by USAir to make an expected payment of principal or any
payment of interest or premium when due, and the continuation of
such failure unremedied for 15 days, (b) the failure to procure and
maintain property and liability insurance in accordance with the
provisions of the Collateral Agency Agreement and the continuation
of such failure, in the case of maintenance of such insurance,
until the earlier of (i) 30 days after notice to USAir or the
Collateral Agent that such insurance is subject to lapse or
cancellation or (ii) the date such lapse or cancellation is
effective as to the Collateral Agent, (c) operation of the Aircraft
after receipt of notice that the insurance required by the
Collateral Agency Agreement has been canceled, (d) the failure by
USAir to perform any covenants contained in the Collateral Agency
Agreement and the continuation of such failure for a period of 30
days after notice to USAir by the Indenture Trustee or by holders
of 25% of outstanding Notes under such Indenture, unless such
failure is curable and USAir is diligently proceeding to correct
such failure and shall in fact correct such failure within 180 days
after delivery of such notice, (e) any representation or warranty
made by USAir in any Indenture, the Collateral Agency Agreement or
any Liquidity Agreement or in any document or certificate furnished
to the Collateral Agent, an Indenture Trustee or the Noteholders
under such Indenture shall be incorrect in any material respect as
of the date made and shall be material at the time of determination
and shall not have been remedied within 30 days after notice has
been given to USAir by the Indenture Trustee or holders of 25% of
outstanding Notes under such Indenture, (f) the occurrence of
certain events of bankruptcy, reorganization or insolvency of USAir
and (g) a Collateral Access Event under any other Indenture.

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<PAGE>

Events of Default
- -----------------

Events of Default under each Indenture are (i) the failure to
pay the principal outstanding on the relevant Class of Notes on the
Legal Maturity Date thereof and the continuation of such failure
for 15 days and (ii) the failure to pay interest on any Interest
Payment Date on such Class of Notes and the continuation of such
failure unremedied for 15 days (unless the Collateral Agent shall
have borrowed an Interest Advance with respect thereto).

Remedies
- --------

Each Indenture will provide that upon the occurrence and
during the continuance of any Collateral Access Event under such
Indenture, the applicable Indenture Trustee may, or upon the
instruction of the holders of a majority in aggregate principal
amount of the relevant Class of Notes shall, declare the unpaid
principal of all of the Notes of such Class outstanding at such
date to be immediately due and payable, together with all accrued
but unpaid interest thereon and all other amounts due in respect
thereof (such declaration being an "acceleration" of the relevant
Class of Notes). Each Indenture provides that upon any accelera-
tion of either of the other Classes of Notes, the Notes issued
under such Indenture shall be automatically accelerated. The
Collateral Agency Agreement provides that upon the Collateral
Agent's receipt of a Notice of Acceleration the Collateral Agent
shall, upon the direction of the Controlling Party, exercise such
remedies available to it under applicable law, including any of the
remedies of a secured party under applicable law or otherwise
provided in the applicable Indenture, as may be directed by the
Controlling Party.

Section 1110 of the Bankruptcy Code provides, among other
things, that the right of a holder of a security interest in
aircraft first placed in service after October 22, 1994 (such as
the Aircraft) granted by a person that is a citizen of the United
States holding an air carrier operating certificate, such as USAir,
to repossess such aircraft in compliance with the terms of the
security agreement is not affected in a Chapter 11 bankruptcy
reorganization case with respect to such person by the automatic
stay provisions of the Bankruptcy Code or any power of the
bankruptcy court to enjoin such repossession unless, within 60 days
after commencement of the case, the debtor agrees, with the court's

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<PAGE>

approval, to perform obligations under the security agreement and
cures all outstanding defaults, including Collateral Access Events,
other than defaults, including Collateral Access Events, relating
to financial condition or bankruptcy. USAir has been advised by
Fulbright & Jaworski L.L.P. that, in the opinion of such counsel,
the Collateral Agent, for the benefit of the Noteholders, would be
entitled to the benefits of Section 1110 of the Bankruptcy Code
with respect to the Aircraft. It is unclear whether, after an
Event of Loss of an engine subject to the lien of an Indenture or
a voluntary substitution of an engine subject to the lien of an
Indenture by USAir, any replacement engine subject to the lien of
the related Indenture would have the benefits of Section 1110 of
the Bankruptcy Code if such aircraft or engine had been first
placed into service on or before October 22, 1994. The right of
the Company to substitute an aircraft upon an Event of Loss with
respect to an Aircraft is subject to the receipt of an opinion of
counsel that the benefits of Section 1110 of the Bankruptcy Code
would continue to be applicable.

Purchase Rights of Noteholders
- ------------------------------

At any time after the delivery to the Collateral Agent of a
Notice of Acceleration which has not been rescinded or withdrawn,
the Class B Noteholders shall have the right to purchase all, but
not less than all, of the New Class A Notes and the Class C
Noteholders shall have the right to purchase all, but not less than
all, of the New Class A Notes and the New Class B Notes. The
purchase price for any Class of Notes shall be equal to the
aggregate principal amount of all Notes of such Class then
outstanding, together with all accrued and unpaid interest (but
without premium, if any) then due and payable to the holders of
such Notes under the applicable Indenture and the other Operative
Documents.

Reports to Noteholders
- ----------------------

Under the terms of the Collateral Agency Agreement and the
Indentures, as applicable, the following reports are required to be
filed with the Collateral Agent and promptly transmitted to the
related Class of Noteholders until the Notes are paid in full: (i)
an annual report of USAir containing its financial statements
audited by its independent certified public accountant, within 120
days after the end of each of its fiscal years and (ii) quarterly

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<PAGE>

reports of USAir containing its unaudited financial statements,
within 60 days after the end of each of the first three quarters of
each of its fiscal years.

Modification of Agreements
- --------------------------

Without the consent of the holders of 50% of the unpaid
principal amount of the Notes under the applicable Indenture and,
if required by the Liquidity Agreements, the applicable Liquidity
Provider, the provisions of the Collateral Agency Agreement or the
applicable Indenture may not be amended or modified, except that
(i) certain provisions of each Indenture and the Collateral Agency
Agreement may be supplemented, amended or modified without the
consent of the Noteholders thereunder to the extent such supple-
ment, amendment or modification, among other things, cures an
ambiguity or subjects other collateral to the lien of the Collater-
al Agency Agreement and (ii) each Indenture Trustee may consent to
any modification or amendment of, addition to or deletion from the
Collateral Agency Agreement or applicable Indenture if such
modification, amendment, addition or deletion does not materially
adversely affect the interests of the Noteholders represented by
such Indenture Trustee. Without the consent of each Noteholder in
an affected Class of Notes, the Collateral Agent may not agree to
any amendments or modifications of any of the Liquidity Agreements
which are materially adverse to the Noteholders. Without the
consent of each Noteholder in an affected Class of Notes and, if
required by the Liquidity Agreements, the applicable Liquidity
Provider, no amendment or modification of the applicable Indenture
may, among other things, (i) reduce the percentage of the aggregate
principal amount of the Notes of such Class necessary to modify or
amend any provision of such Indenture or other Operative Document
or to waive compliance therewith, (ii) reduce the principal amount
of or interest payable on such Note or extend the time when any
such principal or interest is due and payable or otherwise affect
the terms of payment of such Note or (iii) make such Note payable
in a currency other than U.S. dollars. Without the consent of each
Noteholder in an affected Class and each applicable Liquidity
Provider, no amendment or modification of the Collateral Agency
Agreement may, among other things, modify certain provisions of the
Collateral Agency Agreement relating to the distribution of
principal, interest or premium or other monies received or realized
by the Collateral Agent from the Collateral.

USAir may from time to time be a Noteholder with respect to
any of the Notes, but shall not be entitled to vote such Notes in
respect of any matters coming before Noteholders.

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<PAGE>

Certain Payments to Noteholders
- -------------------------------

(a) No payment or distribution shall be made on or in respect
of any obligation owed to a Noteholder under the Operative
Documents, including any payment or distribution of cash, property
or securities after commencement of a bankruptcy case involving
USAir, except directly to the Collateral Agent for application as
provided in the Collateral Agency Agreement. See "-Redemption" and
"-Priority of Distributions."

(b) In the event that a Noteholder shall receive any payment
or distribution on or in respect of any such obligation which it is
not entitled to receive under the applicable Indenture or the
Collateral Agency Agreement, it will hold any amount so received in
trust for the Senior Holders (as defined below) and will forthwith
turn over such payment to the Collateral Agent in the form received
to be applied or held as provided in the Collateral Agency
Agreement. See "-Redemption" and "-Priority of Distributions."

(c) In connection with any foreclosure sale of all or any
part of the Collateral, no Noteholder may "bid-in" or purchase any
part of such Collateral with any Notes held by such Noteholder
unless prior to or contemporaneously with any such purchase by such
Noteholder, the obligations owed to the Senior Holders under the
Operative Documents have been or are being paid in full in dollars
and in immediately available funds (or in such other form as shall
be acceptable to the Senior Holders).

(d) Each Noteholder (and the applicable Indenture Trustee on
behalf of such Noteholder) shall be entitled to receive and retain
any and all amounts paid or payable to such Noteholder with the
proceeds of an Interest Advance under the Liquidity Facilities or
a withdrawal from the Cash Collateral Account to the extent
permitted by the terms of the Collateral Agency Agreement. See
"-Redemption" and "-Priority of Distribution."

The term "Senior Holder" means, until the Liquidity Obliga-
tions (as defined in Appendix A to the Collateral Agency Agreement)
have been paid in full and the commitment to make advances under
the Liquidity Facilities and the Liquidity Agreements has expired
or terminated, the Liquidity Providers, and (i) with respect to the
Class B Noteholders, thereafter, until the Class A Obligations (as
defined in Appendix A to the Collateral Agency Agreement) have been
paid in full, the Class A Noteholders and (ii) with respect to the

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<PAGE>

Class C Noteholders, thereafter, until the Class A and the Class B
Obligations (as defined in Appendix A to the Collateral Agency
Agreement) have been paid in full, the Class A Noteholders and the
Class B Noteholders.

Collateral Agency Agreement
- ---------------------------

Registration, Possession, Leasing
- ---------------------------------

USAir may lease an Aircraft to any United States certificated
air carrier or to foreign air carriers duly organized and operating
pursuant to a license issued under the laws of certain countries
with which the United States government maintains normal diplomatic
relations (and Taiwan) (such United States and foreign air carriers
being the "Permitted Air Carriers"). In addition, subject to
certain limitations, USAir may lease any of the Aircraft to foreign
air carriers that are not Permitted Air Carriers and may transfer
possession of an Aircraft other than by lease, including transfers
in connection with normal interchange and pooling arrangements with
any air carrier, charters, transfers to the United States govern-
ment or foreign governments and transfers in connection with
maintenance or modifications. If the Aircraft are leased or the
possession is otherwise transferred, such Aircraft will remain
subject to the lien of the Collateral Agency Agreement.

USAir is required, except under certain circumstances, to keep
each Aircraft registered under the Act. The Collateral Agency
Agreement under the Act. Such recordation of the Collateral Agency
Agreement (including Collateral Agency Agreement supplements)
provided the Collateral Agent a perfected security interest in the
related Aircraft whenever it is located in the United States or any
of its territories and possessions; the Convention provides that
such security interest will also be recognized, with certain
limited exceptions, in those jurisdictions that have ratified or
adhere to the Convention. Although USAir has no current intention
to do so, USAir will have the right, subject to certain conditions,
at its own expense to register any Aircraft in countries other than
the United States. Prior to any such change in the jurisdiction of
registry, the Collateral Agent shall have received an opinion of
counsel that, among other things, the Collateral Agency Agreement
and the Collateral Agent's right to repossession thereunder are
valid and enforceable under the laws of such country in each case
subject, in certain cases, to certain filings, recordations or

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<PAGE>

other actions. Subject to certain limitations, each Aircraft may
also be operated by USAir or under lease or interchange arrange-
ments in countries that are not parties to the Convention. The
extent to which the related Collateral Agent's security interest
would be recognized in an Aircraft located in a country that is not
a party to the Convention, and the extent to which such security
interest would be recognized in a jurisdiction adhering to the
Convention if the Aircraft is registered in a jurisdiction not a
party to the Convention, is uncertain. Moreover, in the case of a
Collateral Access Event, the ability of the Collateral Agent to
realize upon its security interest in an Aircraft could be
adversely affected as a legal or practical matter if such Aircraft
were registered or located outside the United States.

Liens
- -----

The Aircraft will be maintained by USAir free of any liens,
other than the rights of the Collateral Agent and certain limited
liens permitted under the Collateral Agency Agreement, including
liens for taxes either not yet due and payable or being contested
in good faith; suppliers', mechanics' and other similar liens
arising in the ordinary course of business and either not yet due
and payable or being contested in good faith; judgment liens whose
enforcement has been stayed; salvage and similar rights of insurers
of the Aircraft; and any other lien with respect to which USAir
shall have provided a bond or other security in an amount and under
terms reasonably satisfactory to the Collateral Agent.

Insurance
- ---------

USAir will, at its expense, maintain or cause to be maintained
all-risk aircraft hull insurance covering the Aircraft, and, to the
extent available at reasonable cost, all-risk property damage
insurance covering engines and parts while temporarily removed from
an Aircraft pending replacement, at all times in an amount not less
than the sum of (i) the aggregate outstanding principal amount of
the Notes and (ii) the scheduled amount of interest payable on the
Notes on the next Interest Payment Date. During any period when an
Aircraft is on the ground and not in operation USAir may carry or
cause to be carried in lieu of the insurance required by the
previous sentence, insurance otherwise conforming with the
provisions of said sentence except that the scope of the risks
covered and the type of insurance shall be the same as are from

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<PAGE>

time to time applicable to aircraft owned or leased by USAir of the
same type as such Aircraft similarly on the ground and not in
operation, provided that in all cases full amounts shall not be
less than that described in the immediately preceding sentence.
All policies covering loss of or damage to an Aircraft shall be
made payable to the Collateral Agent for any loss in excess of
$5,000,000. USAir may self-insure a portion of these risks, but in
no case will the self-insurance with respect to all of the aircraft
in USAir's fleet (including the Aircraft) exceed the lesser of 50%
of the largest replacement value of any single aircraft in USAir's
fleet or 1-1/2% of the average aggregate insurable value (during
the preceding calendar year) of all aircraft on which USAir carries
insurance, unless an insurance broker of national standing selected
by USAir and reasonably satisfactory to the Collateral Agent shall
certify that the standard among all other major United States
airlines is a higher level of self-insurance, in which case USAir
may self-insure to such higher level. In addition, USAir will, at
its expense, maintain or cause to be maintained comprehensive
airline liability (including, without limitation, passenger,
contractual, bodily injury and property damage liability) insurance
(exclusive of manufacturer's product liability insurance) and cargo
liability insurance with respect to each Aircraft (i) in amounts
that are not less than the comprehensive airline liability
insurance as is from time to time applicable to aircraft owned and
operated by USAir of the same type as such Aircraft and (ii) of the
types and covering the same risks as are from time to time
applicable to aircraft owned or operated by USAir of the same type
as such Aircraft and which is maintained in effect with insurers of
recognized responsibility; provided that USAir need not maintain
cargo liability insurance, or may maintain such insurance in an
amount less than that specified above for the respective Aircraft
as long as the amount of cargo liability insurance, if any,
maintained with respect to such Aircraft is the same as the cargo
liability insurance, if any, maintained for other aircraft of the
same model as such Aircraft owned or operated by USAir. During any
period when an Aircraft is on the ground and not in operation USAir
may carry or cause to be carried, in lieu of the insurance required
by the previous sentence, insurance otherwise conforming with the
provisions of said sentence except that the amounts of coverage
shall not be required to exceed the amounts of comprehensive
airline liability insurance, and the scope of risks covered and
type of insurance shall be the same, as are from time to time in
effect with respect to aircraft owned or leased by USAir of the
same type as such Aircraft similarly on the ground and not in
operation. USAir may also self-insure a portion of these risks by
means of a deductible or premium adjustment provisions subject to

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<PAGE>

the same limitations described above for insurance for risks of
loss or damage to such Aircraft. USAir is also permitted a
deductible per occurrence not in excess of the prevailing standard
market deductible for similar aircraft. The Collateral Agent, the
Indenture Trustees and the Liquidity Providers will each be named
as additional insured parties under all liability insurance
policies required with respect to the Aircraft. In addition, the
insurance policies will provide that, in respect of the respective
interests of the Collateral Agent, the Indenture Trustees and the
Liquidity Providers, the insurance shall not be invalidated by any
action or inaction of USAir and shall insure the respective
interests of the Collateral Agent, the Indenture Trustees and the
Liquidity Providers as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in
such policies by USAir. If and to the extent that USAir or a
lessee operates an Aircraft (A) on routes where it maintains war
risk insurance in effect with respect to other similar equipment,
or (B) on routes other than routes within or between the United
States, Canada, Mexico, Bermuda and islands other than Cuba in the
Caribbean Basin where the custom in the industry is to carry such
insurance, USAir or such lessee shall maintain such insurance with
respect to the Aircraft in an amount not less than the lesser of
the aggregate unpaid principal of, together with accrued interest
on, a ratable portion of the Notes of all Classes (based on the
initial Appraised Value of such Aircraft) and the amount of such
insurance customarily carried by corporations engaged in the same
or similar business similarly situated with USAir and with respect
to similar equipment on similar routes; provided that if the
requirement to maintain war risk insurance arises solely by reason
of clause (A) of this sentence, such insurance shall be maintained
in an amount not less than that maintained by USAir or such lessee
on other similar aircraft in its fleet. Unless an Aircraft is
operated or used under a contract with the United States government
pursuant to which the United States government assumes liability
for damage or loss to such Aircraft and to other property or
persons, USAir may not operate or locate any Aircraft outside the
United States and Canada (i) in any war zone or recognized or, in
USAir's reasonable judgment, threatened area of hostilities, unless
such Aircraft is fully covered by war risk insurance, or (ii) in
any area excluded from the insurance coverage required under the
Collateral Agency Agreement. Insurance proceeds, if any, held from
time to time by the Collateral Agent with respect to any Aircraft,
prior to the distribution thereof, will be invested and reinvested
by the Collateral Agent at the direction of USAir (except after the
occurrence and during the continuance of a Collateral Access Event)
in certain investments described in the Collateral Agency Agree-
ment. The net amount of any loss resulting from any such invest-
ments will be paid by USAir.

- 200 -
<PAGE>

Events of Loss
- --------------

If an Event of Loss occurs with respect to an Aircraft, USAir
shall either redeem a pro rata amount of the outstanding principal
amount of the Notes or USAir shall subject a replacement aircraft
to the lien created by the Collateral Agency Agreement. In the
event USAir elects to replace an Aircraft, it must do so within 120
days of the Event of Loss with a Boeing 757 aircraft of the same or
a more advanced model having a value and utility at least equal to,
and in as good operating condition and repair and as airworthy as,
the Aircraft subject to the Event of Loss, assuming such Aircraft
was in the condition and repair required by the Collateral Agency
Agreement immediately prior to the occurrence of the Event of Loss.
In the event USAir elects not to replace such Aircraft, USAir is
required to redeem, not later than 165 days after the occurrence of
such Event of Loss, a pro rata amount (based on the ratio borne by
the initial Appraised Value of such Aircraft to the initial
Aggregate Appraised Value) of the outstanding principal amount of
the Notes together with accrued and unpaid interest thereon. Upon
such payment the lien of the Collateral Agency Agreement with
respect to such Aircraft shall terminate. The payments made by
USAir shall be deposited with the Collateral Agent.

If an Event of Loss occurs with respect to an Engine (as
defined in the Collateral Agency Agreement) alone, USAir shall
replace such Engine with another engine of the same or an improved
model of the same or another manufacturer and suitable for
installation and use on the Aircraft.

An Event of Loss with respect to the Aircraft or Engine means
any of the following events: (i) payment of an insurance settlement
with respect to such property on the basis of an actual or
constructive total loss; (ii) destruction or damage beyond repair;
provided that if it is not clear whether damage constitutes damage
beyond repair, an Event of Loss will be deemed to occur when it is
determined by USAir that such damage is beyond repair; (iii) theft
or disappearance for a period in excess of 120 days, unless the
location of the Aircraft is known and USAir is diligently pursuing
its recovery; (iv) the condemnation or taking of title to such
Aircraft by the United States government or any foreign government
or instrumentality or agency thereof; (v) the requisition or taking
of use of such Aircraft or airframe by a foreign government or
instrumentality or agency for a continuous period of more than six
months; (vi) with respect to an Engine only, the requisition for
use by any government or the divestiture of title resulting from

- 201 -
<PAGE>

the installation of such Engine on an airframe leased to USAir or
purchased by USAir subject to a conditional sale agreement; or
(vii) "grounding" of such Aircraft for a period of twelve consecu-
tive months (or such shorter period determined by USAir) due to an
action by a governmental body, unless prior to the expiration of
such period USAir is diligently carrying forward all necessary
steps to permit normal use or in any event, if such "grounding" is
for a period of more than 24 consecutive months.

Indemnification
- ---------------

Subject to certain exceptions, USAir has agreed to indemnify
the Collateral Agent, the Liquidity Providers and the Indenture
Trustees for certain liabilities, losses, fees and expenses and for
certain other matters arising out of the transactions described
herein or relating to the Aircraft.

The Indenture Trustees
- ----------------------

Wilmington Trust Company is the Indenture Trustee under each
of the Indentures. USAir and its affiliates may from time to time
enter into banking and trustee relationships with the Indenture
Trustees and their affiliates. Wilmington Trust Company and its
affiliates may hold Notes in their own names. The Indenture
Trustee's address is Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration. For purposes of meeting the legal requirements of
any jurisdictions in which any part of the Collateral may at the
time be located, each of the Indenture Trustees will have the power
to appoint a co-trustee or separate trustee of all or any part of
the Collateral. To the extent permitted by law, all rights,
powers, duties and obligations conferred or imposed upon such
Indenture Trustee will be conferred or imposed upon and exercised
or performed by such Indenture Trustee and such separate trustee or
co-trustee jointly, or, in any jurisdiction in which such Indenture
Trustee will be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise
and perform such rights, powers, duties and obligations solely at
the direction of such Indenture Trustee. Any Indenture Trustee may
resign at any time, in which event a successor Indenture Trustee
will be appointed as provided in the applicable Indenture. USAir
may also remove any Indenture Trustee, if such Indenture Trustee
ceases to be eligible to continue as such under the applicable

- 202 -
<PAGE>

Indenture or if the Indenture Trustee becomes insolvent. In such
circumstances, a successor Indenture Trustee will be appointed as
provided in the applicable Indenture. Any resignation or removal
of any Indenture Trustee and appointment of a successor Indenture
Trustee will not become effective until acceptance of the appoint-
ment by the successor Indenture Trustee.

The Indenture Trustee has not participated in the preparation
of this Prospectus and assumes no liability for its contents.

The Collateral Agent
- --------------------

Wilmington Trust Company is the Collateral Agent under the
Collateral Agency Agreement. USAir and its affiliates may from
time to time enter into banking and trustee relationships with the
Collateral Agent and its affiliates. Wilmington Trust Company and
its affiliates may hold Notes in their own names. The Collateral
Agent's address is Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.

For purposes of meeting the legal requirements of any
jurisdictions in which any part of the Collateral may at the time
be located, the Collateral Agent will have the power to appoint a
co-trustee or separate trustee of all or any part of the Collater-
al. To the extent permitted by law, all rights, powers, duties and
obligations conferred or imposed upon the Collateral Agent will be
conferred or imposed upon and exercised or performed by the
Collateral Agent and such separate trustee or co-trustee jointly,
or, in any jurisdiction in which the Collateral Agent will be
incompetent or unqualified to perform certain acts, singly upon
such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction
of the Collateral Agent.

The Collateral Agent may resign at any time, in which event a
successor Collateral Agent will be appointed as provided in the
Collateral Agency Agreement. The Liquidity Providers and the
Indenture Trustees, acting together, may remove the Collateral
Agent. USAir may also remove the Collateral Agent. In such
circumstances, a successor Collateral Agent will be appointed as
provided in the Collateral Agency Agreement. Any resignation or
removal of the Collateral Agent and appointment of a successor
Collateral Agent will not become effective until acceptance of the
appointment by the successor Collateral Agent.

- 203 -
<PAGE>

The Collateral Agent has not participated in the preparation
of this Prospectus and assumes no liability for its contents.

Governing Law
- -------------

Each Indenture, the Old Notes, the Collateral Agency Agree-
ment, the Liquidity Facilities and the Registration Rights
Agreement are governed by, and construed in accordance with, New
York State law. The New Notes will be governed by, and construed
in accordance with, New York State law.

PLAN OF DISTRIBUTION
--------------------

Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New
Notes. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with
resales of New Notes received in exchange for Old Notes where such
New Notes were acquired as a result of market-making activities or
other trading activities. USAir will, for a period of 90 days
after the Expiration Date, make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection
with any such resale.

USAir will not receive any proceeds from any sale of New Notes
by broker-dealers. New Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New
Notes or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may
be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or conces-
sions from any such broker-dealer and/or the purchasers of any such
New Notes. Any broker-dealer that resells New Notes that were
received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of
new Notes and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the

- 204 -
<PAGE>

Securities Act. The Letter of Transmittal states that by acknowl-
edging that it will deliver and by delivering a Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwrit-
er" within the meaning of the Securities Act.

For a period of 90 days after the Expiration Date, USAir will
promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer
that requests such documents in the Letter of Transmittal. USAir
has agreed in the Registration Rights Agreement to pay all expenses
incident to the Exchange Offer other than commissions or conces-
sions of any brokers or dealers and to indemnify any broker-dealer
that receives New Notes for its own account pursuant to the
Exchange Offer as a result of market making or other trading
activities against certain liabilities including liabilities under
the Securities Act.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
---------------------------------------------

The following summary describes certain United States federal
income tax consequences of the exchange of Old Notes for New Notes
as of the date hereof. Except where noted, it deals only with New
Notes held as "capital assets" and does not deal with special
situations, such as those of dealers in securities, financial
institutions, life insurance companies or foreign holders.
Furthermore, the discussion below is based upon the provisions of
the Internal Revenue Code of 1986 (the "Code") and regulations,
rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to
result in federal income tax consequences different from those
discussed below. Persons considering the exchange of Old Notes for
New Notes should consult their own tax advisors concerning the
federal income tax consequences in light of their particular
situations as well as any consequences arising under the laws of
any other taxing jurisdiction.

Exchange of Notes
- -----------------

USAir has been advised by its tax counsel, Ginsburg, Feldman &
Bress, Chartered, that the exchange of Old Notes for New Notes in the
Exchange Offer should not constitute a taxable event to Noteholders.
Consequently, in such firm's opinion, no gain or loss should be
recognized by a Noteholder upon receipt of a New Note, the holding
period of the New Note should include the holding period of the Old
Note and the basis of the New Note should be the same as the basis of
the Old Note immediately before the exchange.

- 205 -
<PAGE>

LEGAL MATTERS
-------------

The validity of the New Notes will be passed upon for USAir by
Lawrence M. Nagin, Executive Vice President-Corporate Affairs and
General Counsel of USAir. Mr. Nagin's compensation arrangements
with USAir are discussed in "Management-Compensation of Executive
Officers."

INDEPENDENT AUDITORS
--------------------

The consolidated financial statements of USAir as of December
31, 1995 and 1994, and for each of the three years in the period
ended December 31, 1995, appearing in this Prospectus have been
audited by KPMG Peat Marwick LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein.

EXPERTS
-------

The references to AirClaims, AISI, and BK, and to their
respective appraisal reports, each dated December 31, 1995, are
included herein in reliance upon the authority of each such firm as
an expert with respect to the matters contained in its appraisal
report.

- 206 -
<PAGE>

<TABLE>
USAir, Inc.
Consolidated Financial Statements
---------------------------------
USAir, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995 (unaudited)
- ------------------------------------------------------
(in thousands)
- --------------
<CAPTION>

1996 1995
------------- -------------
<S> <C> <C>
Operating Revenues
Passenger transportation $ 1,551,579 $ 1,486,590
Cargo and freight 37,308 40,071
Other 150,728 137,829
------------- -------------
Total Operating Revenues 1,739,615 1,664,490

Operating Expenses
Personnel costs 713,751 693,564
Aviation fuel 155,795 155,637
Commissions 123,535 134,924
Aircraft rent 102,415 100,831
Other rent and landing fees 96,357 102,004
Aircraft maintenance 86,539 74,927
Depreciation and amortization 77,738 83,659
Other, net 392,395 369,248
------------- ------------
Total Operating Expenses 1,748,525 1,714,794
------------- ------------
</TABLE>

[table continued on following page]

- 207 -
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Operating Income (Loss) (8,910) (50,304)

Other Income (Expense)
Interest income 13,410 7,154
Interest expense (71,447) (73,105)
Interest capitalized 1,449 4,165
Other, net 10,860 10,266
-------------- ---------------
Other Income (Expense), Net (45,728) (51,520)
-------------- ---------------
Income (Loss) Before Taxes (54,638) (101,824)

Income Tax Provision (Credit) 292 -
-------------- ---------------
Net Income (Loss) $ (54,930) $ (101,824)
============== ===============
</TABLE>

See accompanying Note to condensed consolidated financial statements.

- 208 -
<PAGE>

USAir, Inc.
Condensed Consolidated Balance Sheets
March 31, 1996 (unaudited) and December 31, 1995
- ------------------------------------------------
(dollars in thousands except per share amount)
- ----------------------------------------------

<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
- --------------------------------- ---------------- ----------------
<S> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 782,712 $ 879,613
Short-term investments 45,487 19,831
Receivables, net 444,680 321,755
Materials and supplies, net 213,359 222,245
Prepaid expenses and other 120,647 97,922
------------ ------------
Total current assets 1,606,885 1,541,366

Property and Equipment
- ----------------------
Flight equipment 4,998,231 5,021,520
Ground property and equipment 1,056,173 1,052,706
Less accumulated depreciation
and amortization (2,259,371) (2,222,814)
----------- -----------
3,795,033 3,851,412
Purchase deposits 24,361 17,026
----------- -----------
Property and equipment, net 3,819,394 3,868,438
</TABLE>

[table continued on following page]

- 209 -

<PAGE>

<TABLE>

<S> <C> <C>
Other Assets
- ------------
Goodwill, net 506,550 510,562
Other intangibles, net 312,792 312,539
Other assets, net 611,833 590,622
------------ -----------
Total other assets 1,431,175 1,413,723
------------ -----------
$ 6,857,454 $ 6,823,527
============ ===========

LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------

Current Liabilities
- -------------------
Current maturities of
long-term debt $ 83,874 $ 77,496
Accounts payable 301,061 325,079
Payable to parent company 176,122 100,344
Traffic balances payable
and unused tickets 875,442 638,019
Accrued expenses 1,308,529 1,435,194
------------ ------------
Total current liabilities 2,745,028 2,576,132
</TABLE>

[table continued on following page]

- 210 -

<PAGE>

<TABLE>

<S> <C> <C>
Long-term Debt, Net of Current
Maturities
- -----------------------------------
Long-term debt 2,657,587 2,674,376
Note payable - parent company - 67,556
Total Long-term debt, net of
-------------- --------------
current maturities 2,657,587 2,741,932

Deferred Credits and Other Liabilities
- --------------------------------------
Deferred gains, net 376,392 382,995
Postretirement benefits other
than pensions, non-current 1,034,176 1,015,373
Non-current employee benefit
liabilities and other 410,374 418,268
------------- -------------
Total deferred credits
and other liabilities 1,820,942 1,816,636

Stockholder's Equity (Deficit)
- ------------------------------
Common stock, par value $1 per share,
authorized 1,000 shares,
issued and outstanding 1,000 shares 1 1
Paid-in capital 2,416,131 2,416,131
Retained earnings (deficit) (2,704,240) (2,649,310)
Adjustment for minimum
pension liability (77,995) (77,995)
-------------- -------------
Total stockholder's equity (deficit) (366,103) (311,173)
-------------- -------------
$ 6,857,454 $ 6,823,527
============== =============
</TABLE>

See accompanying Notes to condensed consolidated financial statements.

- 211 -

<PAGE>

USAir, Inc.
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995 (unaudited) (in thousands)

<TABLE>
<CAPTION>
1996 1995
------------ --------------
<S> <C> <C>
Cash and cash equivalents beginning of period $ 879,613 $ 428,925

Cash flows from operating activities
Net income (loss) (54,930) (101,824)
Adjustments to reconcile net income (loss) to cash provided
by (used for) operating activities
Depreciation and amortization 77,738 83,659
Loss (gain) on disposition of property 3,466 (1,329)
Amortization of deferred gains and credits (6,603) (6,603)
Other (3,448) (1,876)
Changes in certain assets and liabilities

Decrease (increase) in receivables (122,925) (119,762)
Decrease (increase) in materials, supplies,
prepaid expenses and intangible pension assets (11,564) (13,675)
Increase (decrease) in traffic balances payable
and unused tickets 237,423 161,493
Increase (decrease) in accounts payable and
accrued expenses (150,880) (16,575)
Increase (decrease) in postretirement benefits
other than pensions, non-current 18,803 17,174
Net cash provided by (used for)
operating activities (12,920) 682
</TABLE>
[table continued on following page]

- 212 -

<PAGE>

<TABLE>
<S> <C> <C>
Cash flows from investing activities
Aircraft acquisitions and purchase deposits, net (3,385) (20,531)
Additions to other property (27,979) (17,337)
Proceeds from disposition of property 3,483 36,617
Change in short-term investments (25,695) -
Change in restricted cash and investments 985 2,565
Other (11,903) 177
----------- -----------

Net cash provided by (used for) investing activities (64,494) 1,491

Cash flows from financing activities
Issuance of debt 103,002 -
Reduction of debt (122,489) (15,240)
---------- -----------
Net cash provided by (used for) financing activities (19,487) (15,240)
---------- -----------
Net increase (decrease) in cash and cash equivalents (96,901) (13,067)
---------- -----------
Cash and cash equivalents end of period $ 782,712 $ 415,858
========== ===========
Noncash investing and financing activities
Issuance of debt - refinancing of debt
secured by aircraft $ 159,998 $ -
========== ===========

Reduction of debt - refinancing of debt
secured by aircraft $ 154,422 $ -
========= ========
</TABLE>
[table continued on following page]

- 213 -

<PAGE>

<TABLE>

<S> <C> <C>
Reduction of parent company debt -
aircraft acquisitions $ 68,641 $ -
========= ========
Issuance of debt - aircraft acquisitions $ 4,585 $ 101,215
========= ========
Underwriter's fees - refinancing of debt
secured by aircraft $ 2,488 $ -
========= ========
</TABLE>

See accompanying Notes to condensed consolidated financial statements.

- 214 -

<PAGE>

USAir, Inc.
Note to Condensed Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation
---------------------

The accompanying Condensed Consolidated Financial Statements include the
accounts of USAir and its wholly-owned subsidiary USAM Corp. USAir is a wholly-
owned subsidiary of USAir Group.

Management believes that all adjustments necessary for a fair statement of
results have been included in the Condensed Consolidated Financial Statements
for the interim periods presented, which are unaudited. All significant
intercompany accounts and transactions have been eliminated. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

Certain 1995 amounts have been reclassified to conform with 1996
classifications.

These interim period Condensed Consolidated Financial Statements should be
read in conjunction with the audited Consolidated Financial Statements that
follow for the year ended December 31, 1995.

- 215 -
<PAGE>

Independent Auditors' Report

The Stockholder and Board of Directors
USAir, Inc.:

We have audited the consolidated balance sheets of USAir, Inc. and
subsidiary ("USAir") as of December 31, 1995 and 1994, and the
related consolidated statements of operations, cash flows, and
changes in stockholder's equity (deficit) for each of the years in
the three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of USAir's management.
Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of USAir, Inc. and subsidiary as of December 31, 1995 and
1993, and the results of their operations and their cash flows for
the three-year period ended December 31, 1995 in conformity with
generally accepted accounting principles.

As discussed in Note 9 to the consolidated financial statements,
effective January 1, 1993, USAir changed its method of accounting
for postemployment benefits.

KPMG Peat Marwick LLP
Washington, D. C.
February 28, 1996

- 216 -
<PAGE>

<TABLE>

USAir, Inc.
Consolidated Statements of Operations
Years Ended December 31,
(in thousands)

1995 1994 1993
- ---------------------------- ------------ ------------ -------------
<S> <C> <C> <C>

Operating Revenues
Passenger transportation $6,267,762 $5,922,223 $ 6,081,788
Cargo and freight 153,651 160,364 170,500
Other 563,463 496,006 370,760
--------- --------- ----------
Total operating revenues 6,984,876 6,578,593 6,623,048

Operating Expenses
Personnel costs 2,751,437 2,753,269 2,698,039
Aviation fuel 605,027 642,305 677,859
Commissions 527,058 549,192 559,793
Aircraft rent 398,063 521,395 431,616
Other rent and landing fees 388,866 422,190 431,591
Aircraft maintenance 295,594 335,791 308,890
Depreciation and amortization 337,066 387,211 325,214
Other, net 1,447,114 1,484,212 1,339,152
--------- --------- ----------
Total operating expenses 6,750,225 7,095,565 6,772,154
--------- --------- ----------
Operating income (loss) 234,651 (516,972) (149,106)
</TABLE>

[table continued on following page]
- 217 -

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other Income (Expense)
Interest income 51,122 28,044 24,794
Interest expense (301,923) (285,846) (238,628)
Interest capitalized 8,781 13,760 17,754
Other, net 44,767 44,831 (29,862)
--------- --------- ---------
Other income (expense), net (197,253) (199,211) (225,942)
--------- --------- ---------
Income (loss) before taxes and cumulative
effect of accounting changes 37,398 (716,183) (375,048)

Income tax provision (credit) 4,408 - -
--------- --------- ---------
Income (loss) before cumulative effect
of accounting changes 32,990 (716,183) (375,048)

Cumulative effect of change in method of
accounting for postemployment benefits
in 1993 - - (43,749)
---------- ---------- ----------
Net income (loss) $ 32,990 $ (716,183) $ (418,797)
========== ========== =========
</TABLE>

See accompanying Notes to consolidated financial statements.

- 218 -
<PAGE>

<TABLE>
USAir, Inc.
Consolidated Balance Sheets
December 31, (dollars in thousands except per share amount)

<CAPTION>
1995 1994
---- ----
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 879,613 $ 428,925
Short-term investments 19,831 22,133
Receivables, net 321,755 326,012
Materials and supplies, net 222,245 238,481
Prepaid expenses and other 97,922 77,111
--------- ---------
Total current assets 1,541,366 1,092,662
Property and Equipment
Flight equipment 5,021,520 4,914,776
Ground property and equipment 1,052,706 1,040,329
Less accumulated depreciation
and amortization (2,222,814) (2,006,041)
--------- ---------
3,851,412 3,949,064
Purchase deposits 17,026 195,701
--------- ---------
Property and equipment, net 3,868,438 4,144,765
Other Assets
Goodwill, net 510,562 526,615
Other intangibles, net 312,539 319,229
Other assets, net 590,622 592,689
--------- ---------
Total other assets 1,413,723 1,438,533
--------- ---------
$6,823,527 $6,675,960
========= =========

</TABLE>

- 219 -
<PAGE>

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<S> <C> <C>
Current Liabilities
Current maturities of long-term debt $ 77,496 $ 80,714
Accounts payable 325,079 263,243
Payable to parent company 100,344 85,175
Traffic balances payable and
unused tickets 638,019 591,154
Accrued expenses 1,435,194 1,297,574
---------- ----------
Total current liabilities 2,576,132 2,317,860
Long-Term Debt, Net of Current Maturities
Long-term debt 2,674,376 2,849,488
Note payable - parent company 67,556 -
--------- ---------
Total long-term debt, net of
current maturities 2,741,932 2,849,488
Deferred Credits and Other Liabilities
Deferred gains, net 382,995 409,091
Postretirement benefits other than
pensions, non-current 1,015,373 958,706
Non-current employee benefit liabilities
and other 418,268 414,000
--------- ---------
Total deferred credits and
other liabilities 1,816,636 1,781,797

Stockholder's Equity (Deficit)
Common stock, par value $1 per share,
authorized 1,000 shares, issued and
outstanding 1,000 shares 1 1
Paid-in capital 2,416,131 2,416,131
Retained earnings (deficit) (2,649,310) (2,682,300)
Adjustment for minimum pension liabilit (77,995) (7,017)
--------- ---------
Total stockholder's equity (deficit) (311,173) (273,185)
---------- ---------
$6,823,527 $6,675,960
========= =========
See accompanying Notes to consolidated financial statements.

</TABLE>
- 220 -
<PAGE>

<TABLE>
USAir, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, (in thousands)
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash and cash equivalents beginning of year $ 428,925 $ 367,835 $ 295,432
Cash flows from operating activities
Net income (loss) 32,990 (716,183) (418,797)
Adjustments to reconcile net income (loss)
to cash provided by (used for) operating
activities
Depreciation and amortization 337,066 387,211 325,214
Loss (gain) on disposition of property (16,654) (16,671) 10,405
Amortization of deferred gains and credits (26,411) (26,382) (26,439)
Other (2,787) (8,080) 26,052
Changes in certain assets and liabilities
Decrease (increase) in receivables 4,257 127,902 (59,916)
Decrease (increase) in materials,
supplies, prepaid expenses and intang-
ible pension assets (68,415) 70,750 32,069
Increase (decrease) in traffic balances
payable and unused tickets 46,865 (68,452) 37,178
Increase (decrease) in accounts payable
and accrued expenses 214,707 326,855 80,838
Increase (decrease) in postretirement
benefits other than pensions, non-current 56,667 51,613 65,833
------- --------- --------
Net cash provided by (used for) operating
activities 578,285 128,563 72,437
Cash flows from investing activities
Aircraft acquisitions and purchase deposits,
net (61,689) (46,022) (125,981)
Additions to other property (80,644) (128,874) (150,793)
Proceeds from disposition of property 219,762 55,540 176,019
Change in short-term investments 2,430 (21,994) -
Change in restricted cash and investments 71,980 2,578 (14,221)
Other (1,134) 1,110 (4,378)
-------- -------- --------
Net cash provided by (used for) investing
activities 150,705 (137,662) (119,354)
Cash flows from financing activities
Issuance of debt - 172,156 329,556
Reduction of debt (278,302) (101,967) (210,236)
-------- -------- --------
[table continued on following page]
</TABLE>
- 221 -

Net cash provided by (used for)
financing activities (278,302) 70,189 119,320
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 450,688 61,090 72,403
--------- -------- --------
Cash and cash equivalents end of year $ 879,613 $ 428,925 $ 367,835
======== ======== ========
Noncash investing and financing activities
Issuance of debt for aircraft acquisitions,
net $ 169,725 $ 224,614 $ 343,188
Issuance of parent company debt for aircraft
acquisitions $ 68,640 $ - $ 76,094
Issuance of debt for other property
acquisitions $ - $ - $ 669
Reduction of debt-aircraft purchase
deposits $ 70,837 $ - $ -
Reduction of debt-aircraft related $ - $ - $ 47,685
Reduction of parent company debt applied
to inter-company receivable $ - $ - $ 79,539
Aircraft acquisitions-transfer from
affiliated company $ - $ 3,569 $ 70,700
Other property acquisitions-transfer
from affiliated company $ - $ 7,925 $ -
Aircraft dispositions - transfer to
affiliated company $ - $ 81,913 $ -

Supplemental Information
Cash paid during the year for interest,
net of amounts capitalized $ 290,560 $ 254,199 $ 221,811
======== ======== ========
Cash received during the year for income
tax refunds, net of taxes paid $ (6,329) $ - $ -
======== ======== ========
See accompanying Notes to consolidated financial statements.

</TABLE>

- 222 -
<PAGE>

<TABLE>
USAir, Inc.
Consolidated Statements of Changes in Stockholder's Equity (Deficit)
Three Years Ended December 31, 1995
(in thousands)

<CAPTION>
Adjustment
For
Retained Minimum
Common Paid-In Earnings Pension
Stock Capital (Deficit) Liability Total
------ -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance Dec. 31, 1992 $ 1 $2,416,131 $(1,547,320) $ (6,820) $ 861,992

Net income (loss) - - (418,797) - (418,797)

Adjustment for minimum
pension liability - - - (35,144) (35,144)
--- --------- ---------- ------- -------

Balance Dec. 31, 1993 1 2,416,131 (1,966,117) (41,964) 408,051

Net income (loss) - - (716,183) - (716,183)

Adjustment for minimum
pension liability - - - 34,947 34,947
--- --------- ---------- ------- -------

Balance Dec. 31, 1994 1 2,416,131 (2,682,300) (7,017) (273,185)

Net income (loss) - - 32,990 - 32,990

</TABLE>

[table continued on following page]
- 223 -

<PAGE>

<S> <C> <C> <C> <C> <C>
Adjustment for minimum
pension liability - - - (70,978) (70,978)
--- --------- ---------- ------- -------

Balance Dec. 31, 1995 $ 1 $2,416,131 $(2,649,310) $(77,995) $(311,173)
=== ========= ========= ====== ========

</TABLE>

See accompanying Notes to consolidated financial statements.

- 224 -
<PAGE>

USAir, Inc.
Notes to Consolidated Financial Statements
------------------------------------------

1. Summary of Significant Accounting Policies
------------------------------------------

(a) Basis of Presentation and Nature of Operations
----------------------------------------------

The accompanying consolidated financial statements include the
accounts of USAir, Inc. ("USAir") and its wholly-owned subsidiary
USAM Corp. ("USAM"). USAir is a wholly-owned subsidiary of USAir
Group, Inc. ("USAir Group" or the "Company"). All significant
intercompany accounts and transactions have been eliminated.

USAir is a major United States air carrier whose primary
business is transporting passengers, property and mail. USAir
operates predominantly in the eastern United States with primary
hubs at the major airports in Pittsburgh, Pennsylvania, Charlotte,
North Carolina, Philadelphia, Pennsylvania and at Baltimore/-
Washington International Airport. USAir also maintains significant
operations at the major airports in Boston, Massachusetts, New
York, New York and Washington, D.C. USAir enplaned more than 57
million passengers during 1995 and is currently the fifth largest
domestic air carrier, as measured by revenue passenger miles
("RPMs").

In the fourth quarter of 1995, USAir and a subsidiary of
British Airways plc ("BA") formed Airline Technical Services, LLC
("ATS"), a Delaware limited liability company, offering joint
aviation maintenance, and technical and engineering expertise in
the Americas. ATS will receive a commission on the contracts it
brokers for USAir and BA. USAir accounts for ATS using the equity
method because it is owned equally by each parent company. No
material activity occurred in 1995.

At December 31, 1992, USAM owned 11% of the Covia Partnership
("Covia") which owned and operated a computerized reservation
system ("CRS"). In September 1993, Covia purchased the assets of
the corporation that owned and operated the Galileo CRS which
provided services to travel agent subscribers in Europe. Covia was
immediately separated into three new entities and, as a result,
USAM owns 11% of the Galileo International Partnership which owns
and operates the Galileo CRS, approximately 11% of the Galileo
Japan Partnership which markets the Galileo CRS in Japan and

- 225 -
<PAGE>

approximately 21% of the Apollo Travel Services Partnership which
markets the Galileo CRS in the U.S. and Mexico. USAM accounts for
these investments using the equity method because it is represented
on the board of directors of each of the partnerships and therefore
participates in policy making processes.

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Certain 1994 and 1993 amounts have been reclassified to
conform with 1995 classifications.

(b) Cash and Cash Equivalents and Short-Term Investments
----------------------------------------------------

For financial statement purposes, USAir considers all highly
liquid investments purchased within three months of maturity to be
cash equivalents. Cash and cash equivalents are stated at cost,
which approximates market value. Short-term investments consist of
certificates of deposit and commercial paper purchased with
maturities greater than three months but less than one year. Short-
term investments are stated at cost plus accrued interest, which
approximates market value.

Inventories of materials and supplies are valued at average
cost and are charged to operations as consumed. An allowance for
obsolescence is provided for flight equipment expendable and
repairable parts.

(d) Property and Equipment
----------------------

Property and equipment is stated at cost or, if acquired under
capital leases, at the lower of the present value of minimum lease
payments or fair market value at the inception of the lease.
Maintenance and repairs, including the overhaul of aircraft
components, are charged to operating expense as incurred and costs
of major improvements are capitalized for both owned and leased

- 226 -
<PAGE>

assets. Interest related to deposits on aircraft purchase contracts
and facility and equipment construction projects is capitalized as
additional cost of the asset or as leasehold improvement if the
asset is leased. Depreciation and amortization for principal asset
classifications is provided on a straight-line basis to estimated
residual values over estimated depreciable lives. USAir periodical
ly reviews estimated depreciable lives and residual values for
reasonableness and revises its estimates, if necessary.

<TABLE>
<CAPTION>
Depreciable
Assets Lives Residual Values
------ ----------- ---------------
(years) (in millions)
<S> <C> <C>
Aircraft
Boeing 767-200ER 20 $14.0
Boeing 757-200 20 8.0
Boeing 737-300/400 20 7.5
Boeing 737-200 5-17 0.6-5.0
McDonnell Douglas MD-80 20 7.5
Douglas DC-9-30 17 3.0
Fokker 100 20 5.0
Fokker F28-4000 8 2.0
Fokker F28-1000 6 1.0
Turboprop aircraft 15 1.5
Improvements to leased aircraft life of lease -

Ground property, equipment and 1-10 or
leasehold improvements life of lease -

Buildings 30 -

Property acquired under capital lease is amortized on a
straight-line basis over the term of the lease and charged to
Depreciation and Amortization Expense. When property and equipment
is sold or retired, the cost and accumulated depreciation is
removed from the accounts and any gain or loss recognized as Other
Income (Expense).

</TABLE>

- 227 -
<PAGE>

(e) Goodwill and Other Intangibles
------------------------------

Goodwill, the cost in excess of fair value of identified net
assets acquired, is being amortized on a straight-line basis over
40 years. The $629 million goodwill resulting from the acquisition
of Pacific Southwest Airlines ("Pacific Southwest") and Piedmont
Aviation, Inc. ("Piedmont Aviation"), both in 1987, is being
amortized as Depreciation and Amortization Expense. Accumulated
amortization at December 31, 1995 and 1994 related to the Pacific
Southwest and Piedmont Aviation acquisitions was $128 million and
$113 million, respectively. The $11 million goodwill resulting
from USAM's CRS investments is being amortized as other non-
operating expense, consistent with the classification of income or
loss on the investments. USAM's related accumulated amortization
at December 31, 1995 and 1994 was approximately $2 million. USAir
evaluates whether or not goodwill is impaired by comparing the
goodwill balances with estimated future undiscounted cash flows
which, in USAir's judgment, are attributable to the goodwill. This
analysis is performed separately for the goodwill which resulted
from each acquisition.

Intangible assets consist mainly of purchased operating rights
at various airports, purchased route authorities, capitalized
software costs and the intangible assets associated with the
underfunded amounts of certain pension plans. The operating
rights, valued at purchase cost or appraised value if acquired from
Pacific Southwest or Piedmont Aviation, are being amortized over
periods ranging from ten to 25 years as Depreciation and Amortiza-
tion Expense. The purchased route authorities are being amortized
over 25 years as Depreciation and Amortization Expense. Capital-
ized software costs are being amortized as Depreciation and
Amortization Expense over five years, the expected period of
benefit. Accumulated amortization related to intangible assets at
December 31, 1995 and 1994 was $104 million and $80 million,
respectively.

Based on the most recent analyses, USAir believes that
goodwill and other intangible assets were not impaired at Decem-
ber 31, 1995.

- 228 -
<PAGE>

(f) Other Assets, net
-----------------

Other Assets, net consists primarily of non-current pension
assets, the unamortized balance of deferred compensation, restrict-
ed cash and investments and a long-term receivable from BA.
Deferred compensation resulted mainly from USAir's establishment of
an Employee Stock Ownership Plan in 1989 (see Note 8.). Restricted
cash and investments are deposits in trust accounts to collateral-
ize letters of credit and workers' compensation policies and the
long-term receivable from BA resulted from the relinquishment by
USAir of two U.S. to London routes.

In November 1995, USAir entered into a five-year transaction
with a third party pursuant to which USAir agreed to pledge to such
third party from time to time certain flight equipment and
simulators as collateral for up to $70 million aggregate principal
amount of letters of credit to be issued by the third party with
respect to certain workers' compensation obligations of USAir. On
December 15, 1995, USAir pledged ten aircraft to the third party,
resulting in the release of $67.2 million in cash and securities
that had been previously pledged by USAir to letter of credit
providers.

(g) Deferred Gains on Sale and Leaseback Transactions
-------------------------------------------------

Gains on aircraft sale and leaseback transactions are deferred
and amortized over the term of the leases as a reduction of rental
expense.

(h) Passenger Revenue Recognition
-----------------------------

Passenger ticket sales are recognized as revenue when the
transportation service is rendered or the ticket otherwise expires.
At the time of sale, a liability is established (Traffic Balances
Payable and Unused Tickets) and subsequently eliminated either
through carriage of the passenger, through billing from another
carrier which renders the service or by refund to the passenger.
Approximately $31 million and $23 million of amounts owed to
wholly-owned subsidiaries of USAir Group for passenger transporta-
tion revenue are included in Traffic Balances Payable and Unused
Tickets at December 31, 1995 and 1994, respectively.

- 229 -
<PAGE>

(i) Frequent Traveler Awards
------------------------

USAir accrues the estimated incremental cost of providing
outstanding travel awards earned by participants in its Frequent
Traveler Program ("FTP") when participants accumulate sufficient
miles to be entitled to claim award certificates for travel.

(j) Investment Tax Credit
---------------------

Investment tax credit benefits have been recorded using the
"flow-through" method as a reduction of the Federal income tax
provision.

(k) Advertising Costs
-----------------

Advertising costs are expensed when incurred as other
operating expense. Advertising expense for 1995, 1994 and 1993 was
$67 million, $63 million and $59 million, respectively.

2. Financial Instruments
---------------------

(a) Terms of Certain Financial Instruments
--------------------------------------

USAir has entered into hedging arrangements designed to reduce
its exposure to fluctuations in the price of jet fuel. Net
settlements are recorded as adjustments to Aviation Fuel expense.
The total notional number of gallons under these agreements was 38
million and 86 million at December 31, 1995 and 1994, respectively.
Under these arrangements, USAir will pay $0.499 to $0.548 per
notional gallon in 1996 and receive a floating rate per notional
gallon based on current market prices. In 1995 USAir paid $0.496
to $0.521 per notional gallon and received a floating rate per
notional gallon based on current market prices. Decreases in the
market price of fuel to levels below the fixed prices require cash
payments by USAir and cause an increase in USAir's Aviation Fuel
expense. The hedging arrangements represented approximately 8% of
USAir's actual 1995 fuel consumption. USAir is party to such
hedging arrangements with several entities. Although the agree-
ments, which expire in 1996, expose USAir to credit loss in the
event of non-performance by the other parties to the agreements,
USAir does not anticipate such non-performance because of the
favorable creditworthiness status of the other parties. USAir may
continue to enter into such arrangements, depending on market
conditions.

- 230 -
<PAGE>

An aggregate of $32 million of future principal payments of
the Equipment Financing Agreements due 1998 through 2000 are
payable in Japanese Yen. This foreign currency exposure has been
hedged to maturity by participation in foreign currency contracts.
Net settlements will be recorded as adjustments to interest
expense. Although USAir is exposed to credit loss in the event of
non-performance by the counterparty to the contracts, USAir does
not anticipate such non-performance because of the favorable
credit-worthiness status of the other party.

(b) Fair Value of Financial Instruments
-----------------------------------

Unless a quoted market price indicates otherwise, the fair
values of cash and cash equivalents, short-term investments and
other investments generally approximates carrying values because of
the short maturity of these instruments. USAir has estimated the
fair value of long-term debt based on quoted market prices for the
same or similar issues or on the current rates offered to the
Company for debt of similar remaining maturities. The fair values
of energy swap agreements and foreign currency contracts are
obtained from dealer quotes whereby these values represent the
estimated amount USAir would receive or pay to terminate such
agreements.

[remainder of page left blank intentionally]

- 231 -
<PAGE>

The estimated fair values of USAir's financial instruments,
none of which are held for trading purposes, are summarized as
follows (brackets denote a liability):

<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1995 1994
-------------------- --------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
(in thousands)
<S> <C> <C> <C> <C>
Cash and cash
equivalents $ 879,613 $ 879,613 $ 428,925 $ 428,925
Short-term
investments 19,831 19,822 22,133 22,078
Restricted cash
and investments* 98,742 98,539 170,686 170,581
Long-term note
receivable* 45,433 33,277 47,000 31,537
Other long-term
investments* 4,607 4,008 1,633 1,144
Long-term debt
(excludes
capital lease
obligations) (2,753,932) (2,564,514) (2,847,878) (2,435,786)
Energy swap agree-
ments:
In a net receiv-
able position - 1,845 - 259
Foreign currency
contracts:
In a net receiv-
able position - 4,050 - 5,352

* Amounts are included in Other Assets on USAir's consolidated
balance sheets.

</TABLE>

- 232 -
<PAGE>

3. Long-Term Debt
--------------

Details of long-term debt are as follows:

<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Senior Debt:
12 7/8% Senior Debentures due 2000 $ - $ 77,000
10% Senior Notes due 2003 300,000 300,000
9 5/8% Senior Notes due 2001 175,000 175,000
12.15% to 15.23% U.S. Government
Guaranteed Obligations - 3,090
5.7% to 12% Equipment Financing
Agreements, Installments due
1996 to 2016 2,180,430 2,090,064

8.4% Intercompany Aircraft Loan with
USAir Group due 1996 to 2014 68,640 -
8.6% Airport Facility Revenue Bond
due 2022 27,620 27,620
4.0% to 7.1% Aircraft Purchase
Deposit Financing - 172,301
Other 2,242 2,803
--------- ---------
2,753,932 2,847,878
Capital Lease Obligations 65,496 82,324
--------- ---------
Total 2,819,428 2,930,202
Less Current Maturities 77,496 80,714
--------- ---------
$2,741,932 $2,849,488
========= =========

</TABLE>

- 233 -
<PAGE>

Maturities of long-term debt and debt under capital leases
for the next five years are as follows:

(in thousands)
<S> <C>
1996 $ 77,496
1997 88,637
1998 157,287
1999 80,732
2000 125,820
Thereafter 2,289,456

</TABLE>

Interest rates on $492 million principal amount of long-term
debt at December 31, 1995 are subject to adjustment to reflect
prime rate and other rate changes.

Equipment financings totaling $2.3 billion were collateral-
ized by aircraft and engines with a net book value of approxi-
mately $2.4 billion at December 31, 1995.

In February 1996, USAir sold $263 million principal amount
of Enhanced Equipment Notes ("Enhanced Notes") through a private
placement offering under Securities and Exchange Commission
Regulation 144A. The Enhanced Notes are secured by nine 757-200
aircraft. The Enhanced Notes are not reflected in the above
table because they were sold after December 31, 1995.

4. Commitments and Contingencies
-----------------------------

(a) Operating Environment
---------------------
USAir's financial results for 1995 represent a significant
improvement over 1994 results. The improvement is mainly attrib-
utable to a stable domestic economic climate, favorable capacity
trends in USAir's markets, less fare discounting and low fare
competition and the positive influence of USAir's cost-reduction
efforts. However, USAir's financial condition, results of
operations and future prospects are more susceptible to an
economic downturn and competitive influences than most of its
major competitors due to USAir's high cost structure amid the low
cost, low fare environment which characterizes the domestic
airline industry.

- 234 -
<PAGE>

Most of USAir's operations are in competitive markets,
predominately in the Eastern United States. In recent years, air
carriers with low costs of operations and fare structures have
initiated and or expanded into markets served by USAir. In
addition, several of the larger, mature air carriers have devel-
oped or indicated their intention to develop similar low cost,
low fare service. In an effort to preserve market share, USAir
has typically responded to the entry of a low cost, low fare
competitor into its markets by matching fares and increasing the
frequency of service in related markets, generally with the
result of diluting USAir's yield in these markets. USAir cur-
rently has the highest operating costs among the major domestic
air carriers and the growth and expansion of low cost, low fare
carriers in USAir's markets has put considerable pressure on
USAir to reduce operating costs in order to maintain competitive-
ness.

USAir was able to significantly reduce certain non-labor
related operating costs during 1995 through re-engineering
efforts, structural changes and reducing or eliminating capacity
in unprofitable markets, however, USAir has not been successful
to date in achieving meaningful reductions in personnel costs.
USAir believes that its long-term future depends on its success
in further reducing its cost of operations, including personnel
costs.

At December 31, 1995, USAir employed approximately 39,900
full-time equivalent employees. Approximately 65% of USAir's
workforce is covered by collective bargaining agreements with
various unions, or will be covered by collective bargaining
agreements for which initial negotiations are in progress.
USAir's contract with the International Association of Machinists
and Aerospace Workers ("IAM"), which represents USAir's machin-
ists group, is currently open for negotiation and USAir and the
IAM have commenced the collective bargaining process. USAir's
contract with the unions which represent its pilot's and flight
attendant's groups become open for negotiations within the next
year. USAir cannot predict the ultimate outcome of its negotia-
tions with the IAM or if it will be successful in achieving
meaningful wage and benefit concessions from the IAM and its
other organized labor groups.

- 235 -
<PAGE>

Although a competitive strength, the concentration of
significant operations in the eastern U.S. leaves USAir suscepti-
ble to certain regional conditions that may have an adverse
affect on the USAir's results of operations and financial condi-
tion. For example, geographically isolated inclement weather and
the recent partial Federal government shutdowns adversely effect-
ed operating revenues and expenses to a greater degree than some
of USAir's competitors.

The nature of USAir's operations results in reliance on the
availability of aviation fuel. The availability and price of
aviation fuel is largely dependent on the actions of the coun-
tries which compose the Oil Producing and Exporting Countries
("OPEC") cartel. OPEC, which currently controls a significant
amount of the world's known crude oil reserves, can effect the
availability and price of jet fuel through its production and
price-targeting actions. In addition, jet fuel prices are affect-
ed by political events, seasonal factors and other factors that
are generally outside of USAir's control. USAir has a diversified
fuel supplier network and participates in fuel hedging transac-
tions (see Note 2. Fair Value of Financial Instruments for
additional information related to USAir's participation in fuel
hedging contracts) in order to ensure fuel availability and
partially protect USAir from temporary jet fuel price fluctua-
tions.

(b) Leases
------
USAir leases certain aircraft, engines, computer and ground
equipment, in addition to the majority of its ground facilities.
Ground facilities include executive offices, overhaul and mainte-
nance bases and ticket and administrative offices. Public
airports are utilized for flight operations under lease arrange-
ments with the municipalities or agencies owning or controlling
such airports. Substantially all leases provide that the lessee
shall pay taxes, maintenance, insurance and certain other operat-
ing expenses applicable to the leased property. Some leases also
include renewal and purchase options.

In addition, USAir subleases certain leased aircraft and
ground facilities under noncancelable operating leases expiring
in various years through 2021.

- 236 -
<PAGE>

The following amounts applicable to capital leases are
included in property and equipment:

December 31,
---------------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Flight equipment $192,775 $216,600
Ground property and equipment 4,767 10,961
------- -------
197,542 227,561
Less accumulated amortization 140,212 151,217
------- -------
$ 57,330 $ 76,344
======= =======
</TABLE>

At December 31, 1995, obligations under capital and noncancel-
able operating leases for future minimum lease payments were as
follows:

Capital Operating
Leases Leases
------- ---------
(in thousands)
<S> <C> <C>
1996 $ 21,886 $ 712,087
1997 21,697 724,473
1998 10,687 689,645
1999 10,687 655,665
2000 7,586 645,943
Thereafter 20,094 6,621,172
------- ----------
Total minimum lease payments 92,637 10,048,985

Less sublease rental receipts - 178,901
----------
Total minimum operating lease
payments $9,870,084
==========
Less amount representing interest 27,141
-------
</TABLE>

[table continued on following page]

- 237 -

<PAGE>

<TABLE>
<S> <C>
Present value of future minimum
capital lease payments 65,496
Less current obligations under
capital leases 14,085
-------
Long-term obligations under
capital leases $ 51,411
=======

</TABLE>

Rental expense under operating leases for 1995, 1994 and 1993
was $680 million, $703 million and $739 million, respectively. The
$680 million rental expense for 1995 excludes a credit of $4.1
million related to the leasing of three of USAir's parked BAe-146
aircraft, recorded in the fourth quarter of 1995. The $703 million
rental expense for 1994 excludes charges of $103 million related to
USAir's grounded BAe-146 fleet and $13 million primarily related to
USAir's decision to cease operations of its remaining Boeing 727-
200 aircraft in 1995. See Note 14. - Non-Recurring and Unusual
Items.

USAir also leases certain owned aircraft under noncancelable
operating leases which expire in various years through 2002 to both
third and related parties, primarily subsidiaries of USAir Group.
See Note 11. - Related Party Transactions. The minimum future
rentals to be received by USAir on these leases are: $24.4 million
- - 1996; $16.1 million - 1997; $8.0 million - 1998; $6.2 million -
1999; $5.4 million - 2000; and $6.0 million - thereafter. The
following amounts are applicable to aircraft leased under such
agreements as reflected in flight equipment:

December 31,
-------------------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Flight equipment $192,198 $152,956
Less accumulated depreciation 75,089 43,283
------- -------
$117,109 $109,673
======= =======
</TABLE>

- 238 -
<PAGE>

USAir is involved in legal proceedings arising out of its two
aircraft accidents that occurred in July and September 1994 near
Charlotte, North Carolina and Pittsburgh, Pennsylvania, respective-
ly. The National Transportation Safety Board ("NTSB") held hearings
beginning in September 1994 relating to the July accident and
January 1995 relating to the September accident. In April 1995,
the NTSB issued its finding of probable causes with respect to the
accident near Charlotte. It assigned as probable causes the failure
of air traffic control to convey weather and windshear hazard
information and flight crew errors. The NTSB has not yet issued its
final accident investigation report for the accident near Pitts-
burgh. The NTSB, The Boeing Company ("Boeing"), the Federal
Aviation Administration ("FAA") and USAir jointly conducted flight
tests in October 1995 as part of the ongoing investigation into the
cause of this accident. In this regard, USAir provided a 737-300
aircraft in the collective effort to simulate the conditions at the
time of the accident. More public hearings were conducted in
November 1995. The NTSB has indicated that a determination of the
cause of the accident is not likely until sometime in 1996. USAir
expects that it will be at least two to three years before the
accident litigation and related settlements will be concluded.
USAir believes that it is fully insured with respect to this
litigation. Therefore, USAir believes that the litigation will not
have a material adverse effect on USAir's financial condition or
results of operations, although any finding of fault on USAir's
part could create negative publicity and could tarnish USAir's
image.

In 1989 and 1990, a number of U.S. air carriers, including
USAir, received two Civil Investigative Demands ("CIDs") from the
Department of Justice ("DOJ") related to investigations of price
fixing in the domestic airline industry. A CID is a request for
information in the course of an antitrust investigation and does
not constitute the institution of a civil or criminal action.

The investigations by the DOJ culminated in the filing of a
lawsuit against Airline Tariff Publishing Company ("ATPCo") and
eight major air carriers, including USAir, alleging that the
defendants had agreed to fix prices in violation of Section 1 of
the Sherman Act through the methods used to disseminate fare data
to ATPCo, an airline-owned fare publishing service. To avoid the
costs associated with protracted litigation and an uncertain

- 239 -
<PAGE>

outcome, USAir and another carrier decided to settle the lawsuit by
entering into a consent decree to modify their fare-filing
practices in certain respects and to implement compliance programs
that would include education of employees regarding the carrier's
responsibilities under the consent decree. Accordingly, the consent
decree and the U.S. government's complaint were filed contemporane-
ously in the United States District Court for the District of
Columbia in December 1992. On November 1, 1993, after it had
reviewed comments filed regarding the consent decree, the court
entered the decree. In March 1994, the remaining six air carrier
defendants agreed to the entry of a separate consent decree to
settle the lawsuit. USAir petitioned the Court to have its consent
decree amended to conform with the other settlement and the Court
entered an amended consent decree on September 21, 1994. USAir has
recently received a CID from the DOJ relating to USAir's compliance
with the terms of the consent decree.

On March 19, 1993, the U.S. District Court in Atlanta, Georgia
entered a settlement involving USAir and five other U.S. air
carrier defendants in the Domestic Air Transportation Antitrust
Litigation class action lawsuit. The class action suit, which was
filed in July 1990, alleged that the airlines used ATPCo to signal
and communicate carrier pricing intentions and otherwise limit
price competition for travel to and from numerous hub airports.
Under the terms of the settlement, the six air carriers paid $45
million in cash and issued $396.5 million in certificates valid for
purchase of domestic air travel on any of the six airlines. USAir's
share of the cash portion of the settlement, $5 million, was
recorded in results of operations for the second quarter of 1992.
The certificates, mailed to approximately 4.1 million claimants
between December 15 and 31, 1994, provide a dollar-for-dollar
discount against the cost of a ticket generally of up to a maximum
of 10% per ticket, depending on the cost of the ticket. It is
possible that this settlement could have a dilutive effect on
USAir's passenger transportation revenue and associated cash flow.
However, due to the interchange-ability of the certificates among
the six carriers involved in the settlement, the possibility that
carriers not party to the settlement will honor the certificates,
and the potential stimulative effect on travel created by the
certificates, USAir cannot reasonably estimate the impact of this
settlement on further passenger revenue and cash flows. USAir has
employed the incremental cost method to estimate a range of costs
attributable to the exercise of the certificates, based on the
assumption that the estimated maximum number of certificates to be
redeemed for travel on USAir will be related to USAir's market
share relative to the total market share of the six carriers

- 240 -
<PAGE>

involved in the settlement. USAir's estimated percentage of such
market share is less than 9%. Incremental costs include unit costs
for passenger food, beverages and supplies, fuel, reservations,
communications, liability insurance, and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis.
USAir has estimated that its incremental cost will not be material
based on the equivalent free trips associated with the settlement.

On October 11, 1994, USAir and seven other carriers entered
into a settlement agreement with a group of State Attorneys General
resolving similar issues with the states. The settlement entitles
passengers traveling within the United States on state government
business to a 10% discount off the published fares of each of the
settling carriers and will be available for 18 months from August
16, 1995, or until the combined discount amount reaches $40
million, whichever first occurs. On May 10, 1995, a U.S. federal
district court judge approved the settlement. USAir does not
expect that this settlement will have a material adverse effect on
its financial condition or results of operations. As was the case
with the settlement of the private antitrust litigation, it is
difficult to predict the amount of discounted state travel that
will occur on USAir. Thus, a dollar impact of the settlement
cannot be estimated.

In February and March 1995, several class action lawsuits were
filed in various federal district courts by travel agencies and a
travel agency trade association alleging that most of the major
U.S. airlines, including USAir, violated the antitrust laws when
they individually capped travel agent base commissions at $50 for
round-trip domestic tickets with base fares above $500 and at $25
for one-way domestic tickets with base fares above $250. The
lawsuits have been consolidated in the federal district of
Minnesota. The plaintiffs are seeking unspecified treble damages
for restraint of trade. The case is expected to go to a jury trial
in 1996. While USAir believes that its actions in establishing a
commission cap were in full compliance with the antitrust laws,
USAir is unable to predict at this time the ultimate resolution of
the litigation or the potential impact on USAir's financial
condition and results of operations.

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<PAGE>

In March 1995, a number of U.S. carriers, including USAir,
received CIDs from the DOJ related to an investigation of incen-
tives paid to travel agents over and above the base commission
payments. USAir responded to an earlier CID on this topic during
1994. USAir has complied with the requirements of the CID by
producing documents and responding to interrogatories. Because
this matter is in the investigatory stage, USAir is unable to
predict at this time its ultimate resolution or potential impact on
USAir's financial condition or results of operations.

In May 1995, a number of U.S. air carriers, including USAir,
received CIDs from the DOJ relating to its investigation of
incentive payments to travel agencies and a possible agreement
among these carriers to implement a cap on travel agent base
commissions, which is the subject matter of the suits recently
brought by travel agencies, as discussed above. One of the CIDs
received by USAir sought the production of transcripts of deposi-
tions of any USAir employees taken in connection with the private
litigation relating to the commission caps, together with annexed
exhibits. USAir has complied with the requirements of the CIDs.
USAir does not expect these investigations to have a material
effect on its financial condition and results of operations.

In October 1995, USAir terminated for cause an agreement with
In-Flight Phone Corporation ("IFPC"). IFPC was USAir's provider of
on-board telephone and interactive data systems (the "IFPC
System"). The agreement contemplated the eventual installation of
the IFPC System on substantially all of USAir's aircraft. The IFPC
System had been installed on approximately 80 aircraft prior to the
date of termination of the agreement. On December 6, 1995, IFPC
filed suit against USAir seeking equitable relief and damages in
excess of $186 million. USAir believes that its termination of its
agreement with IFPC was appropriate and that it is owed in excess
of $5 million by IFPC. On December 7, 1995, USAir successfully
defended IFPC's emergency motion for a temporary restraining order.
On December 13, 1995, IFPC's motion for a preliminary injunction
was denied and IFPC has relinquished its right to appeal that
decision. IFPC's claim for damages remains pending and USAir is
presently preparing a counterclaim for amounts it is owed by IFPC.
USAir is unable to predict at this time the ultimate resolution or
potential financial impact on USAir's financial condition and
results of operations of this lawsuit. USAir is presently in
negotiations with other vendors of on-board telephone systems and
currently expects to finalize an agreement in the first quarter of
1996.

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<PAGE>

In May 1995, USAir Group, USAir and the Retirement Income
Plan for Pilots of USAir, Inc. (the "Pilots' Pension Plan") were
sued in federal district court for the District of Columbia by 469
active and retired USAir pilots. The lawsuit alleges that USAir
has breached its fiduciary duty under the Employee Retirement
Income Security Act ("ERISA") and otherwise violated ERISA by
erroneously calculating benefits under the Pilots' Pension Plan.
The plaintiffs seek, among other things, an injunction restraining
USAir and the Pilots' Pension Plan from allegedly improperly
calculating benefits under the Pilots' Pension Plan and payments to
plaintiffs of benefits allegedly improperly withheld in an amount
alleged to be equal to approximately $70 million, plus interest.
USAir believes that it has properly calculated benefits under the
Pilots' Pension Plan and intends to vigorously defend itself
against the allegations made in the lawsuit. Because this lawsuit
is in an early stage of litigation, USAir is unable to predict at
this time its ultimate resolution or potential impact on USAir
Group's pension liability or future funding requirements.

USAir has received notices from the U.S. Environmental
Protection Agency and various state agencies that it is a poten-
tially responsible party with respect to the remediation of
existing sites of environmental concern. Only two of these sites
have been included on the Superfund National Priorities List. USAir
continues to negotiate with various governmental agencies concern-
ing known and possible cleanup sites. USAir has made financial
contributions for the performance of remedial investigations and
feasibility studies at sites in Moira, New York; Escondido,
California; and Elkton, Maryland.

- 243 -
<PAGE>

Also, USAir has been identified as a potentially responsible
party ("PRP") for environmental contamination at Boston Logan
Airport. There are a number of other PRPs at the site. USAir is
presently unable to assess its proportionate share of contribution,
but do not expect any such contribution to have a material adverse
effect on its financial condition or results of operations.

Because of changing environmental laws and regulations, the
large number of other potentially responsible parties and certain
pending legal proceedings, it is not possible to reasonably
estimate the amount or timing of future expenditures related to
environmental matters. USAir provides for costs related to
environmental contingencies when a loss is probable and the amount
is reasonably estimable. Although management believes adequate
reserves have been provided for all known contingencies, it is
possible that additional reserves could be required in the future
which could have a material effect on results of operations.
However, USAir believes that the ultimate resolution of known
environmental contingencies should not have a material adverse
effect on USAir's financial position or results of operations based
on USAir's experience with similar environmental sites.

The Equal Employment Opportunity Commission and various state
and local fair employment practices agencies are investigating
charges by certain job applicants, employees and former employees
of the Company's subsidiaries involving allegations of employment
discrimination in violation of Federal and state laws. The
plaintiffs in these cases generally seek declaratory and injunctive
relief and monetary damages, including back pay. In some instances
they also seek classification adjustment, compensatory damages and
punitive damages. Such proceedings are in various stages of
litigation and investigation, and the outcome of these proceedings
is difficult to predict. In the Company's opinion, however, the
disposition of these matters is not likely to have a material
adverse effect on its financial condition or results of operations.

(d) Aircraft Commitments
--------------------

In June 1995, USAir entered into agreements with Boeing and
Rolls Royce plc ("Rolls Royce") deferring the delivery of eight
757-200 aircraft from 1996 to 1998. As part of these agreements,
the due dates for progress payments associated with the 1996
deliveries were likewise rescheduled. Accordingly, approximately
$71 million of progress payments that had been paid by USAir were
refunded to USAir in the third quarter of 1995. The related long-
term debt which financed the deposits was dissolved.

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<PAGE>

The following schedule of USAir's new aircraft deliveries and
scheduled payments at December 31, 1995 (including progress
payments, payments at delivery, buyer furnished equipment, spares,
and capitalized interest) reflects USAir's agreements with Boeing
and Rolls Royce discussed above:

<TABLE>
<CAPTION>
Delivery Period - Firm Orders
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
There-
1996 1997 1998 1999 2000 after Total
---- ---- ---- ---- ---- ------ -----
Boeing
757-200 - - 8 - - - 8
737-Series - - - - - 40 40
--- --- --- --- --- ----- -----
Total - - 8 - - 40 48
=== === === === === ===== =====
Payments
(millions) $ 63 $ 74 $254 $ - $ - $1,855 $2,246
=== === === === === ===== =====
</TABLE>

In addition, USAir has a commitment to purchase hush kits
for certain of its DC-9-30 aircraft and a substantial portion of
its 737-200 aircraft. The installation of these hush kits will
bring the aircraft into compliance with FAA Stage 3 noise level
re-quirements. The projected payments associated with the pur-
chase of the hush kits are: $43 million - 1996; $30 million -
1997; $30 million - 1998; and $17.0 million - 1999.

USAir has the option of purchasing any other Boeing commer-
cial aircraft type in satisfaction of its obligation to purchase
forty 737-Series aircraft. Such satisfaction would be accom-
plished on an "equivalent-seat" basis.

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<PAGE>

(e) Concentration of Credit Risk
----------------------------

USAir invests available cash in money market securities of
various banks, commercial paper of financial institutions and
other companies with high credit ratings and securities backed by
the United States government.

At December 31, 1995, most of USAir's receivables related to
tickets sold to individual passengers through the use of major
credit cards (44%) or to tickets sold by other airlines (16%) and
used by passengers on USAir or its regional airline affiliates.
These receivables are short-term, generally being settled within
14 days after sale. Bad debt losses, which have been minimal in
the past, have been considered in establishing allowances for
doubtful accounts. USAir does not believe it is subject to any
significant concentration of credit risk.

(f) Guarantees
----------

At December 31, 1995, USAir guaranteed payments of debt and
lease obligations of Piedmont Airlines, Inc. and PSA Airlines,
Inc., wholly-owned subsidiaries of USAir Group, amounting to $103
million.

5. Sale of Receivables
-------------------

The revolving receivables sales facility ("Receivables
Agreement") to which USAir had been a party, expired on December
21, 1994. USAir was unable to sell receivables under the Receiv-
ables Agreement during 1994 because it was in violation of
certain financial covenants. USAir had no outstanding amounts
due under the Receivables Agreement at expiry. The average
dollar amount of outstanding receivable sales during 1993 was
approximately $100 million. USAir has engaged in discussions to
arrange a replacement facility but has elected not to pursue such
a financing at this time.

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<PAGE>

6. Income Taxes
------------

Effective January 1, 1993, USAir adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). FAS 109 required a change from the deferred
method under Accounting Principles Board Opinion No. 11 to the
asset and liability method of accounting for income taxes. No
cumulative adjustment at January 1, 1993, and no income tax
credit for the years ended December 31, 1994 and 1993, were
recognized due to the FAS 109 limitation in recognizing benefits
for net operating losses. USAir files a consolidated Federal
income tax return with its parent USAir Group. USAir Group and
its wholly-owned subsidiaries have executed a tax sharing agree-
ment which allocates tax and tax items, such as net operating
losses and tax credits between members of the group based on
their proportion of taxable income and other items. This tax
sharing and allocation impacts the deferred tax assets and
liabilities reported by each corporation on a separate company
basis. Accordingly, USAir's tax expense is based on its taxable
income (loss), taking into consideration its allocated tax loss
carryforwards and tax credit carryforwards.

The components of the provision for income taxes are as
follows:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Current provision:
Federal $4,107 $ - $ -
State 301 - -
----- --- ---
Total current provision 4,408 0 0
----- --- ---
Deferred provision:
Federal - - -
State - - -
----- --- ---
Total deferred provision 0 0 0
----- --- ---
Provision for income taxes $4,408 $ 0 $ 0
===== === ===

</TABLE>

- 247 -
<PAGE>

In 1995, USAir was not subject to regular Federal income tax
as a result of using $22 million in Federal net operating loss
carryforwards. However, USAir was subject to Federal alternative
minimum tax ("AMT") and environmental tax. Approximately $88
million in AMT net operating loss carryforwards and approximately
$17 million in state net operating loss carryforwards were utilized
to reduce the Federal and state tax liabilities.

The significant components of deferred income tax expense
(benefit) for the years ended December 31, 1995, 1994, and 1993,
are as follows:

1995 1994 1993
---- ---- ----
(in thousands)

<S> <C> <C> <C>
Deferred tax expense (benefit)
(exclusive of the other
components listed below) $ 17,779 $(234,269) $(121,847)
Adjustments to deferred tax
assets and liabilities for
enacted changes in tax laws
and rates - - (9,429)

Increase (decrease) for the
year in the valuation
allowance for deferred
tax assets (17,779) 234,269 131,276
------- -------- -------
Total $ 0 $ 0 $ 0
======= ======== =======

</TABLE>

[remainder of page left blank intentionally]

- 248 -
<PAGE>

A reconciliation of taxes computed at the statutory Federal tax
rate on earnings before income taxes to the provision (credit)
for income taxes is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in thousands)

<S> <C> <C> <C>
Tax provision (credit)
computed at Federal
statutory rate $ 13,089 $(250,664) $(146,579)
State income tax expense,
net of Federal tax benefit 196 - -
Book expenses not deductible
for tax purposes 15,088 15,691 9,348
Limitation in recognizing
tax benefit of net operating
loss/credits - 234,973 146,660
Utilization of Federal Net
Operating Loss which reduced
valuation allowance (7,778) - -
Adjustments to deferred tax
assets and liabilities
for enacted changes in
tax laws and rates - - (9,429)

Current year temporary differ-
ences which reduced
valuation allowance (20,293) - -
Alternative Minimum tax which
increased valuation allowance 3,384 - -
Other 722 - -
------- ------- --------
Provision for Income Taxes $ 4,408 $ 0 $ 0
======= ======= ========
Effective Tax Rate 12% 0% 0%
======= ======= ========

</TABLE>
[remainder of page left blank intentionally]

- 249 -
<PAGE>

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1995, 1994 and 1993 are presented
below:
<TABLE>
<CAPTION>

1995 1994 1993
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Deferred tax assets:
Leasing transactions $ 168,813 $ 164,513 $ 129,276
Tax benefits purchased
/sold 67,348 76,784 79,434
Gain on sale and lease-
back transactions 146,387 154,246 162,400
Employee benefits 487,050 484,347 429,312
Net operating loss carry-
forwards 627,357 657,870 508,240
Alternative minimum tax
credit carryforwards 25,819 20,881 20,881
Investment tax credit
carryforwards 48,720 47,880 47,880
Other deferred tax assets 118,521 99,368 61,210
--------- --------- ---------
Total gross deferred
tax assets 1,690,015 1,705,889 1,438,633
Less valuation allowance (785,306) (803,085) (568,816)
--------- --------- ---------
Net deferred tax assets 904,709 902,804 869,817

Deferred tax liabilities:
Equipment depreciation
and amortization 871,056 866,356 840,584
Other deferred tax
liabilities 33,653 36,448 29,233
--------- --------- ---------
Total deferred tax
liabilities 904,709 902,804 869,817
--------- --------- ---------
Net deferred tax
liabilities $ 0 $ 0 $ 0
========= ========= =========

</TABLE>

- 250 -
<PAGE>

Included in "Other Deferred Tax Assets" above for 1995, 1994
and 1993 are approximately $22 million, $16 million and $0,
respectively, of tax assets which originate from subsidiaries of
USAir Group in accordance with USAir's Tax Sharing Agreement.

The valuation allowance for deferred tax assets as of January
1, 1993, was $438 million. The valuation allowance increased $131
million in 1993, $234 million in 1994 and decreased $18 million in
1995.

At December 31, 1995, USAir had unused net operating losses of
$1.6 billion for Federal tax purposes, which expire in the years
2005 to 2009. USAir also has available, to reduce future taxes
payable, $653 million alternative minimum tax net operating losses
expiring in the years 2007 to 2009, $49 million of investment tax
credits expiring in the years 2002 to 2003, and $26 million of
alternative minimum tax credits which do not expire. The Federal
income tax returns of USAir through 1986 have been examined and
settled with the Internal Revenue Service.

7. Stockholder's Equity and Dividend Restrictions
----------------------------------------------

USAir Group owns all of the outstanding common stock of USAir.
USAir's board of directors has not authorized the payment of
dividends to USAir Group since 1988. In addition, USAir, organized
under the Laws of the State of Delaware, may be subject to certain
legal prohibitions on the payment of dividends on its capital
stock. At December 31, 1995, USAir believes that it was legally
prohibited from paying dividends to USAir Group due to the
provisions of Section 170 of Delaware General Corporation Law
("Delaware Law"), which require a company to maintain a capital
surplus in order to pay dividends on its capital stock. In
addition, as of December 31, 1995, USAir does not believe that it
can comply with certain provisions of Delaware Law which permit a
company with a capital deficit to pay dividends under special
circumstances. In order to for USAir to return to a capital
surplus position it must realize substantial profits or increase
its equity through other measures such as the sale of addition
common stock.

Covenants related to USAir's 10% and 9 5/8% Senior Unsecured
Notes currently do not permit the payment of dividends by USAir to
USAir Group. However, these covenants do not restrict USAir from
loaning or advancing funds to USAir Group.

- 251 -
<PAGE>

The provisions of Statement of Accounting Standards No. 87,
"Employers' Accounting for Pensions," require the recognition of an
additional minimum liability for each defined benefit plan for
which the accumulated benefit obligation exceeds plan assets. This
amount has been recognized by USAir as a long-term liability with
an offsetting intangible asset (see Note 1.(e)). Because the
intangible asset recognized may not exceed the amount of unrecog-
nized prior service cost on an individual plan basis, the balance
is reported as a separate reduction of Stockholder's Equity
(Deficit) at December31, 1995 and 1994. See also Note 9.

8. Employee Stock Ownership Plan
-----------------------------

In August 1989, USAir established an Employee Stock Ownership
Plan ("ESOP"). USAir Group sold 2,200,000 shares of its Common
Stock to an Employee Stock Ownership Trust (the "Trust") to hold on
behalf of USAir's employees, exclusive of officers, in accordance
with the terms of the Trust and the ESOP. The trustee placed those
shares in a suspense account pending their release and allocation
to employees. USAir provided financing to the Trust in the form
of a 9 3/4% loan for $111.4 million for its purchase of shares and
USAir contributed an additional $2.2 million to the Trust. USAir
makes a yearly contribution to the Trust sufficient to cover the
Trust's debt service requirement. The contributions are made in
amounts equal to the periodic loan payments as they come due, less
dividends available for loan payment. Since the Company did not
pay dividends on any shares held by the Trust for the years ended
December 31, 1995, 1994 and 1993, the Trust did not utilize
dividends to service its debt during those periods. The initial
maturity of the loan is 30 years. As the loan is repaid over time,
the trustee systematically releases shares of the common stock from
the suspense account and allocates them to participating employees.
Each participant's allocation is based on the participant's
compensation, the total compensation of all ESOP participants and
the total number of shares being released. For each year after
1989, a minimum of 71,933 shares are released from the suspense
account and allocated to participant accounts. If USAir's return
on sales equals or exceeds four percent in a given year, more
shares are released and repayment of the loan is accelerated.
Annual contributions made by USAir, and therefore loan repayments
made by the Trust, were $11.4 million in each of 1995, 1994 and
1993. The interest portion of these contributions was $10.4
million in 1995, $10.5 million in 1994 and $10.5 million in 1993.

- 252 -
<PAGE>

Approximately 510,000 shares of USAir Group Common Stock have been
released or committed to be released as of December 31, 1995.
USAir recognized approximately $4 million of compensation expense
related to the ESOP in each of 1995, 1994 and 1993 based on shares
allocated to employees (the "shares allocated" method). Deferred
compensation related to the ESOP amounted to approximately $87
million, $91 million and $95 million at December 31, 1995, 1994 and
1993, respectively.

In October 1995, the Financial Accounting Standards Board
adopted Statement No. 123 "Accounting for Stock-Based Compensation"
("FAS 123"). This statement establishes the fair value based
method of accounting for stock-based compensation. USAir has
elected to continue using the intrinsic value based method of
accounting prescribed in Accounting Principles Board opinion No.
25, "Accounting for Stock Issued to Employees", as permitted by FAS
123.

9. Employee Benefit Plans
----------------------

(a) Pension Plans
-------------

USAir has several pension plans in effect covering substan-
tially all employees. One qualified defined benefit plan covers
USAir maintenance employees and provides benefits of specified
amounts based on periods of service. Qualified defined benefit
plans for substantially all other employees provide benefits based
on years of service and compensation. The qualified defined
benefit plans are funded, on a current basis, to meet the minimum
funding requirements of the Employee Retirement Income Security Act
of 1974.

The defined benefit pension plan for USAir non-contract
employees was frozen at the end of 1991 for all non-contract
participants, resulting in a one-time book gain of approximately
$107 million in 1991. All non-contract plan participants became
100% vested at the time of the freeze. As a result of this plan
curtailment, the accrual of service costs related to defined
benefits for USAir non-contract and certain other employees ceased
at the end of 1991. USAir implemented a defined contribution
pension plan for non-contract employees in January 1993.

[remainder of page left blank intentionally]

- 253 -
<PAGE>

The funded status of the qualified defined benefit plans at
December 31, 1995 and 1994 was as follows:

1995 1994
Plans in Which Plans in Which
----------------- -----------------
Plan Accumu- Plan Accumu-
Assets lated Assets lated
Exceed Benefits Exceed Benefits
Accumu- Exceed Accumu- Exceed
lated Plan lated Plan
Benefits Assets Benefits Assets
-------- ------ -------- ------
(in millions)

<S> <C> <C> <C> <C>
Fair value of plan assets $ 993 $1,419 $1,690 $ 183
Actuarial present value of:
Vested benefit obligation 929 1,603 1,513 242
Nonvested benefit obliga-
tion 29 22 27 17
----- ----- ----- -----
Accumulated benefit
obligation based
on salaries to date 958 1,625 1,540 259

Additional benefits
based on estimated
future salary levels 130 598 470 -
----- ----- ----- -----
Projected benefit
obligation 1,088 2,223 2,010 259
----- ----- ----- -----
Projected benefit obliga-
tion in excess of fair
value of plan assets (95) (804) (320) (76)

Unrecognized net transition
asset (2) (34) (29) (12)
Unrecognized prior service
cost - 66 (15) 69
Unrecognized net loss 312 571 358 15
----- ----- ----- -----
</TABLE>
[table continued on following page]

- 254 -

<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Pension (liability) pre-
paid before adjustment 215 (201) (6) (4)
Adjustment to recognize
minimum liability* - (149) - (72)
----- ----- ----- -----
Pension (liability) pre-
paid as adjusted and
recognized in consoli-
dated balance sheets $ 215 $ (350) $ (6) $ (76)
===== ===== ===== =====
* See Note 7.

</TABLE>

The weighted average discount rate used to determine the
actuarial present value of the projected benefit obligation was
7.25% and 9.00% as of December 31, 1995 and 1994, respectively. The
expected long-term rate of return on plan assets used in 1995 was
9.0% to 9.5% and 9.5% in 1994. Rates of 3% to 6% were used to
estimate future salary levels. As of December 31, 1995, plan
assets consisted of approximately 7% in cash equivalents and short-
term debt investments, 26% in equity investments, and 67% in fixed
income and other investments. As of December 31, 1994, plan assets
consisted of approximately 10% in cash equivalents and short-term
debt investments, 27% in equity investments, and 63% in fixed
income and other investments. Plan assets as of December 31, 1995
included 205 shares of USAir Group Common Stock. Plan assets as of
December 31, 1994 did not include shares of USAir Group Common
Stock.

The following items are the components of the net periodic
pension cost for the qualified defined benefit plans:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in millions)
<S> <C> <C> <C>
Service cost (benefits
earned during the period) $ 92 $ 124 $ 90
Interest cost on projected
benefit obligation 216 216 188
Actual return on plan assets (539) 48 (224)
Net amortization and deferral 371 (254) 40
---- ---- ----
Net periodic pension cost $ 140 $ 134 $ 94
==== ==== ====
</TABLE>
- 255 -
<PAGE>

Net pension cost for 1993 presented above excludes a charge of
approximately $33.9 million related to "early-out" incentive
programs offered to a limited number of USAir employees during the
years. No such charges were incurred in 1995 or 1994.

Non-qualified supplemental pension plans are established for
certain employee groups, which provide incremental pension payments
from USAir's funds so that total pension payments equal amounts
that would have been payable from USAir's principal pension plans
if it were not for limitations imposed by Federal income tax
regulations.

[remainder of page left blank intentionally]

- 256 -
<PAGE>

The following table sets forth the non-qualified plans' status
at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
---- ----
(in millions)
<S> <C> <C>
Fair value of plan assets $ - $ -
Actuarial present value of:
Vested benefit obligation 30 30
Nonvested benefit obligation 2 2
--- ---
Accumulated benefits based on
salaries to date 32 32

Additional benefits based on
estimated future salary levels 2 1
---- ----
Projected benefit obligation 34 33
---- ----
Projected benefit obligation in
excess of fair value of plan assets (34) (33)
Unrecognized prior service cost 3 1
Unrecognized net loss 8 2
---- ----
Pension (liability) prepaid
before adjustment (23) (30)

Adjustment to recognize minimum
liability* (11) (5)
---- ----
Unfunded accrued supplementary costs
as adjusted and recognized in
consolidated balance sheets $ (34) $ (35)
==== ====
* See Note 7.

</TABLE>

- 257 -
<PAGE>

Net periodic supplementary pension cost for the non-quali-
fied supplemental pension plans included the following compo-
nents:

1995 1994 1993
---- ---- ----
(in millions)
<S> <C> <C> <C>
Service cost (benefits earned
during the period) $ - $ - $ -
Interest cost on projected benefit
obligation 2 2 2
Actual return on plan assets - - -
Net amortization and deferral (1) 21 12
--- --- ---
Net periodic supplementary pension
cost $ 1 $ 23 $14
=== === ===
</TABLE>

The discount rate used to determine the actuarial present
value of the projected benefit obligation was 7.25% and 9.00% as of
December 31, 1995 and 1994, respectively. A rate of 3% was used to
estimate future salary levels.

In addition to the qualified and non-qualified defined benefit
plans described above, USAir also contributes to certain defined
contribution plans. USAir contributions are based on a formula
which considers the age and pre-tax earnings of each employee and
the amount of employee contributions. In addition, certain
qualified defined contribution plans contain a component for profit
sharing contributions if USAir Group achieves certain pre-tax
margin levels. USAir's expense related to the defined contribution
plans, excluding expense for the ESOP Plan, was $64 million, $43
million and $42 million for 1995, 1994 and 1993, respectively. The
1995 contribution expense reflects a new employer match contribu-
tion for certain collective bargaining groups. USAir made no
contributions to its defined contribution plans related to profit
sharing in 1995, 1994 or 1993, since USAir Group did not achieve
the prescribed pre-tax margin level.

[remainder of page left blank intentionally]

- 258 -
<PAGE>

(b) Postretirement Benefits Other Than Pensions
-------------------------------------------

USAir offers medical and life insurance benefits to employees
hired prior to March 29, 1993 who retire from the Company and their
eligible dependents. The medical benefits provided by USAir are
coordinated with Medicare benefits. Retirees generally contribute
amounts towards the cost of their medical expenses based on years
of service with USAir. USAir provides uninsured death benefit
payments to survivors of retired employees for stated dollar
amounts, or in the case of retired pilot employees, death benefit
payments determined by age and level of pension benefit. The plans
for postretirement medical and death benefits are funded on the
pay-as-you-go basis.

The following table sets forth the financial status of the
plans as of December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
---- ----
(in millions)
<S> <C> <C>
Accumulated Postretirement Benefit
Obligation (APBO):
Retirees $ 338 $ 245
Fully eligible active plan participants 176 144
Other plan participants 482 306
----- ----
Total APBO 996 695
Unrecognized prior service credit 155 167
Unrecognized net gain (loss) (112) 123
----- ----
Accrued postretirement benefit cost $1,039 $ 985
===== ====
</TABLE>

- 259 -
<PAGE>

The components of net periodic postretirement benefit cost are
as follows:

1995 1994 1993
---- ---- ----
(in millions)
<S> <C> <C> <C>
Service cost (benefits attributed to
employee service during the period) $ 29 $ 36 $ 31
Interest cost on APBO 65 60 56
Net amortization and deferral (15) (12) (12)
--- --- ---
Net periodic postretirement benefit
cost $ 79 $ 84 $ 75
=== === ===

</TABLE>

The postretirement benefit expense for 1993 presented above
excludes a charge of approximately $15.5 million related to "early-
out" programs offered to a limited number of employees during the
year. No such charges were incurred in 1995 or 1994.

The discount rate used to determine the APBO was 7.25%, 9.00%
and 7.75% at December 31, 1995, 1994 and 1993, respectively. The
average rates of annual compensation increase used to calculate the
APBO ranged from 3% to 6% at December 31, 1995, 1994 and 1993. The
assumed health care cost trend rate used in measuring the APBO was
8.5% in 1995, declining by 1% per year after 1995 to an ultimate
rate of 4.5%. If the assumed health care cost trend rates were
increased by 1 percentage point, the APBO at December 31, 1995
would be increased by 10% and 1995 periodic postretirement benefit
costs would increase 13%.

USAir adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" ("FAS
112"), during 1993. FAS 112 requires the use of an accrual method
to recognize postemployment benefits such as disability-related
benefits. The cumulative effect at January 1, 1993 of adopting FAS
112 was $43.7 million.

- 260 -
<PAGE>

10. Profit Sharing
--------------

In exchange for temporary wage and salary reductions and other
concessions during a twelve month period in 1992 and 1993,
including certain ongoing work rule and medical benefits conces-
sions and the freeze of the defined benefit plan for non-contract
employees, certain USAir employees participate in a profit sharing
program and have been granted options to purchase USAir Group
common stock. The profit sharing program is designed to recompense
those USAir employees whose pay had been reduced in an amount equal
to (i) two times salary forgone plus (ii) one time salary forgone
(subject to a minimum of $1,000) for the freeze of the pension
plans for non-contract employees. Until the maximum payout has been
made, annual pre-tax profits, as defined in the program, of USAir
Group will be distributed to participating employees as follows:
25% of the first $100 million in pre-tax profits; 35% of the next
$100 million in pre-tax profits; and 40% of the pre-tax profits
exceeding $200 million.

The calculation of pre-tax profits under the profit sharing
plan excludes FAS 106 charges (approximately $78.6 million for
1995) and certain unusual items. This program will be in effect
until USAir employees are recompensed for salary and pension
benefits foregone. Because USAir Group recorded a pre-tax profit
for 1995, USAir recognized charges of approximately $49.7 million
under this plan in 1995 (certain amounts have been expensed in
prior years even though 1995 was USAir's first profitable year
since inception of the plan). Under the terms of the plan, the
cash payout for 1995 of approximately $73.7 million was made to
employees covered by the provision of this plan in the first
quarter of 1996.

USAir's ESOP and Defined Contribution Retirement Program each
have profit sharing components. Under the ESOP, each eligible
USAir employee receives a certain number of USAir Group Common
Stock shares based on each participant's compensation relative to
the total compensation of all participants and the number of USAir
Group Common Stock shares in the allocation pool. When USAir's
return on sales equals or exceeds certain prescribed levels, USAir
increases its contribution, which effectively increases the number
of USAir Group Common Stock shares in the allocation pool (see Note
8. - Employee Stock Ownership Plan). Under the Defined Contribu-
tion Retirement Program, USAir makes additional contributions to a
participant's account when USAir Group achieves certain prescribed
pre-tax margin levels (see Note 9. - Employee Benefit Plans). USAir
did not make any profit sharing contributions in connection with
the profit sharing components of the ESOP or the Defined Contribu-
tion Retirement Program in 1995, 1994 or 1993.

- 261 -
<PAGE>

11. Related Party Transactions
--------------------------

(a) Parent Company
--------------

As of December 31, 1995, USAir had a $68.6 million 8.4% note
payable to USAir Group related to USAir Group's purchase of
aircraft-secured debt obligations of USAir. USAir repaid the note
in February 1996. During 1994, USAir Group financed three aircraft
for USAir. USAir repaid this obligation, including interest, in
December 1994.

USAir's balance sheet line item, Payable to Parent Company,
includes intercompany loans from USAir Group which arise in the
normal course of business. These loans bear interest at market
rates which are reset quarterly.

Net interest expense related to the notes payable and
intercompany loans was $7.8 million, $11.3 million and $1.3 million
for the years 1995, 1994 and 1993, respectively.

(b) Regional Airline Subsidiaries of USAir Group
--------------------------------------------

USAir engages in certain transactions with Allegheny Airlines,
Inc. ("Allegheny"), Piedmont Airlines, Inc., and PSA Airlines,
Inc., wholly-owned regional airline subsidiaries of USAir Group.
USAir provides various services to these entities including
passenger handling, contract training and catering. USAir
recognized other operating revenues of approximately $46.5 million,
$43.5 million and $50.3 million related to these services for the
years 1995, 1994 and 1993, respectively. These regional airlines
also perform passenger and ground handling for USAir at certain
airports for which USAir recognized other operating expenses of
approximately $21.0 million and $15.3 million for the years 1995
and 1994, respectively.

USAir leases or subleases certain turboprop aircraft to these
entities. USAir recognized other operating revenues related to
these arrangements of approximately $18.7 million, $22.0 million
and $14.1 million for the years 1995, 1994 and 1993, respectively.
USAir entered into a sale-leaseback arrangement with Allegheny
during 1994 involving certain turboprop aircraft (in return, USAir
subleases these same aircraft back to Allegheny). USAir recognized
other operating expenses related to the lease of these aircraft
from Allegheny of approximately $9.8 million and $3.1 million for
1995 and 1994, respectively.

- 262 -
<PAGE>

USAir's receivables from and payables to these regional
airlines were approximately $9.6 million and $1.6 million,
respectively, at December 31, 1995 and $8.7 million and $1.3
million, respectively, at December 31, 1994. USAir's Traffic
Balances Payable liability included $30.8 million and $22.9 million
at December 31, 1995 and 1994, respectively, representing passen-
gers flown by the regional subsidiaries on behalf of USAir during
the month of December in each of those years.

USAir leases certain aircraft to USAir Group's wholly-owned
subsidiary USAir Leasing and Services, Inc. ("Leasing"). Leasing
subleases these aircraft to third parties. USAir recognized other
operating revenues related to these arrangements of approximately
$4.6 million, $2.2 million and $0.7 million for the years 1995,
1994 and 1993, respectively.

USAir purchases a portion of its aviation fuel from USAir
Group's wholly-owned subsidiary USAir Fuel Corporation ("Fuel
Corp."), which acts as a fuel wholesaler to USAir in certain
circumstances. USAir's aviation fuel purchases were approximately
$104.9 million, $57.8 million and $9.7 million for the years 1995,
1994 and 1993, respectively. USAir's accounts payable to Fuel
Corp. was $20.7 million and $5.6 million at December 31, 1995 and
1994, respectively.

(d) British Airways plc
-------------------

On January 21, 1993, USAir Group and BA entered into an
Investment Agreement under which a wholly-owned subsidiary of BA
purchased certain series of convertible preferred stock and BA
entered into code sharing and wet lease arrangements with USAir. At
December 31, 1995, BA's total voting interest in USAir Group was
approximately 21.0%.

USAir wet leases 767-200ER aircraft, including cockpit and
cabin crews, to BA in order to serve three routes between the U.S.
and London. The wet lease arrangements are scheduled to end by May
31, 1996 (the first of the three wet lease arrangements ended in
December 1995 and a second wet lease ended in February 1996). USAir
recognized other operating revenues of approximately $63.6 million,
$60.7 million and $17.1 million for the years 1995, 1994, and 1993,
respectively, related to the wet lease arrangements. These revenues
were offset by an equal amount of other operating expense.

- 263 -
<PAGE>

USAir also has various agreements with BA for ground handling
at certain airports, contract training and other services. USAir
recognized other operating revenues of approximately $4.9 million,
$6.4 million and $2.4 million for the years 1995, 1994 and 1993,
respectively, related to the services USAir performed for BA.

USAir's current receivables from and payables to BA were
approximately $11.5 million and $5.3 million, respectively, at
December 31, 1995 and $11.0 million and $4.5 million, respectively,
at December 31, 1994.

USAir also had a long-term receivable from BA related to two
U.S. to London routes that USAir relinquished at the time of
implementation of a code sharing arrangement with BA. The balance
of the receivable was approximately $45.4 million and $47.0 million
at December 31, 1995 and 1994, respectively. Payments began in
December 1995 in conjunction with the termination of the first wet
lease arrangement and continue annually for nine years.

12. Selected Quarterly Financial Data (Unaudited)
---------------------------------------------

The following table presents selected quarterly financial data
for 1995 and 1994:

<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C>
1995
Operating revenues $1,664 $1,852 $1,743 $1,725
Operating income (loss) $ (50) $ 135 $ 66 $ 84
Net income (loss) $ (102) $ 85 $ 17 $ 34
===== ===== ===== =====

1994
Operating revenues $1,589 $1,763 $1,642 $1,584
Operating income (loss) $ (135) $ 60 $ (164) $ (278)
Net income (loss) $ (190) $ 1 $ (196) $ (332)
===== ===== ===== =====
See Note 14. - Non-Recurring and Unusual Items.

Note: The sum of the four quarters may not equal yearly totals
due to rounding of quarterly results.

</TABLE>

- 264 -
<PAGE>

13. Supplemental Balance Sheet Information
--------------------------------------

The components of certain accounts in the accompanying
balance sheets are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
(a) Cash and cash equivalents:
Cash $ 11,298 $ 16,946
Cash equivalents, at cost which
approximates market 868,315 411,979
------- -------
$ 879,613 $ 428,925
======= =======
(b) Receivables, net:
Accounts receivable $ 333,859 $ 335,234
Less allowance for doubtful
accounts 12,104 9,222
------- -------
$ 321,755 $ 326,012

======= =======

(c) Materials and supplies, net:
Materials and supplies $ 383,910 $ 408,308
Less allowance for obsolescence 161,665 169,827
------- -------
$ 222,245 $ 238,481
======= =======
(d) Accrued expenses:
Salaries and wages $ 342,391 $ 258,426
Rents 479,749 477,972
All other 613,054 561,176
--------- ---------
$1,435,194 $1,297,574
========= =========
</TABLE>
Note:
Certain 1994 amounts have been reclassified to conform with 1995
classifications.

- 265 -
<PAGE>

14. Non-Recurring and Unusual Items
-------------------------------

(a) 1995
----

In the fourth quarter of 1995, USAir reversed $4.1 million of
the $132.8 million non-recurring charge related to its grounded
BAe-146 fleet that was recorded in the fourth quarter of 1994 (see
Note 14.(b) below). The reversal reflects the successful re-
marketing by USAir of three of these aircraft. USAir will reverse
additional amounts related to the 1994 non-recurring charge in
future periods dependent upon its success and the terms at which
the remaining 15 grounded BAe-146 aircraft are subleased or
otherwise disposed.

(b) 1994
----

USAir's results for 1994 include (i) a $132.8 million charge
related to its grounded BAe-146 fleet, recorded in the fourth
quarter of 1994; (ii) a $54.0 million charge for obsolete inventory
and rotables to reflect market value, recorded in the fourth
quarter of 1994; (iii) a $50 million addition to Passenger
Transportation revenue in the fourth quarter of 1994 to adjust
estimates made during the first three quarters of 1994; (iv) a
$40.1 million charge primarily related to USAir's decision to cease
operations of its remaining Boeing 727-200 aircraft in 1995,
recorded in the third quarter of 1994; (v) a $25.9 million charge
related to USAir's decision to substantially reduce service between
Los Angeles and San Francisco and close its San Francisco crew
base, recorded in the third quarter of 1994; and (vi) an $18.6
million gain resulting from the accounting treatment of the hull
insurance recovery on the aircraft lost in the September accident,
recorded in the third quarter of 1994.

USAir's results for 1993 include non-recurring charges of (i)
$43.7 million for the cumulative effect of an accounting change, as
required by FAS 112 which was adopted during the third quarter of
1993, retroactive to January 1, 1993; (ii) $68.8 million for
severance, early retirement and other personnel-related expenses
recorded primarily during the third quarter of 1993 in connection
with a workforce reduction of approximately 2,500 full-time
positions between November 1993 and the first quarter of 1994;

- 266 -
<PAGE>

(iii) $36.8 million based on a projection of the repayment of
certain employee pay reductions, recorded in the fourth quarter of
1993; (iv) $13.5 million for certain airport facilities at
locations where USAir has, among other things, discontinued or
reduced its service, recorded in the fourth quarter of 1993; (v)
$8.8 million for a loss on USAir's investment in the Galileo
International Partnership, which operates a computerized reserva-
tion system, recorded in the fourth quarter of 1993; and (vi) $18.4
million credit related to non-operating aircraft, recorded in the
second quarter of 1993.

- 267 -
<PAGE>

No dealer, salesperson or other individual has been authorized
to give any information or make any representations, other than
those contained in this Prospectus, in connection with the offering
covered by this Prospectus. If given or made, such information or
representations must not be relied upon as having been authorized
by USAir, Inc. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, the securities covered
hereby in any jurisdiction where, or to any person to whom, it is
unlawful to make such an offer or solicitation to such person.
Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication
that there has not been any change in the facts set forth in this
Prospectus or in the affairs of USAir, Inc. since the date hereof.

TABLE OF CONTENTS
-----------------
Page
- ----------------------------------------------------------- ----

Prospectus Summary........................................ 1
Risk Factors.............................................. 28
Use of Proceeds........................................... 47
Description of the Aircraft and the Appraisals............ 48
Selected Financial and Operating Information.............. 50
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 53
Business.................................................. 89
Management................................................ 141
Beneficial Security Ownership............................. 161
The Exchange Offer........................................ 169
Description of the Notes.................................. 180
Plan of Distribution...................................... 208
United States Federal Income Tax Consequences............. 209
Legal Matters............................................. 210
Independent Auditors...................................... 210
Experts................................................... 210
Consolidated Financial Statements......................... 211

------------

- 268 -

<PAGE>

USAIR, INC.

EXCHANGE OFFER

$263,000,000

Offer to Exchange 6.76% Class A Enhanced Equipment Notes, 7.50%
Class B Enhanced Equipment Notes and 8.93% Class C Enhanced
Equipment Notes for any and all outstanding 6.76% Class A Enhanced
Equipment Notes, 7.50% Class B Enhanced Equipment Notes and 8.93%
Class C Enhanced Equipment Notes.

------------

PROSPECTUS

------------

- 269 -
<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------

Item 20. Indemnification of Directors and Officers
-----------------------------------------

Section 145 of the Delaware Statute provides that a corpora-
tion may indemnify any person who was or is a party or is threat-
ened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal or investiga-
tive (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith a d in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceed-
ing, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or
is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or to the right of the
corporation to procure a judgment in its favor, against expenses
actually and reasonably occurred in connection with the defense of
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corpora-
tion unless and only to the extent that the Delaware Court of
Chancery or such other court in which such action or suit was
brought shall determinate upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses when the Court of Chancery or such
other court shall deem proper.

- 270 -

<PAGE>

Section 102(b)(7) of the Delaware Statute permits a corpora-
tion to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a direction, provided that such provision shall
not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware Statute (relating to unlawful
payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an
improper personal benefit, USAir's certificate of incorporation
include such a provision.

Item 21. Exhibits and Financial Statement Schedules
-------------------------------------------

(a) The following documents are filed as part of this
Registration Statement:

1. Financial Statements
--------------------

The following consolidated financial statements of USAir are
included in Part II, Item 8B. of this report:

- Consolidated Statements of Operations for the Three Months
Ended March 31, 1996 and 1995 (unaudited)

- Consolidated Statements of Operations for each of the Three
Years Ended December 31, 1995

- Consolidated Balance Sheets as of December 31, 1995 and 1994

- Consolidated Statements of Cash Flows for each of the Three
Years Ended December 31, 1995

- Consolidated Statements of Changes in Stockholder's Equity
(Deficit) for each of the Three Years Ended December 31, 1995

- Notes to Consolidated Financial Statements

- 271 -

<PAGE>

(this space intentionally left blank)

3. Exhibits
--------

Designation Description
- ----------- -----------

3.1 Restated Certificate of Incorporation of USAir (incorp-
orated by reference to Exhibit 3.1 to USAir's Registra-
tion Statement on Form 8-B dated January 27, 1983).

3.2 By-laws of USAir (incorporated by reference to Exhibit
3.5 to USAir's Annual Report on Form 10-K for the year
ended December 31, 1995).

4.1 Amended Certificate of Designation, Preferences, and
Rights of the Series D of Junior Preferred Stock of
USAir Group (incorporated by reference to Exhibit 4(c)
to USAir Group's Current Report on Form 8-K dated
August 11, 1989).

4.2 Certificate of Designation of Series A Cumulative
Convertible Preferred Stock of USAir Group (incorpo-
rated by reference to Exhibit 4(b) to USAir Group's
Current Report on Form 8-K dated August 11, 1989).

4.3 Certificate of Designation of Series B Cumulative
Convertible Preferred Stock of USAir Group (incorporated
by reference to Exhibit 3.3 to Amendment No. 4 to USAir
Group's Registration Statement on Form S-3 (Registration
No. 33-39540) dated May 17, 1991).

- 272 -
<PAGE>

4.4 Agreement between USAir Group and Berkshire Hathaway
Inc. dated August 7, 1989 (incorporated by reference to
Exhibit 4(a) to USAir Group's Current Report on Form 8-K
dated August 11, 1989).

4.5 Certificate of Designation of Series F Cumulative
Convertible Senior Preferred Stock of USAir Group
(incorporated by reference to Exhibit 28.2 to USAir
Group's Current Report on Form 8-K dated January 21,
1993).

4.6 Form of Certificate of Designation of Series T Cumula-
tive Exchangeable Convertible Senior Preferred Stock of
USAir Group (incorporated by reference to Appendix VII
to USAir Group's Proxy Statement dated April 26, 1993).
USAir is not filing any instrument (with the exception
of holders of exhibits 10.1(a-c)) defining the rights
of holders of long-term debt because the total amount of
securities authorized under each such instrument does
not exceed ten percent of the total assets of USAir.
Copies of such instruments will be furnished to the
Securities and Exchange Commission upon request.

* 5.1 Purchase Agreement dated February 9, 1996 among USAir
and the Initial Purchasers.

* 5.2 Registration Rights Agreement, dated as of February 15,
1996, among USAir and the Initial Purchasers.

* 5.3 Collateral Agency Agreement, dated as of February 15,
1996, among USAir, the Collateral Agent, the Class A, B
and C Indenture Trustees and the Class A, B and C
Liquidity Providers.

* 5.4 Class A Indenture, dated as of February 15, 1996,
between USAir and the Class A Indenture Trustee.

* 5.5 Class B Indenture, dated as of February 15, 1996,
between USAir and the Class B Indenture Trustee.

* 5.6 Class C Indenture, dated as of February 15, 1996,
between USAir and the Class C Indenture Trustee.

* 5.7 Liquidity Agreement, dated as of February 15, 1996,
among USAir, the Class A Liquidity Provider and the
Collateral Agent.

- 273 -

<PAGE>

* 5.8 Liquidity Agreement, dated as of February 15, 1996,
among USAir, the Class B Liquidity Provider and the
Collateral Agent.

* 5.9 Liquidity Agreement, dated as of February 15, 1996,
among USAir, the Class C Liquidity Provider and the
Collateral Agent.

* 5.10 Opinion of Lawrence M. Nagin, as to the legality of the
New Notes.

** 5.11 Tax opinion of Ginsburg, Feldman and Bress.

* 5.12 Opinion of Fulbright & Jaworski, L.L.P.

** 5.13 Form T-1 of Wilmington Trust Company with respect to the Class A
Notes. (Statement of Eligibility under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee).

** 5.14 Form T-1 of Wilmington Trust Company with respect to the Class B
Notes. (Statement of Eligibility under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee).

** 5.15 Form T-1 of Wilmington Trust Company with respect to the Class C
Notes. (Statement of Eligibility under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee).

10.1(a) Supplemental Agreement No. 16, dated July 19, 1990, to
Purchase Agreement No. 1102 between USAir and The Boeing
Company (incorporated by reference to Exhibit 10.2(a) to
USAir Group's Annual Report on Form 10-K for the year
ended December 31, 1990).

10.1(b) Supplemental Agreement No. 17, dated November 28, 1990,
to Purchase Agreement No. 1102 between USAir and The
Boeing Company (incorporated by reference to Exhibit
10.2(b) to USAir Group's Annual Report on Form 10-K for
the year ended December 31, 1990).

10.1(c) Supplemental Agreement No. 18, dated December 23, 1991,
to Purchase Agreement No. 1102 between USAir and The
Boeing Company (incorporated by reference to Exhibit
10.2(c) to USAir Group's Annual Report on Form 10-K for
the year ended December 31, 1991).

10.2 Purchase Agreement No. 1725 dated December 23, 1991
between USAir and The Boeing Company (incorporated by
reference to Exhibit 10.3 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1991).

10.3 Executive Incentive Compensation Plan of USAir Group,
Inc. as amended and restated December 1, 1995 (incorpo-
rated by reference to Exhibit 10.4 to USAir Group's and
USAir's Annual Report on Form 10-K for the year ended
December 31, 1995).

10.4 USAir, Inc. Officers' Supplemental Benefit Plan (incor-
porated by reference to Exhibit 10.5 to USAir's Annual
Report on Form 10-K for the year ended December 31,
1980).

- 274 -

- ----------------------

* previously filed
** filed herewith

<PAGE>

10.5 USAir, Inc. Supplementary Retirement Benefit Plan
(incorporated by reference to Exhibit 10.5 to USAir
Group's Annual Report on Form 10-K for the year ended
December 31, 1989).

10.6 USAir, Inc. Supplemental Executive Defined Contribution
Plan (incorporated by reference to Exhibit 10.6 to USAir
Group's Annual Report on Form 10-K for the year ended
December 31, 1994).

10.7 USAir Group's 1984 Stock Option and Stock Appreciation
Rights Plan (incorporated by reference to Exhibit A to
USAir Group's Proxy Statement dated March 30, 1984).

10.8 USAir Group's 1988 Stock Incentive Plan (incorporated by
reference to Exhibit 10.15 to USAir Group's Annual
Report on Form 10-K for the year ended December 31,
1987).

10.9 USAir Group's 1992 Stock Option Plan (incorporated by
reference to Exhibit A to USAir Group's Proxy Statement
dated March 30, 1992).

10.10 USAir Group's 1996 Stock Incentive Plan (incorporated by
reference to Exhibit A to USAir Group's Proxy Statement
dated April 15, 1996).

10.11 Employment Agreement between USAir and its Chief Execu-
tive Officer (incorporated by reference to Exhibit 10.11
to USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1995).

10.12 Employment Agreement between USAir and its President and
Chief Operating Officer (incorporated by reference to
Exhibit 10.12 to USAir Group's and USAir's Annual Report
on Form 10-K for the year ended December 31, 1995).

10.13 Employment Agreement between USAir and its Executive
Vice President-Corporate Affairs and General Counsel
(incorporated by reference to Exhibit 10.13 to USAir
Group's and USAir's Annual Report on Form 10-K for the
year ended December 31, 1995).

10.14 Agreement between USAir and its Chief Executive Officer
with respect to certain employment arrangements
(incorporated by reference to Exhibit 10.14 to USAir
Group's and USAir's Annual Report on Form 10-K for the
year ended December 31, 1995).

- 275 -

<PAGE>

10.15 Agreement between USAir and its President and Chief
Operating Officer with respect to certain employment
arrangements (incorporated by reference to Exhibit 10.15
to USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1995).

10.16 Agreement between USAir and its Executive Vice Presi-
dent-Corporate Affairs and General Counsel with respect
to certain employment arrangements (incorporated by
reference to Exhibit 10.16 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1995).

10.17 Employment Agreement between USAir and its former Chief
Executive Officer, as amended by a severance agreement
(incorporated by reference to Exhibit 10.17 to USAir
Group's and USAir's Annual Report on Form 10-K for the
year ended December 31, 1995).

10.18 Employment Agreement between USAir and its former
President and Chief Operating Officer, as amended by a
severance agreement (incorporated by reference to
Exhibit 10.18 to USAir Group's and USAir's Annual Report
on Form 10-K for the year ended December 31, 1995).

10.19 Employment Agreement between USAir and its former
Executive Vice President, General Counsel and Secretary,
as amended by a severance agreement (incorporated by
reference to Exhibit 10.19 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1995).

10.20 Employment Agreement between USAir and its Executive
Vice President-Marketing (incorporated by reference to
Exhibit 10.20 to USAir Group's and USAir's Annual Report
on Form 10-K for the year ended December 31, 1995).

10.21 Trust Agreement dated as of April 1, 1992 between USAir
and Wachovia Bank of North Carolina, N.A. providing for
certain compensation arrangements for the Executive Vice
President-Marketing (incorporated by reference to
Exhibit 10.21 to USAir Group's and USAir's Annual Report
on Form 10-K for the year ended December 31, 1995).

10.22 Employment Agreement between USAir and its Executive
Vice President-Customer Services (incorporated by
reference to Exhibit 10.22 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1995).

- 276 -
<PAGE>

10.23 Agreement between USAir and its Chief Executive Officer
providing supplemental retirement benefits (incorporated
by reference to Exhibit 10.23 to USAir Group's and
USAir's Annual Report on Form 10-K for the year ended
December 31, 1995).

10.24 Agreement between USAir and its President and Chief
Operating Officer providing supplemental retirement
benefits (incorporated by reference to Exhibit 10.24 to
USAir Group's and USAir's Annual Report on Form 10-K for
the year ended December 31, 1995).

10.25 Agreement between USAir and its Executive Vice Presi-
dent-Corporate Affairs and General Counsel providing
supplemental retirement benefits (incorporated by
reference to Exhibit 10.25 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1995).

10.26 Agreement between USAir and its former Chief Executive
Officer providing supplemental retirement benefits
(incorporated by reference to Exhibit 10.26 to USAir
Group's and USAir's Annual Report on Form 10-K for the
year ended December 31, 1995).

10.27 Agreement between USAir and its former President and
Chief Operating Officer providing supplemental retire-
ment benefits (incorporated by reference to Exhibit
10.27 to USAir Group's and USAir's Annual Report on Form
10-K for the year ended December 31, 1995).

10.28 Agreement between USAir and its former Executive Vice
President, General Counsel and Secretary providing
supplemental retirement benefits (incorporated by
reference to Exhibit 10.28 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended December
31, 1995).

10.29 Agreement between USAir and its Executive Vice Presi-
dent-Marketing providing supplemental retirement
benefits (incorporated by reference to Exhibit 10.29 to
USAir Group's and USAir's Annual Report on Form 10-K for
the year ended December 31, 1995).

10.30 Employment Agreement between USAir and its Executive
Vice President-Customer Services providing retirement
benefits (incorporated by reference to Exhibit 10.30 to
USAir Group's and USAir's Annual Report on Form 10-K for
the year ended December 31, 1995).

- 277 -
<PAGE>

* 21 Subsidiary of USAir.

** 23.1 Consent of KPMG Peat Marwick LLP to the incorporation of
their report concerning certain financial statements
contained of USAir in this report in certain registra-
tion statements.

* 23.2 Consent of Fulbright & Jaworski, L.L.P. to the incorpor-
ation of their legal opinion covering certain matters of
New York law and Section 1110 of the Federal Bankruptcy
Code.

** 23.3 Consent of Lawrence M. Nagin as to the incorporation of his
legal opinion (included within Exhibit 5.10).

** 23.4 Consent of Ginsburg, Feldman & Bress to the incorporation
of their tax opinion (included within Exhibit 5.11).

** 23.5 Consents of BK, AISI and Airclaims to the references to
their aircraft appraisals.

* 24.1 Powers of Attorney signed by the directors of USAir,
Inc. authorizing their signatures on this registration
statement.

* 27.1 Valuation and Qualifying Accounts and Reserves

99.1 Letter of Transmittal

Item 22. Undertakings
------------

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:

i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change to such
information in the Registration Statement;

iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement.

- 278 -
<PAGE>

(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securi-
ties offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

(b) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers,
partners and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, partner or controlling
person of any of the registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer,
partner or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.

- 279 -
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Amendment No.1 to Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Arlington, Virginia on July 2, 1996.

USAir, Inc.

By: /s/ Stephen M. Wolf
---------------------------
Stephen M. Wolf
Chairman and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons on behalf of USAir, Inc. and in the capacities and on the
dates indicated.

July 2, 1996 By: /s/ Stephen M. Wolf
-----------------------------
Stephen M. Wolf
Chairman and Chief
Executive Officer
(Principal Executive Officer)

July 2, 1996 By: /s/ John W. Harper
-----------------------------
John W. Harper
Senior Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)

July 2, 1996 By: /s/James A. Hultquist
-----------------------------
James A. Hultquist
Controller
(Principal Accounting Officer)

July 2, 1996 By: *
-----------------------------
Robert J. Ayling
Director

- 280 -
<PAGE>

July 2, 1996 By: *
-----------------------------
Robert W. Bogle
Director

July 2, 1996 By: *
-----------------------------
Edwin I. Colodny
Director

July 2, 1996 By: *
-----------------------------
Mathias J. DeVito
Director

July 2, 1996 By: *
-----------------------------
Rakesh Gangwal
Director

July 2, 1996 By: *
-----------------------------
George J. W. Goodman
Director

July 2, 1996 By: *
-----------------------------
John W. Harris
Director

July 2, 1996 By: *
-----------------------------
Edward A. Horrigan, Jr.
Director

July 2, 1996 By: *
-----------------------------
Robert LeBuhn
Director

July 2, 1996 By: *
-----------------------------
Roger P. Maynard
Director

- 281 -
<PAGE>

July 2, 1996 By: *
-----------------------------
John G. Medlin, Jr.
Director

July 2, 1996 By: *
-----------------------------
Hanne M. Merriman
Director

July 2, 1996 By: *
-----------------------------
Raymond W. Smith
Director

July 2, 1996 By: *
-----------------------------
Derek M. Stevens
Director

By: /s/ Lawrence M. Nagin
------------------------
Lawrence M. Nagin
Attorney-In-Fact

- 282 -

<PAGE>

Exhibit 5.10

July 2, 1996

USAir, Inc.
2345 Crystal Drive
Arlington, Virginia 22227

Re: USAir, Inc. Registration
Statement on Form S-4 (No. 333-4335)
------------------------------------

Ladies and Gentlemen:

I am Executive Vice President-Corporate Affairs
and General Counsel of USAir, Inc., a Delaware
corporation (the "Company"), and have acted in such
capacity in connection with the issuance by the Company
of up to $142,400,000 aggregate principal amount of the
Company's 6.76% Class A Enhanced Equipment Notes (the
"Class A Notes"), up to $54,800,000 aggregate principal
amount of the Company's 7.50% Class B Enhanced Equipment
Notes (the "Class B Notes") and up to $65,800,000
aggregate principal amount of the Company's 8.93% Class C
Enhanced Equipment Notes (the "Class C Notes", and
together with the Class A Notes and the Class B Notes,
the "New Notes"; any such class of New Notes, a "Class")
to be issued by the Company. The New Notes will be
issued pursuant to separate indentures (collectively, the
"Indentures"), dated as of February 15, 1996, between the
Company and Wilmington Trust Company, as Indenture
Trustee. The Class A Notes, the Class B Notes and the
Class C Notes are to be offered by the Company in
exchange for its privately placed 6.76% Class A Enhanced
Equipment Notes, 7.50% Class B Enhanced Equipment Notes
and 8.93% Class C Enhanced Equipment Notes (collectively,
the "Old Notes"), respectively.

This opinion is delivered in accordance with the
requirements of Item 601(b)(5) of Regulation S-K.

1
<PAGE>

In connection with this opinion, I or attorneys
under my supervision have examined (i) the registration
statement on Form S-4 (the "Registration Statement")
filed on May 23, 1996, with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "1933 Act"), (ii) executed
copies of the Indentures; (iii) the forms of the New
Notes included as exhibits to the Indentures; (iv) the
Form T-1 of the Indenture Trustee relating to the New
Notes to be filed pursuant to the Trust Indenture Act of
1939, as amended (the "TIA"); (v) an executed copy of the
Collateral Agency Agreement, dated as of February 15,
1996, among the Company, Wilmington Trust Company, as
Collateral Agent and Indenture Trustee and Westdeutsche
Landesbank Girozentrale New York ("WestLB New York"), as
Class A, B and C Liquidity Provider (the "Collateral
Agency Agreement"); (vi) executed copies of the
respective Liquidity Agreements, each dated as of
February 15, 1996, among the Company, WestLB New York, as
the Class A,B, and C Liquidity Provider, respectively,
and Wilmington Trust Company, as Collateral Agent (the
"Liquidity Agreements"); (vii) certain resolutions of the
Board of Directors of the Company relating to the
issuance of the New Notes; and (viii) such other
documents as I have deemed necessary or appropriate as a
basis for the opinion set forth herein.

In such examination, I have assumed the genuineness
of all signatures, the legal capacity of natural persons,
the authenticity of all documents submitted to me as
originals, the conformity to original documents of all
documents submitted to me as facsimile, certified or
photostatic copies, and the authenticity of the originals
of such copies. As to any facts material to this opinion
which I did not independently establish or verify, I have
relied upon oral or written statements and
representations of the Company and its officers and other
representatives, public officials and others. In making
such examination of documents executed by parties other
than the Company, I have also assumed that such parties
had the power, corporate or other, to enter into and

2
<PAGE>

perform all obligations thereunder and have assumed the
due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such
documents and the validity and binding effect thereof. I
have further assumed that the Registration Statement will
have been declared effective by the Commission under the
1933 Act and the Indentures will have been duly qualified
under the TIA.

I am a member of the Bar of the State of California
and I express no opinion as to the laws of any other
jurisdiction. For purposes of this opinion, I have
assumed that the relevant laws of the State of New York
and the State of California are identical.

Based upon and subject to the foregoing, I am of the
opinion that when the New Notes in the form examined by
me (i) have been duly executed by the Company and
authenticated by the Indenture Trustee in accordance with
the terms of the Indentures and (ii) have been duly
delivered against receipt of the Old Notes surrendered in
exchange therefor pursuant to the terms of the Exchange
Offer (as defined in the Registration Statement), the New
Notes will constitute valid and binding obligations of
the Company entitled to the benefits of the applicable
Indentures, the Collateral Agency Agreement and the
applicable Liquidity Agreements and enforceable against
the Company in accordance with their respective terms,
except that enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights
generally and (b) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity).

3
<PAGE>

I hereby consent to the use of my name under the
caption "Legal Matters" and to the filing of this opinion
with the Commission as an exhibit to the Registration
Statement. In giving such consent, I do not thereby
admit that I am in the category of persons whose consent
is required under Section 7 of the 1933 Act or the rules
and regulations of the Commission.

Very truly yours,

/s/ Lawrence M. Nagin

Lawrence M. Nagin

<PAGE>

Exhibit 5.11

[LETTERHEAD OF GINSBURG, FELDMAN AND BRESS CHARTERED]

July 2, 1996

USAir, Inc.
Crystal Park Four
2345 Crystal Drive
Arlington, Virginia 22227

Dear Sirs:

We have acted as special tax counsel to USAir, Inc., (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act), of a Registration Statement on Form S-4 (Registration No. 333-4335), as
amended by Amendment No.1 thereto (the "Registration Statement"), relating to
New Class A, Class B and Class C Enhanced Equipment Notes (the "Notes"), to be
issued in exchange for Old Class A, Class B and Class C Enhanced Equipment
Notes, respectively, pursuant to three separate indentures, each dated as of
February 15, 1996, entered into between the Company and Wilmington Trust
Company, as indenture trustee under each indenture.

Based upon the facts as set forth in the Registration Statement (which we
have assumed to be accurate without examination of the Notes or the related
indentures), we are of the opinion that the discussion in the Prospectus
constituting part of the Registration Statement entitled "United States Federal
Income Tax Consequences," insofar as it relates to statements of law or legal
conclusions, is correct in all material respects.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the first sentence of the
second paragraph under the caption "United States Federal Income Tax
Consequences" in the Prospectus constituting part of the Registration Statement.
In giving such consent, we do not thereby concede that we are within the
category of persons whose consent is required under Section 7 of the Act or the
Rules and Regulations of the commission thereunder.

Very truly yours,

/s/ Ginsburg, Feldman and Bress Chartered

<PAGE>

Exhibit 5.12

FULBRIGHT & JAWORSKI
L.L.P.

February 16, 1996

To each of the Parties Named
on the Attached Schedule:

Re: USAir Enhanced Equipment Notes
------------------------------

Gentlemen:

We have acted as special New York counsel for USAir, Inc. (the
"Company") in connection with the transactions contemplated by the
Collateral Agency Agreement (the "Collateral Agreement") dated as
of February 15, 1996 among the Company; Wilmington Trust Company,
as Class A Indenture Trustee; Wilmington Trust Company, as Class B
Indenture Trustee; Wilmington Trust Company, as Class C Indenture
Trustee; Westdeutsche Landesbank Girozentrale, New York Branch, as
Class A Liquidity Provider; Westdeutsche Landesbank Girozentrale,
New York Branch, as Class B Liquidity Provider; Westdeutsche
Landesbank Girozentrale, New York Branch, as Class C Liquidity
Provider; and Wilmington Trust Company, as Collateral Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in Appendix A to the Collateral
Agreement.

In connection herewith, we have examined the originals or
copies of the Collateral Agreement, the Class A Indenture, the
Class B Indenture, the Class C Indenture, the Class A Liquidity
Agreement, the Class B Liquidity Agreement, the Class C Liquidity
Agreement and the Notes issued under each Indenture (collectively,
the "Agreements"). We have also examined the Registration Rights
Agreement. In addition, we have examined copies, certified or
otherwise identified to our satisfaction of such corporate records
of the Company and such other documents, certificates and other
statements of government officials and corporate officers and other
representatives of the Company as we have considered necessary or
appropriate for purposes of this opinion. As to certain facts
material to the opinions expressed herein, we have relied without
independent verification upon the representations and warranties
contained in or made pursuant to the Agreements.
<PAGE>

Based upon the foregoing, and upon an examination of such
questions of law as we have considered necessary or appropriate,
and subject to the assumptions, exceptions, qualifications and
limitations set forth below, we advise you that, in our opinion:

1. The execution and delivery by the Company of each of the
Agreements, the consummation by the Company of the transactions
contemplated thereby and the compliance by the Company with the
terms and provisions thereof do not contravene any federal law or
regulation of the United States of America or any law or regulation
of the State of New York applicable to the Company.

2. Except for (i) the filings referred to in paragraph 4
below and (ii) filings or other actions that may be required under
the securities or Blue Sky laws of the various states, as to which
we express no opinion, the execution and delivery by the Company of
the Agreements, the consummation by the Company of the transactions
contemplated thereby, the issuance of the Notes as contemplated by
the Indentures and the operation by the Company of the Aircraft
under U.S. registration, does not require the authorization,
consent or approval of, or the giving of notice to, or the
registration, recording or filing of any document with, or the
taking of any other action with respect to, the Department of
Transportation, the Federal Aviation Administration or any
authority or agency of the federal government of the United States
of America or the State of New York or any local authority or
agency within the State of New York.

3. Each of the Agreements and the Registration Rights
Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, and each of the Notes is entitled the benefits of the
applicable Indenture.

4. The Collateral Agreement the Collateral Agreement
Supplement No. 1 are in due form for filing in accordance with the
Aviation Act. The Collateral Agreement, as supplemented by the
Collateral Agreement Supplement No. 1, validly creates for the
benefit of the Collateral Agent the security interest in the
Collateral which the Granting Clauses of the Collateral Agreement
purports to create. Except for the filings with the FAA referred
to in the opinion dated today and addressed to you of Crowe &
Dunlvey, P.C., and the filing of Uniform Commercial Code financing
statements in the Commonwealth of Virginia, which filings we assume
have been duly effected and are adequate for their intended purpose
(and subject to the timely filing in the future of continuation
statement with respect to such financing statements, no further
<PAGE>

recording or filing in the United States of America of the
Collateral Agreement or any other documents, nor of any financing
statements with respect thereto, nor any other action, is necessary
or advisable in order to perfect and maintain perfected in the
United States of America the Lien of the Collateral Agreement in
the Aircraft as against the Company and any third parties.

5. Assuming the due authorization, execution and delivery of
the Collateral Agreement and the Indentures (the "Trustee
Documents") by Wilmington Trust Company, the Trustee Documents,
constitute the legal, valid and binding obligations of the
Collateral Agent and the Indenture Trustees as the case may be,
enforceable against the Collateral Agent and the Indenture Trustees
in accordance with their respective terms.

6. In a proceeding under Chapter 11 of the U.S. Bankruptcy
Code involving the Company as debtor, the Collateral Agent, on
behalf of the Noteholders and the Liquidity Providers, would be
entitled to the benefits of 11 U.S.C. Section 1110 with respect to
the security interest granted by the Collateral Agreement in the
Aircraft. However, we express no opinion as to the protection
afforded by Section 1110 of the Bankruptcy Code to the Collateral
Agent with respect to a security interest in a Replacement Airframe
or Replacement Engine.

7. The Notes, the Collateral Agreement and each Indenture
conform in all material respects to the description of such
documents contained in the Offering Memorandum.

8. The statements set forth under "Description of the Notes -
Events of Default" in the Offering Memorandum, insofar as such
statements purport to summarize the provisions of 11 U.S.C. Section
1110, provide a fair summary of such provisions.

The foregoing opinions are subject to the following
assumptions, exceptions, qualifications and limitations:

A. The foregoing opinions are expressly limited to matters
under and governed by the internal laws of the State of New York,
and applicable federal laws of the United States of America, except
that we express no opinion as to federal securities law or the
securities laws of any state including the State of New York. Our
opinion in paragraph 1 above as to the contravention of certain
laws, rules and regulations is based upon a review of those laws
and regulations that, in our experience, are normally applicable to
transactions of the type contemplated by the Agreements.
<PAGE>

B. The foregoing opinions in paragraphs 3 and 5 regarding the
enforceability of the Agreements and the Registration Rights
Agreement are subject to the following:

(i) The enforceability of the Agreements and the
Registration Rights Agreement may be limited or
affected by (a) bankruptcy, insolvency,
reorganization, moratorium, liquidation,
rearrangement, probate, conservatorship, fraudulent
transfer, fraudulent conveyance and other similar
laws (including court decisions) now or hereafter
in effect and affecting the rights and remedies of
creditor generally or providing for the relief of
debtors, (b) the refusal of a particular court to
grant (1) equitable remedies, including, without
limiting the generality of the foregoing, specific
performance and injunctive relief or (2) a
particular remedy sought by the Collateral Agent
under any of the Agreements as opposed to another
remedy provided for therein or another remedy
available at law or in equity, but which does not
in our opinion make such remedies with respect to
the Agreements inadequate for the practical
realization of the benefit intended to be provided
thereby and (c) general principles of equity
(regardless of whether such remedies are sought in
a proceeding in equity or at law).

(ii) In rendering the foregoing opinions, we express no
opinion as to the availability of certain equitable
remedies, including specific performance, and
further, we express no opinions as to the
enforceability of provisions of any of the
Agreements and Registration Rights Agreement (a)
restricting access to legal (procedural and/or
substantive) or equitable remedies, (b) purporting
to waive the right to receive notice or any benefit
bestowed by law, to the extent such right or
benefit can not be waived, (c) relating to
indemnities to the extent prohibited by public
policy (or otherwise limited by federal or state
securities laws which may be applicable to the
enforceability of Section 5 of the Registration
Rights Agreement) or which might require
indemnification for losses or expenses caused by
gross negligence, willful misconduct, fraud or
illegality of an indemnified party, or (d)
<PAGE>

providing for the exercise of rights and remedies
with respect to the Collateral other than in a
commercially reasonable manner or as otherwise
provided in the Uniform Commercial Code or other
applicable law.

(iii) We note that the enforceability of specific
provisions of the Agreements and the Registration
Rights Agreement may be subject to standards of
reasonableness, care and diligence and "good faith"
limitations and obligations such as those provided
in Sections 1-102(3) and 1-203 of the Uniform
Commercial Code and similar applicable principles
of common law and judicial decisions.

(iv) We express no opinion with respect to compliance
with the anti-fraud provisions of the applicable
federal or state securities laws, rules or
regulations.

C. With respect to the opinion given in paragraph 4 above as
to the creation of as security interest in the Collateral, we
express no opinions as to the creation of any security interest in
any Collateral other than (I) that portion of the Collateral
consisting of the Aircraft, (II) that portion of the Collateral
(except for the Aircraft) which is not excluded by Section 9-104 of
the Uniform Commercial Code (the "UCC") and (III) if possession or
control and dominion or both by the Collateral Agent is required or
necessary, such portion of the Collateral as has been deposited
with the Collateral Agent pursuant to the Collateral Agreement, or
which possession or control and dominion, or both, has otherwise
effectively occurred.

D. We express no opinion as to the priority of any security
interest purported to be created by any of the Agreements.

E. We have made no examination of, and express no opinion as
to, (a) the title of any person to any of the Collateral or (b) the
value of any security granted to the Collateral Agent.

F. We have assumed (a) the due authorization, execution and
delivery by, and, expect with respect to the Company, the
enforceability against, each of the parties thereto of the
Agreements, and the Registration Rights Agreement and that each of
such parties (including the Company) has the full power, authority
and legal right to execute, deliver and perform such documents and
(b) the due authentication of each Note by the applicable Indenture
Trustee.
<PAGE>

G. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the
conformity to the originals of all documents submitted to us as
copies, which facts we have not verified independently.

H. We have assumed that the Agreements and the transactions
contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirements Income Security Act of 1974.

I. With respect to the opinion given in paragraph 5, our
opinion is subject to limitations of Delaware law applicable to,
and of New York law governing the banking and trust powers of,
Wilmington Trust Company, the Collateral Agent or the Indenture
Trustees, as to which we express no opinion.

J. Except to the extent expressly set forth in paragraphs 7
and 8 above, we have not checked the accuracy or completeness of,
or otherwise verified, and are not passing upon, and assume no
responsibility for, the accuracy or completeness of the information
contained in or incorporated by reference in the Offering
Memorandum.

In giving the foregoing opinion, we have relied upon the
opinion delivered to you today of Crowe & Dunlevy, with respect to
the matter set forth therein relating to the Act and regulations
thereunder and the opinion of Richards, Layton & Finger delivered
to you today with respect to paragraph 5 hereof as to matters of
Delaware law. Our opinion is subject to all applicable
qualifications and exceptions set forth in such opinions.

The opinions expressed herein are solely for the benefit of,
and may only be relied upon by, the named addressee in connection
with the Agreements, and the transactions provided for thereby.
This opinion may not be furnished or relied upon by, any other
person with the prior written consent of this Firm. The opinions
expressed herein are as of the date hereof and we make no
undertaking to amend or supplement such opinions as facts an
circumstances come t our attention or changes in the law occur
which could affect such opinions.

FULBRIGHT & JAWORSKI L.L.P.

By: /s/William C. Clarke
-----------------------
William C. Clarke
<PAGE>

SCHEDULE
--------

Morgan Stanley & Co. Incorporated

Chase Securities, Inc.

Salomon Brothers Inc.

Lehman Brothers, Inc.

Wilmington Trust Company, as Collateral Agent, Class A Indenture
Trustee, Class B Indenture Trustee and Class C Indenture Trustee

Westdeutsche Landesbank Girozentrale, New York Branch

<PAGE>

Exhibit 5.13

Registration No.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

USAIR, INC.

(Exact name of obligor as specified in its charter)

Delaware 53-0218143
(State of incorporation) (I.R.S. employer identification no.)

2345 Crystal Drive
Arlington, Virginia 22227
(Address of principal executive offices) (Zip Code)

6.76% Class A Enhanced Equipment Notes
(Title of the indenture securities)

================================================================================

<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

A. Copy of the Charter of Wilmington Trust Company, which includes
the certificate of authority of Wilmington Trust Company to
commence business and the authorization of Wilmington Trust
Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
ameded, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 13th
day of June, 1996.

WILMINGTON TRUST COMPANY
[SEAL]

Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
--------------------------- ------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE>

EXHIBIT A

AMENDED CHARTER

Wilmington Trust Company

Wilmington, Delaware

As existing on May 9, 1987
<PAGE>

Amended Charter

Act of Incorporation

Wilmington Trust Company

Wilmington Trust Company, originally incorporated by an Act
of the General Assembly of the State of Delaware, entitled "An
Act to Incorporate the Delaware Guarantee and Trust Company",
approved March 2, A.D. 1901, and the name of which company was
changed to "Wilmington Trust Company" by an amendment filed in
the Office of the Secretary of State on March 18, A.D. 1903, and
the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements
pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend
its Charter or Act of Incorporation so that the same as so
altered and amended shall in its entirety read as follows:

First: - The name of this corporation is Wilmington Trust
Company.

Second: - The location of its principal office in the State
of Delaware is at Rodney Square North, in the City of
Wilmington, County of New Castle; the name of its resident
agent is Wilmington Trust Company whose address is Rodney
Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware,
the Town of Newport, New Castle County, Delaware, at
Claymont, New Castle County, Delaware, at Greenville, New
Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open,
maintain and operate branch offices at Ninth and Shipley
Streets, 418 Delaware Avenue, 2120 Market Street, and 3605
Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the
agency or agencies of the government of the State of
Delaware empowered to confer such authority.

Third: - (a) The nature of the business and the objects and
purposes proposed to be transacted, promoted or carried on
by this Corporation are to do any or all of the things
herein mentioned as fully and to the same extent as natural
persons might or could do and in any part of the world,
viz.:

(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
<PAGE>

seal, and alter the seal at pleasure, to hold,
purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such
officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with
the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences
of debt, to receive deposits of money, or securities
for money, to buy gold and silver bullion and foreign
coins, to buy and sell bills of exchange, and generally
to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation
which are proper or necessary for the transaction of
the business of the Corporation hereby created.

(2) To insure titles to real and personal property, or
any estate or interests therein, and to guarantee the
holder of such property, real or personal, against any
claim or claims, adverse to his interest therein, and
to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.

(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management
of funds, and the purchase, sale, management and
disposal of property of all descriptions, and to
prepare and execute all papers which may be necessary
or proper in such business.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers
of every description, and to carry on the business of
conveyancing in all its branches.

(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other
personal property of every sort and kind, from
executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and
individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.

(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking
fund therefor on such terms as may be agreed upon
between the two parties, and in like manner may act as
Treasurer of any corporation or municipality.

2
<PAGE>

(7) To act as Trustee under any deed of trust,
mortgage, bond or other instrument issued by any state,
municipality, body politic, corporation, association or
person, either alone or in conjunction with any other
person or persons, corporation or corporations.

(8) To guarantee the validity, performance or effect
of any contract or agreement, and the fidelity of
persons holding places of responsibility or trust; to
become surety for any person, or persons, for the
faithful performance of any trust, office, duty,
contract or agreement, either by itself or in
conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation,
judgment, suit, order, or decree to be entered in any
court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by
any law, judge, officer or court in the State of
Delaware or elsewhere.

(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and
all estates and property, real, personal or mixed, and
to be appointed as such trustee, trustee in bankruptcy,
receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give
bond with surety, but its capital stock shall be taken
and held as security for the performance of the duties
devolving upon it by such appointment.

(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake
or be called upon to perform, or for the assumption of
any responsibility the said Corporation may be entitled
to receive a proper compensation.

(11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and
other securities, obligations, contracts and evidences
of indebtedness, of any private, public or municipal

3
<PAGE>

corporation within and without the State of Delaware,
or of the Government of the United States, or of any
state, territory, colony, or possession thereof, or of
any foreign government or country; to receive, collect,
receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in
respect of all such bonds, mortgages, debentures,
notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and
other property, any and all the rights, powers and
privileges of individual owners thereof, including the
right to vote thereon; to invest and deal in and with
any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by
pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and
when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment
and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge,
mortgage and convey real and personal property of any
name and nature and any estate or interest therein.

(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have
the following powers:

(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.

(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of
the assets and liabilities of any person, firm,
association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to
hold or in any manner to dispose of the whole or any
part of the property so purchased; to conduct in any
lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of
such business.

(3) To take, hold, own, deal in, mortgage or otherwise
lien, and to lease, sell, exchange, transfer, or in any

4
<PAGE>

manner whatever dispose of property, real, personal or
mixed, wherever situated.

(4) To enter into, make, perform and carry out
contracts of every kind with any person, firm,
association or corporation, and, without limit as to
amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.

(5) To have one or more offices, to carry on all or
any of its operations and businesses, without
restriction to the same extent as natural persons might
or could do, to purchase or otherwise acquire, to hold,
own, to mortgage, sell, convey or otherwise dispose of,
real and personal property, of every class and
description, in any State, District, Territory or
Colony of the United States, and in any foreign country
or place.

(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this
paragraph shall (except where otherwise expressed in
said paragraph) be nowise limited or restricted by
reference to or inference from the terms of any other
clause of this or any other paragraph in this charter,
but that the objects, purposes and powers specified in
each of the clauses of this paragraph shall be regarded
as independent objects, purposes and powers.

Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock,
par value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock,
par value $1.00 per share (hereinafter referred to as
"Common Stock").

(b) Shares of Preferred Stock may be issued from time to
time in one or more series as may from time to time be
determined by the Board of Directors each of said series to
be distinctly designated. All shares of any one series of
Preferred Stock shall be alike in every particular, except
that there may be different dates from which dividends, if
any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative,
participating, optional and other special rights of each

5
<PAGE>

such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding; and, subject
to the provisions of subparagraph 1 of Paragraph (c) of this
Article Fourth, the Board of Directors of the Corporation is
hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a
particular series of Preferred Stock, the voting powers and
the designations, preferences and relative, optional and
other special rights, and the qualifications, limitations
and restrictions of such series, including, but without
limiting the generality of the foregoing, the following:

(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of
the Board of Directors;

(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to
the dividends payable on any other class or classes, or
series of the same or other class of stock and whether
such dividends shall be cumulative or non-cumulative;

(3) The right, if any, of the holders of Preferred
Stock of such series to convert the same into or
exchange the same for, shares of any other class or
classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;

(4) Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption
price or prices and the time or times at which, and the
terms and conditions on which, Preferred Stock of such
series may be redeemed.

(5) The rights, if any, of the holders of Preferred
Stock of such series upon the voluntary or involuntary
liquidation, merger, consolidation, distribution or
sale of assets, dissolution or winding-up, of the
Corporation.

(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and

6
<PAGE>

(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting
the generality of the foregoing include the right,
voting as a series or by itself or together with other
series of Preferred Stock or all series of Preferred
Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the
payment of dividends on any one or more series of
Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.

(c) (1) After the requirements with respect to
preferential dividends on the Preferred Stock (fixed in
accordance with the provisions of section (b) of this
Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements,
if any, with respect to the setting aside of sums as sinking
funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this
Article Fourth), and subject further to any conditions which
may be fixed in accordance with the provisions of section
(b) of this Article Fourth, then and not otherwise the
holders of Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board
of Directors.

(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the
provisions of section (b) of this Article Fourth), to
be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding-
up, of the Corporation, the holders of the Common Stock
shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to
stockholders ratably in proportion to the number of
shares of Common Stock held by them respectively.

(3) Except as may otherwise be required by law or by
the provisions of such resolution or resolutions as may
be adopted by the Board of Directors pursuant to
section (b) of this Article Fourth, each holder of
Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon by
the stockholders.

(d) No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to purchase
shares of any class or series of stock or of other
securities of the Corporation shall have any preemptive
right to purchase or subscribe for any unissued stock of any

7
<PAGE>

class or series or any additional shares of any class or
series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or
series, or bonds, certificates of indebtedness, debentures
or other securities convertible into or exchangeable for
stock of the Corporation of any class or series, or carrying
any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares
of any class or series of stock or securities convertible
into or exchangeable for stock, or carrying any right to
purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by
the Board of Directors in the exercise of its sole
discretion.

(e) The relative powers, preferences and rights of each
series of Preferred Stock in relation to the relative
powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section
(b) of this Article Fourth and the consent, by class or
series vote or otherwise, of the holders of such of the
series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred
Stock adopted pursuant to section (b) of this Article Fourth
that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the
outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of
Preferred Stock.

(f) Subject to the provisions of section (e), shares of any
series of Preferred Stock may be issued from time to time as
the Board of Directors of the Corporation shall determine
and on such terms and for such consideration as shall be
fixed by the Board of Directors.

(g) Shares of Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall determine
and on such terms and for such consideration as shall be
fixed by the Board of Directors.

8
<PAGE>

(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the affirmative
vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon.

Fifth: - (a) The business and affairs of the Corporation
shall be conducted and managed by a Board of Directors. The
number of directors constituting the entire Board shall be
not less than five nor more than twenty-five as fixed from
time to time by vote of a majority of the whole Board,
provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the
time in office, and provided further, that the number of
directors constituting the whole Board shall be twenty-four
until otherwise fixed by a majority of the whole Board.

(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number
of directors constituting the whole Board permits, with the
term of office of one class expiring each year. At the
annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors of
the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting.
Any vacancies in the Board of Directors for any reason, and
any newly created directorships resulting from any increase
in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office,
although less than a quorum, and any directors so chosen
shall hold office until the next annual election of
directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next
election of the class for which such director shall have
been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall
shorten the term of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Charter or Act of Incorporation or
the By-Laws of the Corporation), any director or the entire
Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the
holders of two-thirds or more of the outstanding shares of
capital stock of the Corporation entitled to vote generally
in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for

9
<PAGE>

that purpose.

(d) Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled to
vote for the election of directors. Such nominations shall
be made by notice in writing, delivered or mailed by first
class United States mail, postage prepaid, to the Secretary
of the Corporation not less than 14 days nor more than 50
days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than
21 days' notice of the meeting is given to stockholders,
such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which
notice of the meeting was mailed to stockholders. Notice of
nominations which are proposed by the Board of Directors
shall be given by the Chairman on behalf of the Board.

(e) Each notice under subsection (d) shall set forth (i)
the name, age, business address and, if known, residence
address of each nominee proposed in such notice, (ii) the
principal occupation or employment of such nominee and (iii)
the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.

(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and if
he should so determine, he shall so declare to the meeting
and the defective nomination shall be disregarded.

(g) No action required to be taken or which may be taken at
any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to
the taking of any action is specifically denied.

Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.

Seventh: - The Corporation hereby created is hereby given
the same powers, rights and privileges as may be conferred
upon corporations organized under the Act entitled "An Act
Providing a General Corporation Law", approved March 10,
1899, as from time to time amended.

Eighth: - This Act shall be deemed and taken to be a private
Act.

Ninth: - This Corporation is to have perpetual existence.

10
<PAGE>

Tenth: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their
number to constitute an Executive Committee, which
Committee, to the extent provided in said resolution, or in
the By-Laws of the Company, shall have and may exercise all
of the powers of the Board of Directors in the management of
the business and affairs of the Corporation, and shall have
power to authorize the seal of the Corporation to be affixed
to all papers which may require it.

Eleventh: - The private property of the stockholders shall
not be liable for the payment of corporate debts to any
extent whatever.

Twelfth: - The Corporation may transact business in any part
of the world.

Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire
Board. The stockholders may make, alter or repeal any By-
Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election
of directors (considered for this purpose as one class).

Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time
to time designated by the Board, and the Directors may keep
the books of the Company outside of the State of Delaware at
such places as may be from time to time designated by them.

Fifteenth: - (a) In addition to any affirmative vote
required by law, and except as otherwise expressly provided
in sections (b) and (c) of this Article Fifteenth:

(A) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with or into
(i) any Interested Stockholder (as hereinafter defined)
or (ii) any other corporation (whether or not itself an
Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter
defined) of an Interested Stockholder, or

(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of related transactions) to or with any
Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation
or any Subsidiary having an aggregate fair market value

11
<PAGE>

of $1,000,000 or more, or

(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or
any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate fair market value of
$1,000,000 or more, or

(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or

(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder, or any
Affiliate of any Interested Stockholder,

shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article Fifteenth
as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

(2) The term "business combination" as used in
this Article Fifteenth shall mean any transaction
which is referred to any one or more of clauses
(A) through (E) of paragraph 1 of the section (a).

(b) The provisions of section (a) of this Article
Fifteenth shall not be applicable to any particular
business combination and such business combination
shall require only such affirmative vote as is required
by law and any other provisions of the Charter or Act
of Incorporation of By-Laws if such business
combination has been approved by a majority of the
whole Board.

12
<PAGE>

(1) A "person" shall mean any individual firm, corporation
or other entity.

(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the Corporation
or any Subsidiary) who or which as of the record date for
the determination of stockholders entitled to notice of and
to vote on such business combination, or immediately prior
to the consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly,
of more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial
owner, directly or indirectly, of not less than 10% of
the then outstanding voting Shares, or

(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
such assignment or succession shall have occurred in
the course of a transaction or series of transactions
not involving a public offering within the meaning of
the Securities Act of 1933.

(3) A person shall be the "beneficial owner" of any Voting
Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or

(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or

(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of
any shares of capital stock of the Corporation.

(4) The outstanding Voting Shares shall include shares

13
<PAGE>

deemed owned through application of paragraph (3) above but
shall not include any other Voting Shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.

(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981.

(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in Rule
3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December
31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the
definition of Investment Stockholder set forth in paragraph
(2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the
Corporation.

(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
Fifteenth on the basis of information known to them,
(1) the number of Voting Shares beneficially owned by
any person (2) whether a person is an Affiliate or
Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section
(c), or (4) whether the assets subject to any business
combination or the consideration received for the
issuance or transfer of securities by the Corporation,
or any Subsidiary has an aggregate fair market value of
$1,00,000 or more.

(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder from
any fiduciary obligation imposed by law.

Sixteenth: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by the
By-Laws), the affirmative vote of the holders of at least
two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election
of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this
Charter or Act of Incorporation.

14
<PAGE>

Seventeenth: (a) a Director of this Corporation shall not
be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director,
except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter
be amended.

(b) Any repeal or modification of the foregoing
paragraph shall not adversely affect any right or
protection of a Director of the Corporation existing
hereunder with respect to any act or omission occurring
prior to the time of such repeal or modification."

15
<PAGE>

I ___________________________________________

_________________ Secretary of Wilmington Trust
Company, do hereby certify that the foregoing is a
true and correct copy of the Charter or Act of
Incorporation of Wilmington Trust Company, as
heretofore amended and changed from time to time,
copies of which, certified by the Secretary of the
State of Delaware, are on file in the office of
Wilmington Trust Company.

Date __________________

_______________________________________
Secretary
<PAGE>

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

As existing on February 21, 1991
<PAGE>

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
Stockholders' Meetings

Section 1. The Annual Meeting of Stockholders shall be held
on the third Thursday in April each year at the principal office
at the Company or at such other date, time, or place as may be
designated by resolution by the Board of Directors.

Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.

Section 3. Notice of all meetings of the stockholders shall
be given by mailing to each stockholder at least ten (10 days
before said meeting, at his last known address, a written or
printed notice fixing the time and place of such meeting.

Section 4. A majority in the amount of the capital stock of
the Company issued and outstanding on the record date, as herein
determined, shall constitute a quorum at all meetings of
stockholders for the transaction of any business, but the holders
of a small number of shares may adjourn, from time to time,
without further notice, until a quorum is secured. At each
annual or special meeting of stockholders, each stockholder shall
be entitled to one vote, either in person or by proxy, for each
shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as
determined herein.

ARTICLE II
Directors

Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-
two (72) years shall be nominated for election to the Board of
Directors of the Company, provided, however, that this limitation
shall not apply to any person who was serving as director of the
Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.

Section 4. The affairs and business of the Company shall be
managed and conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall
<PAGE>

be held on the third Thursday of each month at the principal
office of the Company, or at such other place and time as may be
designated by the Board of Directors, the Chairman of the Board,
or the President.

Section 6. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors
or by the President, and shall be called upon the written request
of a majority of the directors.

Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.

Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of
any change in the time or place of any regular meeting, stating
the time and place of such meeting, which shall be mailed not
less than two days before the time of holding such meeting.

Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board
of Directors, although less than a quorum, shall have the right
to elect the successor who shall hold office for the remainder of
the full term of the class of directors in which the vacancy
occurred, and until such director's successor shall have been
duly elected and qualified.

Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive
Committee, a Trust Committee, an Audit Committee and a
Compensation Committee, and shall elect from its own members a
Chairman of the Board of Directors and a President who may be the
same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person,
may appoint at any time such other committees and elect or
appoint such other officers as it may deem advisable. The Board
of Directors may also elect at such meeting one or more Associate
Directors.

Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by
it or any associate director or officer elected by it and may
appoint or elect his successor.

Section 12. The Board of Directors may designate an officer
to be in charge of such of the departments or division of the
Company as it may deem advisable.

2
<PAGE>

ARTICLE III
Committees

Section I. Executive Committee

(A) The Executive Committee shall be composed
of not more than nine members who shall be selected by the Board
of Directors from its own members and who shall hold office
during the pleasure of the Board.

(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.

(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a week in each week the Board is not regularly
scheduled to meet. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when
a quorum is present.

(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.

(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the
Company, and shall direct the disposal of the same, in accordance
with such rules and regulations as the Board of Directors from
time to time make.

(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-
Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section.

3
<PAGE>

This By-Law shall be subject to implementation by Resolutions of
the Board of Directors presently existing or hereafter passed
from time to time for that purpose, and any provisions of these
By-Laws(other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions
of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct
and management of its affairs and business under all of the other
provisions of these By-Laws.

Section 2. Trust Committee

(A) The Trust Committee shall be composed of
not more than thirteen members who shall be selected by the Board
of Directors, a majority of whom shall be members of the Board of
Directors and who shall hold office during the pleasure of the
Board.

(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.

(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a month. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Trust Committee may be held at any time when a
quorum is present.

(D) Minutes of each meeting of the Trust
Committee shall be kept and promptly submitted to the Board of
Directors.

(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the
Company to whom supervision over the investment of trust funds
may be delegated when the Trust Committee is not in session.

Section 3. Audit Committee

(A) The Audit Committee shall be composed of
five members who shall be selected by the Board of Directors from
its own members, none of whom shall be an officer of the Company,
and shall hold office at the pleasure of the Board.

(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however
subject to the approval of the Board of Directors; it shall
consider all matters brought to its attention by the officer in

4
<PAGE>

charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or
with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper
for the transaction of its business, and a majority of its
Committee shall constitute a quorum.

Section 4. Compensation Committee

(A) The Compensation Committee shall be
composed of not more than five (5) members who shall be selected
by the Board of Directors from its own members who are not
officers of the Company and who shall hold office during the
pleasure of the Board.

(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought
to its attention by the management and from time to time review
the management of the Company, major organizational matters,
including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may
be called at any time by the Chairman of the Compensation
Committee, the Chairman of the Board of Directors, or the
President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may
be elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.

(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion
of all matters brought to the Board, with the exception that he
would have no right to vote. An associate director will be
eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active
directors.

Section 6. Absence or Disqualification of Any Member of a
Committee

(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws

5
<PAGE>

of this Company, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.

ARTICLE IV
Officers

Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further
authority and powers and shall perform such duties as the Board
of Directors may from time to time confer and direct. He shall
also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of
the Company.

Section 2. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed
upon him by statute or assigned to him by the Board of Directors
in the absence of the Chairman of the Board the President shall
have the powers and duties of the Chairman of the Board.

Section 3. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry
into effect all legal directions of the Executive Committee and
of the Board of Directors, and shall at all times exercise
general supervision over the interest, affairs and operations of
the Company and perform all duties incident to his office.

Section 4. There may be one or more Vice Presidents,
however denominated by the Board of Directors, who may at any
time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties
as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or
division to which they are assigned.

Section 5. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of
Directors, as well as the Committees thereof, to the keeping of
accurate minutes of all such meetings and to recording the same
in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other
meeting. He shall have custody of the corporate seal and shall
affix the same to any documents requiring such corporate seal and
to attest the same.

6
<PAGE>

Section 6. The Treasurer shall have general supervision
over all assets and liabilities of the Company. He shall be
custodian of and responsible for all monies, funds and valuables
of the Company and for the keeping of proper records of the
evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the
Company, and perform such other duties as may be assigned to him
from time to time by the Board of Directors of the Executive
Committee.

Section 7. There may be a Controller who shall exercise
general supervision over the internal operations of the Company,
including accounting, and shall render to the Board of Directors
at appropriate times a report relating to the general condition
and internal operations of the Company.

There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.

Section 8. The officer designated by the Board of Directors
to be in charge of the Audit Division of the Company with such
title as the Board of Directors shall prescribe, shall report to
and be directly responsible only to the Board of Directors.

There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of
the Auditor and such duties as may be prescribed by the officer
in charge of the Audit Division.

Section 9. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as
shall be determined from time to time by the Board of Directors,
who shall ex officio hold the office Assistant Secretary of this
Company and who may perform such duties as may be prescribed by
the officer in charge of the department or division to whom they
are assigned.

Section 10. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective
offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the
President and the officer in charge of the department or division
to which they are assigned.

ARTICLE V
Stock and Stock Certificates

Section 1. Shares of stock shall be transferrable on the

7
<PAGE>

books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.

Section 2. Certificate of stock shall bear the signature of
the President or any Vice President, however denominated by the
Board of Directors and countersigned by the Secretary or
Treasurer or an Assistant Secretary, and the seal of the
corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only
upon the books of the Company by the holder thereof or his
attorney, upon surrender of the certificate properly endorsed.
Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the
Executive Committee.

Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination
of the stockholders entitled to notice of, and to vote at, any
meeting of stockholders and any adjournment thereof, or entitled
to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with
obtaining such consent.

ARTICLE VI
Seal

Section 1. The corporate seal of the Company shall be in
the following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

8
<PAGE>

ARTICLE VII
Fiscal Year

Section 1. The fiscal year of the Company shall be the
calendar year.

ARTICLE VIII
Execution of Instruments of the Company

Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors,
shall have full power and authority to enter into, make, sign,
execute, acknowledge and/or deliver and the Secretary or any
Assistant Secretary shall have full power and authority to attest
and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the
business of this Company or in acting as executor, administrator,
guardian, trustee, agent or in any other fiduciary or
representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such
instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the
Executive Committee.

ARTICLE IX
Compensation of Directors and Members of Committees

Section 1. Directors and associate directors of the
Company, other than salaried officers of the Company, shall be
paid such reasonable honoraria or fees for attending meetings of
the Board of Directors as the Board of Directors may from time to
time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for
services as members of committees as the Board of Directors shall
from time to time determine and directors and associate directors
may be employed by the Company for such special services as the
Board of Directors may from time to time determine and shall be
paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.

9
<PAGE>

ARTICLE X
Indemnification

Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect
to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses
-------- -------
incurred by a Director officer in his capacity as a Director or
officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not
entitled to be indemnified under this Article or otherwise.

(C) If a claim for indemnification or payment
of expenses, under this Article X is not paid in full within
ninety days after a written claim therefor has been received by
the Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden
of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.

(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right
or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or
modification.

10
<PAGE>

ARTICLE XI
Amendments to the By-Laws

Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws
adopted at any regular or special meeting of the Board of
Directors by a vote of the majority of all the members of the
Board of Directors then in office.

I, . . . . . . . . . . . . . . . . . . . . .
Assistant Secretary of Wilmington Trust
Company, do hereby certify that the foregoing
is a true and correct copy of the By-Laws of
the Wilmington Trust Company.

Date. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . .
Assistant Secretary

11
<PAGE>

EXHIBIT C

Section 321(b) Consent

Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon requests
therefor.

WILMINGTON TRUST COMPANY

Dated: June 13, 1996 By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>

EXHIBIT "D"

NOTICE

This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- -----------------
Name of Bank City

in the State of DELAWARE , at the close of business on March 31, 1996.
------------

ASSETS Thousands of dollars

Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins. . . . . . . 198,158
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . . . 0
Hold-to-maturity securities. . . . . . . . . . . . . . . . . . . . . . 536,638
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . 862,050
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,000
Securities purchased under agreements to resell. . . . . . . . . . . . . 25,000
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,404,372
LESS: Allowance for loan and lease losses. . . . . . 48,153
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve 3,356,219
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . 76,915
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . 16,314
Investments in unconsolidated subsidiaries and associated companies. . . . 146
Customers' liability to this bank on acceptances outstanding . . . . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,403
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,240
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,265,083

CONTINUED ON NEXT PAGE
<PAGE>

LIABILITIES

Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . 3,450,823
Noninterest-bearing . . . . . . . . 689,843
Interest-bearing. . . . . . . . . . 2,760,980
Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . . 99,885
Securities sold under agreements to repurchase . . . . . . . . . . . . . 198,506
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . 38,856
Trading liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . . . . /////
With original maturity of one year or less . . . . . . . . . . . . 930,611
With original maturity of more than one year . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,832
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,847,513
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . 354,791
Net unrealized holding gains (losses) on available-for-sale securities . . . 161
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . 417,570
Total liabilities, limited-life preferred stock, and equity capital. . 5,265,083

<PAGE>

Exhibit 5.14

Registration No.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

USAIR, INC.

(Exact name of obligor as specified in its charter)

Delaware 53-0218143
(State of incorporation) (I.R.S. employer identification no.)

2345 Crystal Drive
Arlington, Virginia 22227
(Address of principal executive offices) (Zip Code)

7.50% Class B Enhanced Equipment Notes
(Title of the indenture securities)

================================================================================
<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the trustee and
upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

WILMINGTON TRUST COMPANY
[SEAL]

Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
--------------------------- --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE>

EXHIBIT A

AMENDED CHARTER

Wilmington Trust Company

Wilmington, Delaware

As existing on May 9, 1987
<PAGE>

Amended Charter

Act of Incorporation

Wilmington Trust Company

Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

First: - The name of this corporation is Wilmington Trust Company.

Second: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle; the
name of its resident agent is Wilmington Trust Company whose address is
Rodney Square North, in said City. In addition to such principal office, the
said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at Greenville, New
Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as may
be authorized from time to time by the agency or agencies of the government
of the State of Delaware empowered to confer such authority.

Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are to
do any or all of the things herein mentioned as fully and to the same extent
as natural persons might or could do and in any part of the world, viz.:

(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common
<PAGE>

seal, and alter the seal at pleasure, to hold, purchase, convey,
mortgage or otherwise deal in real and personal estate and property,
and to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to discount
bills, notes or other evidences of debt, to receive deposits of money,
or securities for money, to buy gold and silver bullion and foreign
coins, to buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.

(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.

(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.

(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.

(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.

(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
2
<PAGE>

(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.

(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person, or
persons, corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit, order, or
decree to be entered in any court of record within the State of
Delaware or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or elsewhere.

(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.

(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.

(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
3
<PAGE>

corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds, as and
when the Board of Directors shall determine, and in the promotion of
its said corporate business of investment and to the extent authorized
by law, to lease, purchase, hold, sell, assign, transfer, pledge,
mortgage and convey real and personal property of any name and nature
and any estate or interest therein.

(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:

(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.

(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.

(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any
4
<PAGE>

manner whatever dispose of property, real, personal or mixed, wherever
situated.

(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.

(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.

(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.

Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").

(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of Directors
each of said series to be distinctly designated. All shares of any one
series of Preferred Stock shall be alike in every particular, except that
there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights of each
5
<PAGE>

such series, and the qualifications, limitations or restrictions thereof, if
any, may differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of Paragraph
(c) of this Article Fourth, the Board of Directors of the Corporation is
hereby expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of a particular series of
Preferred Stock, the voting powers and the designations, preferences and
relative, optional and other special rights, and the qualifications,
limitations and restrictions of such series, including, but without limiting
the generality of the foregoing, the following:

(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;

(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;

(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;

(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.

(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.

(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
6
<PAGE>

(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.

(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b) of
this Article Fourth), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be entitled
to receive such dividends as may be declared from time to time by the Board
of Directors.

(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
Fourth), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.

(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article Fourth, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.

(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any preemptive
right to purchase or subscribe for any unissued stock of any
7
<PAGE>

class or series or any additional shares of any class or series to be issued
by reason of any increase of the authorized capital stock of the Corporation
of any class or series, or bonds, certificates of indebtedness, debentures
or other securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to purchase stock
of any class or series, but any such unissued stock, additional authorized
issue of shares of any class or series of stock or securities convertible
into or exchangeable for stock, or carrying any right to purchase stock, may
be issued and disposed of pursuant to resolution of the Board of Directors
to such persons, firms, corporations or associations, whether such holders
or others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.

(e) The relative powers, preferences and rights of each series of Preferred
Stock in relation to the relative powers, preferences and rights of each
other series of Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or resolutions adopted
pursuant to authority granted in section (b) of this Article Fourth and the
consent, by class or series vote or otherwise, of the holders of such of the
series of Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other series of
Preferred Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding series,
or any of them; provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be therein fixed)
of the outstanding shares of such series voting thereon shall be required
for the issuance of any or all other series of Preferred Stock.

(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors of
the Corporation shall determine and on such terms and for such consideration
as shall be fixed by the Board of Directors.

(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
8
<PAGE>

(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.

Fifth: - (a) The business and affairs of the Corporation shall be conducted
and managed by a Board of Directors. The number of directors constituting
the entire Board shall be not less than five nor more than twenty-five as
fixed from time to time by vote of a majority of the whole Board, provided,
however, that the number of directors shall not be reduced so as to shorten
the term of any director at the time in office, and provided further, that
the number of directors constituting the whole Board shall be twenty-four
until otherwise fixed by a majority of the whole Board.

(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the whole
Board permits, with the term of office of one class expiring each year. At
the annual meeting of stockholders in 1982, directors of the first class
shall be elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be elected to hold
office for a term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships resulting
from any increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less than a
quorum, and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of the
class for which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of directors shall
shorten the term of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or the
entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-thirds
or more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called for
9
<PAGE>

that purpose.

(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered or
mailed by first class United States mail, postage prepaid, to the Secretary
of the Corporation not less than 14 days nor more than 50 days prior to any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the Corporation not later than the close of
the seventh day following the day on which notice of the meeting was mailed
to stockholders. Notice of nominations which are proposed by the Board of
Directors shall be given by the Chairman on behalf of the Board.

(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.

(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.

(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.

Sixth: - The Directors shall choose such officers, agent and servants as may
be provided in the By-Laws as they may from time to time find necessary or
proper.

Seventh: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.

Eighth: - This Act shall be deemed and taken to be a private Act.

Ninth: - This Corporation is to have perpetual existence.
10
<PAGE>

Tenth: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or in
the By-Laws of the Company, shall have and may exercise all of the powers of
the Board of Directors in the management of the business and affairs of the
Corporation, and shall have power to authorize the seal of the Corporation
to be affixed to all papers which may require it.

Eleventh: - The private property of the stockholders shall not be liable for
the payment of corporate debts to any extent whatever.

Twelfth: - The Corporation may transact business in any part of the world.

Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a vote
of the majority of the entire Board. The stockholders may make, alter or
repeal any By-Law whether or not adopted by them, provided however, that any
such additional By-Laws, alterations or repeal may be adopted only by the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class).

Fourteenth: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the Board,
and the Directors may keep the books of the Company outside of the State of
Delaware at such places as may be from time to time designated by them.

Fifteenth: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article Fifteenth:

(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or

(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value
11
<PAGE>

of $1,000,000 or more, or

(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or

(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or

(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.

(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).

(b) The provisions of section (a) of this Article Fifteenth shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.

(1) A "person" shall mean any individual firm, corporation or other entity.

(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or

(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.

(3) A person shall be the "beneficial owner" of any Voting Shares :

(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or

(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or

(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.

(4) The outstanding Voting Shares shall include shares
13
<PAGE>

deemed owned through application of paragraph (3) above but shall not
include any other Voting Shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or options or
otherwise.

(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.

(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each class
of equity security is owned, directly or indirectly, by the Corporation.

(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,00,000 or more.

(e) Nothing contained in this Article Fifteenth shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.

Sixteenth: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of Incorporation
by the By-Laws), the affirmative vote of the holders of at least two-thirds
of the outstanding shares of the capital stock of the Corporation entitled
to vote generally in the election of directors (considered for this purpose
as one class) shall be required to amend, alter or repeal any provision of
Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of
Incorporation.
14
<PAGE>

Seventeenth: (a) a Director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation
Laws as the same exists or may hereafter be amended.

(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
15
<PAGE>

I
------------------------------------------

_________________ Secretary of Wilmington Trust Company, do hereby
certify that the foregoing is a true and correct copy of the
Charter or Act of Incorporation of Wilmington Trust Company, as
heretofore amended and changed from time to time, copies of which,
certified by the Secretary of the State of Delaware, are on file
in the office of Wilmington Trust Company.

Date __________________

_______________________________________
Secretary
<PAGE>

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

As existing on February 21, 1991
<PAGE>

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
Stockholders' Meetings

Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.

ARTICLE II
Directors

Section 1. The number and classification of the Board of Directors shall be
as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall
<PAGE>

be held on the third Thursday of each month at the principal office of the
Company, or at such other place and time as may be designated by the Board of
Directors, the Chairman of the Board, or the President .

Section 6. Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

Section 10. The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person. The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, may appoint at any time such other
committees and elect or appoint such other officers as it may deem advisable.
The Board of Directors may also elect at such meeting one or more Associate
Directors.

Section 11. The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

Section 12. The Board of Directors may designate an officer to be in charge
of such of the departments or division of the Company as it may deem advisable.

2
<PAGE>

ARTICLE III
Committees

Section I. Executive Committee

(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at least once a week in each week
the Board is not regularly scheduled to meet. A majority of its members shall be
necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

(D) Minutes of each meeting of the Executive Committee shall be
kept and submitted to the Board of Directors at its next meeting.

(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section.
3
<PAGE>

This By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws(other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.

Section 2. Trust Committee

(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

(B) The Trust Committee shall have general supervision over the
Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority of
its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when a
quorum is present.

(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.

(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

Section 3. Audit Committee

(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

(B) The Audit Committee shall have general supervision over the
Audit Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in
4
<PAGE>

charge of the Audit Division, review all reports of examination of the Company
made by any governmental agency or such independent auditor employed for that
purpose, and make such recommendations to the Board of Directors with respect
thereto or with respect to any other matters pertaining to auditing the Company
as it shall deem desirable.

(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

Section 4. Compensation Committee

(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board .

(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may be called at any
time by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

Section 6. Absence or Disqualification of Any Member of a Committee

(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws
5
<PAGE>

of this Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.

ARTICLE IV
Officers

Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.

Section 2. The President shall have the powers and duties pertaining to the
office of the President conferred or imposed upon him by statute or assigned to
him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

Section 3. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

Section 4. There may be one or more Vice Presidents, however denominated by
the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

Section 5. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE>

Section 6. The Treasurer shall have general supervision over all assets and
liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.

Section 7. There may be a Controller who shall exercise general supervision
over the internal operations of the Company, including accounting, and shall
render to the Board of Directors at appropriate times a report relating to the
general condition and internal operations of the Company.

There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

Section 8. The officer designated by the Board of Directors to be in charge
of the Audit Division of the Company with such title as the Board of Directors
shall prescribe, shall report to and be directly responsible only to the Board
of Directors.

There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

Section 9. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

Section 10. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

ARTICLE V
Stock and Stock Certificates

Section 1. Shares of stock shall be transferrable on the

7
<PAGE>

books of the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.

Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall recite
that the stock represented thereby is transferrable only upon the books of the
Company by the holder thereof or his attorney, upon surrender of the certificate
properly endorsed. Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate or certificates
shall be issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of Directors
or the Executive Committee.

Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.

ARTICLE VI
Seal

Section 1. The corporate seal of the Company shall be in the following
form:

Between two concentric circles the words "Wilmington Trust
Company" within the inner circle the words "Wilmington,
Delaware."
8
<PAGE>

ARTICLE VII
Fiscal Year

Section 1. The fiscal year of the Company shall be the calendar year.

ARTICLE VIII
Execution of Instruments of the Company

Section 1. The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.

ARTICLE IX
Compensation of Directors and Members of Committees

Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
9
<PAGE>

ARTICLE X
Indemnification

Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.

(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
10
<PAGE>

ARTICLE XI
Amendments to the By-Laws

Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.

I, . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assistant Secretary of Wilmington Trust Company, do hereby
certify that the foregoing is a true and correct copy of the
By-Laws of the Wilmington Trust Company.

Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . .
Assistant Secretary

11
<PAGE>

EXHIBIT C

Section 321(b) Consent

WILMINGTON TRUST COMPANY

Dated: June 13, 1996 By: /s/ Emmett R. Harmon
--------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>

EXHIBIT "D"

NOTICE

This form is intended to assist state nonmember banks
and savings banks with state publication requirements.
It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for
your state publication requirements.

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------- --------------------
Name of Bank City

in the State of DELAWARE , at the close of business on March 31, 1996.
------------

ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins. . . . . . . 198,158
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . 536,638
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . 862,050
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,000
Securities purchased under agreements to resell. . . . . . . . . . . . . 25,000
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,404,372
LESS: Allowance for loan and lease losses. . . . . . 48,153
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and
reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 3,356,219
Premises and fixed assets (including capitalized leases). . . . . . . 76,915
Other real estate owned. . . . . . . . . . . . . .. . . . . . . . . . . . 16,314
Investments in unconsolidated subsidiaries and associated companies. . . 146
Customers' liability to this bank on acceptances outstanding . . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,403
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,240
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,265,083

CONTINUED ON NEXT PAGE
<PAGE>

LIABILITIES

Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . 3,450,823
Noninterest-bearing . . . . . . . . 689,843
Interest-bearing. . . . . . . . . . 2,760,980
Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . . 99,885
Securities sold under agreements to repurchase . . . . . . . . . . . . . 198,506
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . .38,856
Trading liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . 930,611
With original maturity of more than one year . . . . . . . . . . . .28,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,832
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 4,847,513
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . 354,791
Net unrealized holding gains (losses) on available-for-sale securities . . . 161
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . 417,570
Total liabilities, limited-life preferred stock, and equity capital. . 5,265,083

<PAGE>
Exhibit 5.15

Registration No.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

USAIR, INC.

(Exact name of obligor as specified in its charter)

Delaware 53-0218143
(State of incorporation) (I.R.S. employer identification no.)

2345 Crystal Drive
Arlington, Virginia 22227
(Address of principal executive offices) (Zip Code)

8.93% Class C Enhanced Equipment Notes
(Title of the indenture securities)

================================================================================

<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

WILMINGTON TRUST COMPANY
[SEAL]

Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
-------------------------- ----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE>

EXHIBIT A

AMENDED CHARTER

Wilmington Trust Company

Wilmington, Delaware

As existing on May 9, 1987
<PAGE>

Amended Charter

Act of Incorporation

Wilmington Trust Company

First: - The name of this corporation is Wilmington Trust
Company.

(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
<PAGE>

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers
of every description, and to carry on the business of
conveyancing in all its branches.

2
<PAGE>

3
<PAGE>

(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.

(3) To take, hold, own, deal in, mortgage or otherwise
lien, and to lease, sell, exchange, transfer, or in any

4
<PAGE>

manner whatever dispose of property, real, personal or
mixed, wherever situated.

Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock,
par value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock,
par value $1.00 per share (hereinafter referred to as
"Common Stock").

5
<PAGE>

(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and

6
<PAGE>

7
<PAGE>

8
<PAGE>

9
<PAGE>

that purpose.

Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.

Eighth: - This Act shall be deemed and taken to be a private
Act.

Ninth: - This Corporation is to have perpetual existence.

10
<PAGE>

<PAGE>

power to authorize the seal of the Corporation to be affixed
to all papers which may require it.

Eleventh: - The private property of the stockholders shall
not be liable for the payment of corporate debts to any
extent whatever.

Twelfth: - The Corporation may transact business in any part
of the world.

Fifteenth: - (a) In addition to any affirmative vote
required by law, and except as otherwise expressly provided
in sections (b) and (c) of this Article Fifteenth:

(A) any merger or consolidation of the
<PAGE>

Corporation or any Subsidiary (as hereinafter defined)
with or into (i) any Interested Stockholder (as
hereinafter defined) or (ii) any other corporation
(whether or not itself an Interested Stockholder), which,
after such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested Stockholder, or

11
<PAGE>

of $1,000,000 or more, or

(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or

(2) The term "business combination" as used in
this Article Fifteenth shall mean any transaction
which is referred to any one or more of clauses
(A) through (E) of paragraph 1 of the section (a).

12
<PAGE>

(1) A "person" shall mean any individual firm, corporation
or other entity.

(A) is the beneficial owner, directly or indirectly,
of more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial
owner, directly or indirectly, of not less than 10% of
the then outstanding voting Shares, or

(3) A person shall be the "beneficial owner" of any Voting
Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or

(4) The outstanding Voting Shares shall include shares

13
<PAGE>

(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder from
any fiduciary obligation imposed by law.

14
<PAGE>

15
<PAGE>

I ___________________________________________

Date __________________

_______________________________________
Secretary
<PAGE>

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

As existing on February 21, 1991
<PAGE>

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
Stockholders' Meetings

Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.

ARTICLE II
Directors

Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.

Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.

Section 4. The affairs and business of the Company shall be
managed and conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall
<PAGE>

Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.

Section 12. The Board of Directors may designate an officer
to be in charge of such of the departments or division of the
Company as it may deem advisable.

2
<PAGE>

ARTICLE III
Committees

Section I. Executive Committee

(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.

(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.

(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws;
and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section.

3
<PAGE>

Section 2. Trust Committee

(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.

(D) Minutes of each meeting of the Trust
Committee shall be kept and promptly submitted to the Board of
Directors.

Section 3. Audit Committee

4
<PAGE>

Section 4. Compensation Committee

(C) Meetings of the Compensation Committee may
be called at any time by the Chairman of the Compensation
Committee, the Chairman of the Board of Directors, or the
President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may
be elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.

Section 6. Absence or Disqualification of Any Member of a
Committee

(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws

5
<PAGE>

ARTICLE IV
Officers

6
<PAGE>

There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.

ARTICLE V
Stock and Stock Certificates

Section 1. Shares of stock shall be transferrable on the

7
<PAGE>

books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.

ARTICLE VI
Seal

Section 1. The corporate seal of the Company shall be in
the following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

8
<PAGE>

ARTICLE VII
Fiscal Year

Section 1. The fiscal year of the Company shall be the
calendar year.

ARTICLE VIII
Execution of Instruments of the Company

ARTICLE IX
Compensation of Directors and Members of Committees

9
<PAGE>

ARTICLE X
Indemnification

10
<PAGE>

ARTICLE XI
Amendments to the By-Laws

Date. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . .
Assistant Secretary

11
<PAGE>

EXHIBIT C

Section 321(b) Consent

WILMINGTON TRUST COMPANY

Dated: June 13, 1996 By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>

EXHIBIT "D"

NOTICE

This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been approved by
any state banking authorities. Refer to your appropriate state banking
authorities for your state publication requirements.

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- -------------------
Name of Bank City

in the State of DELAWARE , at the close of business on March 31, 1996.
-------------

ASSETS Thousands of dollars

Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins. . . . . . . 198,158
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . . 536,638
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . 862,050
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,000
Securities purchased under agreements to resell. . . . . . . . . . . . . 25,000
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . 3,404,372
LESS: Allowance for loan and lease losses. . . . . . 48,153
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve 3,356,219
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . 76,915
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . 16,314
Investments in unconsolidated subsidiaries and associated companies. . . . . 146
Customers' liability to this bank on acceptances outstanding . . . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,403
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,240
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,265,083

CONTINUED ON NEXT PAGE
<PAGE>

LIABILITIES

EQUITY CAPITAL

Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . 354,791
Net unrealized holding gains (losses) on available-for-sale securities . . 161
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . 417,570
Total liabilities, limited-life preferred stock, and equity capital. . 5,265,083

2
<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 13th day
of June, 1996.

WILMINGTON TRUST COMPANY
[SEAL]

Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
--------------------------- ------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
USAir, Inc.:

We consent to the use of our report included herein in the registration
statement.

KPMG Peat Marwick LLP

Washington D.C.
July 2, 1996

<PAGE>
Exhibit 23.5

[LOGO OF AIRCLAIMS APPEARS HERE]

Our Ref: ROW/kw

USAir Inc. 27 June, 1996
2345 Crystal Drive
Arlington
Virginia 22227
USA

Ladies and Gentleman

Airclaims Limited consents to the inclusion of our appraisal report, dated 31
December, 1995, regarding nine Boeing 757-2B7 aircraft to be referred to within,
or included as an exhibit to, any registration statement that may be filed by
USAir, Inc. with the Securities and Exchange Commission in connection with or
related to the financing or refinancing of such aircraft.

Very truly yours,

/s/ Richard Owen Walker

Richard Owen Walker
Aviation Analyst
Appraiser - International Society of Transport Aircraft Trading

<PAGE>

[LOGO OF AIRCRAFT INFORMATION SERVICES, INC. APPEARS HERE]

USAir Inc.
2345 Crystal Drive
Arlington, Virginia 22227

Ladies and Gentlemen:

Aircraft Information Services, Inc. ("AISI") consents to the inclusion of our
appraisal report, dated 31 December, 1995, regarding nine Boeing 757-2B7
aircraft, to be referred to within, or included as an exhibit to, any
registration statement that may be filed by USAir, Inc. with the Securities and
Exchange Commission in connection with or related to the financing or
refinancing of such aircraft.

Very truly yours,

/s/ Fred E. Bearden

Fred E. Bearden
President

<PAGE>

[LOGO OF BK ASSOCIATES INC. APPEARS HERE]
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272 . Fax (516) 365-6287

June 26, 1996

USAir Inc.
2345 Crystal Drive
Arlington, VA 22227

Ladies & Gentlemen:

BK Associates, Inc. consents to the inclusion of our appraisal report, dated
December 31,
1995, regarding nine Boeing 757-2B7 aircraft, to be referred to within,
or included as an exhibit to, any registration statement that may be filed by
USAir, Inc. with the Securities and Exchange Commission in connection with or
related to the financing or refinancing of such aircraft.

Sincerely yours,

BK ASSOCIATES, INC.

/s/ William H. Bath

William H. Bath
President
ISTAT Certified Senior Appraiser

<PAGE>

Exhibit 99.1

OTHER Subject to Completion
---------------------

LETTER OF TRANSMITTAL

For Tender of all Outstanding 6.76% Class A, 7.50% Class B and
8.93% Class C Enhanced Equipment Notes
In Exchange for
6.76% Class A, 7.50% Class B
and 8.93% Class C Enhanced Equipment Notes
of
USAIR, INC.
Pursuant to the Prospectus, dated ______, 1996

=============================================================
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ___________, 1996 (THE "EXPIRATION DATE") UNLESS
OTHERWISE EXTENDED BY USAIR, INC. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
=============================================================

TO: Wilmington Trust Company, Exchange Agent

By Hand, Overnight Courier or by Mail:
--------------------------------------

Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
Attention: David A. Vanaskey, Jr.
Corporate Trust Administration

By Facsimile:
------------

Wilmington Trust Company
(302) 651 - 8464
----- -------

For information, telephone: Wilmington Trust Company (302) 651-8726 or USAIR,
Inc. (703) 418-5918.

Delivery of this instrument to an address, other than as set forth above,
will not constitute a valid delivery. The instructions contained herein should
be read carefully before this Letter of Transmittal is completed.
<PAGE>

The undersigned acknowledges receipt of the Prospectus dated
______________, 1996 (the "Prospectus") of USAir, Inc., a Delaware corporation
(the "Company"), and this Letter of Transmittal and Instructions hereto (the
"Letter"), which together constitute the Company's offer (the "Exchange Offer")
to exchange $1,000 in principal amount of its (i) 6.76% Class A Enhanced
Equipment Notes (the "New Class A Notes") for each $1,000 in principal amount of
outstanding 6.76% Class A Enhanced Equipment Notes (the "Old Class A Notes"),
(ii) 7.50% Class B Enhanced Equipment Notes (the "New Class B Notes") for each
$1,000 in principal amount of outstanding 7.50% Class B Enhanced Equipment Notes
(the "Old Class B Notes") and (iii) 8.93% Class C Enhanced Equipment Notes (the
"New Class C Notes") for each $1,000 in principal amount of outstanding 8.93%
Class C Enhanced Equipment Notes (the "Old Class C Notes"). The Old Class A
Notes, the Old Class B Notes and the Old Class C Notes are collectively referred
to as the "Old Notes". The New Class A Notes, the New Class B Notes and the New
Class C Notes are collectively referred to as the "New Notes".

The terms of the New Notes are identical in all respects to the terms of
the Old Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the New Notes are freely transferable by holders thereof (except as
provided herein or in the Prospectus) and are not subject to any covenant
regarding registration under the Securities Act of 1933, as amended (the "Act").

The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended.
The Company shall notify the holders of the Old Notes of any extension by means
of a press release or other public announcement prior to 9:00 A.M., New York
City time, on the next business day after the previously scheduled Expiration
Date.

This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of Old Notes is to be
made by book-entry transfer to the account maintained by the Exchange Agent at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in "The Exchange Offer-How to Tender" section of the
Prospectus. Holders of Old Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Notes into the Exchange Agent's account at

2
<PAGE>

the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer-How to Tender" section of
the Prospectus. See Instruction 1. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.

The instructions included with this Letter must be followed. Questions and
requests for assistance or for additional copies of the Prospectus and this
Letter may be directed to the Exchange Agent.

Capitalized terms used but not defined herein have the meanings given to
them in the Prospectus.

The undersigned has completed, executed and delivered this Letter to
indicate the action he or she desires to take with respect to the Exchange
Offer.

PLEASE READ THIS ENTIRE LETTER AND THE PROSPECTUS CAREFULLY BEFORE
PROVIDING INFORMATION.

THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES" BELOW
AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS SET
FORTH IN SUCH BOX BELOW.

3
<PAGE>

List below the Old Notes to which this Letter relates. If the space
provided below is inadequate the certificate numbers and principal amount of Old
Notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
====================================================================================
DESCRIPTION OF OLD NOTES 1 2 3
- ------------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Principal Principal
Registered Holder(s) Certificate Amount of Amount
(Please fill in, if blank) Numbers(s)* Old Note(s) Tendered**
- ------------------------------------------------------------------------------------

-------------------------------------------------------

-------------------------------------------------------
Total
- ------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in column
2. See Instruction 4. Old Notes tendered hereby must be in denominations of
principal amount of $1,000 or an integral multiple thereof.
====================================================================================

</TABLE>

[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT OR ITS AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution_______________________

Account Number______________________________________

Transaction Code Number_____________________________

[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:

Name(s) of Registered Holder(s)________________________

Window Ticket Number (if any) ______________________

Name of Eligible Institution that
Guaranteed Delivery_________________________________

Date of Execution of Notice of

4
<PAGE>

Guaranteed Delivery_________________________________

If Delivered by Book-Entry Transfer, Complete the Following:

Account Number______________________________________

Transaction Code Number ____________________________

[ ] CHECK HERE IF NEW NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN PERSON
SIGNING THIS LETTER OF TRANSMITTAL:

Name________________________________________________
(Please Print)

Address_____________________________________________

____________________________________________________
(Including Zip Code)

[ ] CHECK HERE IF NEW NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM THAT
LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:

Address_____________________________________________

____________________________________________________
(Including Zip Code)

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENT OR SUPPLEMENT
THERETO:

Name________________________________________________
(Please Print)

Address_____________________________________________

5
<PAGE>

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby exchanges,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby. The undersigned
irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact to cause the Old Notes to be assigned, transferred and
exchanged.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes or any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes and that neither the holder of such Old Notes nor
any such other person is an "affiliate," as defined in Rule 405 under the Act,
of the Company.

The undersigned further agrees that acceptance of any tendered Old Notes by
the Company and the issuance of New Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement (as defined in the Prospectus) and that the Company shall have
no further obligations or liabilities thereunder. The undersigned also
acknowledges that this Exchange Offer is being made in reliance on an
interpretation by the staff of the Securities and Exchange Commission (the
"SEC"), as set forth in no-action letters issued to third parties, that the New
Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Act), without compliance with the registration and prospec-

6
<PAGE>

tus delivery provisions of the Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in a distribution of New Notes. If
the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of New Notes.
If any holder is an affiliate of the Company or is engaged in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Act. If the
undersigned is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes, it represents that the Old Notes to be exchanged for
the New Notes were acquired by it as a result of market-making activities or
other trading activities and that it will deliver a prospectus in connection
with any resale of such New Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Act.

The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
exchange, assignment and transfer of the Old Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder will be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and will not be affected by, and will
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.

Unless otherwise indicated above, please deliver the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Old Notes, please credit the account indicated above at the Book-
Entry Transfer Facility. Similarly, unless otherwise indicated above, please
send the New Notes (and, if applicable, substitute certificates representing Old
Notes for any Old Notes not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Old Notes."

7
<PAGE>

==========================================================================
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)

X
________________________________________________________________________

X
________________________________________________________________________
Signature(s) of Holder(s)

Dated______________________________ _________________________________
Area Code and Telephone Number

IF A HOLDER IS TENDERING ANY OLD NOTES, THIS LETTER MUST BE SIGNED BY
REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) FOR THE
OLD NOTES OR BY ANY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY
ENDORSEMENTS AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY A
TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A
CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY,
PLEASE SET FORTH THE FULL TITLE OF SUCH PERSONS. SEE INSTRUCTION 3.

Name(s)________________________________________________________________________

______________________________________________________________________________
(Please Type or Print)

Capacity (full title)__________________________________________________________

Address_______________________________________________________________________

______________________________________________________________________________
(Including Zip Code)

Area Code and Telephone No.___________________________________________________

GUARANTEE OF SIGNATURE(S)
(If Required - See Instruction 3)

Signature(s) Guaranteed by an Eligible Institution

______________________________________________________________________________
(Authorized Signature)

Name__________________________________________________________________________

Title_________________________________________________________________________

Address_______________________________________________________________________

______________________________________________________________________________
(Including Zip Code)

Name of Firm__________________________________________________________________

Area Code and Telephone No.___________________________________________________

Dated___________________________
================================================================================

8
<PAGE>

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS TO THE
EXCHANGE OFFER

1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
-----------------------------------------------------------------
Certificates for all physically delivered Old Notes or confirmation of any book-
entry transfer to the Exchange Agent's or its agent's account at a book-entry
facility of Old Notes tendered by book-entry transfer, as well as a properly
completed and duly executed copy of this Letter and any other documents required
by this Letter, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date or the tendering holder must comply
with the guaranteed delivery procedures set forth below. The method of delivery
of this Letter, the Old Notes and any other required documents is at the
election and risk of the tendering holders, but except as otherwise provided
below, the delivery will be deemed made when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. No Letter or confirmation should be sent to the Company.

Holders of Old Notes whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer--How to Tender" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to the Expiration Date, the Exchange Agent must receive from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, or a Book-Entry Confirmation, together with a properly completed and duly
executed Letter (or a facsimile thereof) and any other documents required by the
Letter will be deposited by the Eligible Institution with the

9
<PAGE>

Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may
be, and all other documents required by this Letter, are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.

All questions as to the validity, form, eligibility (including time or
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company whose determinations will be final and binding. The Company
reserves the absolute right to reject any or all tenders that are not in proper
form or the acceptance of which, in the opinion of the Company's counsel, could
be unlawful. No alternative, conditional, irregular or contingent tenders will
be accepted. All tendering holders, by execution of this Letter, waive any
right to receive notice of the acceptance of their Old Notes for exchange.

None of the Company, the Exchange Agent or any other person shall be
obligated to give notice of any defect or irregularity in any tender, nor shall
any of them incur any liability for failure to give any such notice.

See "The Exchange Offer" section of the Prospectus.

2. Withdrawals. A tender pursuant to the Exchange Offer may be
-----------
withdrawn, subject to the procedures described in this Letter and in the
Prospectus, at any time prior to the Expiration Date. To be effective with
respect to the tender of Old Notes, a notice of withdrawal must (i) be received
by the Exchange Agent before the Expiration Date, (ii) specify the name of the
person who tendered the Old Notes, (iii) indicate the number of Old Notes, the
principal amount, the certificate numbers and series thereof being withdrawn,
(iv) be signed by the registered holder in the same manner as the original
signature on this Letter (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Company that the person withdrawing
the tender has succeeded to the beneficial ownership of the Old Notes and (v)
include a statement that such holder is withdrawing his election to have such
Old Notes exchanged. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer, any notice of withdrawal must specify the name and
number of the account at the book entry transfer facility to be credited with
the withdrawn Old Notes or otherwise comply with the book-entry transfer
facility procedure.

3. Signature on this Letter; Guarantee of Signatures. If this Letter is
-------------------------------------------------
signed by the registered holder of the Old

10
<PAGE>

Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever. If any
of the Old Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter.

If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to the
Company of their authority so to act must be submitted with this Letter, unless
waived by the Company.

All signatures on this Letter or certificates for Old Notes required by
this Instruction 3 must be guaranteed by a firm that is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD"), or by a commercial bank or trust company having an
office or correspondent in the United States or by such other Eligible
Institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended (each of the foregoing being referred to as an "Eligible
Institution") unless the Old Notes tendered pursuant hereto are tendered: (i) by
the registered holder of Old Notes (which term, for purposes of the Exchange
Offer, includes any participant in the Book-Entry Transfer Facility system whose
name appears on a security position listing as the holder of such Old Notes) who
has not checked the box relating to special issuances or the box relating to
special delivery on this Letter or (ii) for the account of an Eligible
Institution.

4. Partial Tenders (not applicable to holders of Old Notes who tender by
---------------------------------------------------------------------
book-entry transfer). If less than all the Old Notes evidenced by a submitted
- --------------------
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Old Notes to be tendered in the box above entitled
"Description of Old Notes - Principal Amount Tendered." A reissued certificate
representing the balance of Old Notes not tendered will be sent to such
tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.

5. Transfer Taxes. The Company shall pay all transfer taxes, if any,
--------------
applicable to the transfer and exchange of Old Notes to it or its order pursuant
to the Exchange Offer. If, however, New Notes and/or substitute Old Notes not
exchanged are to be delivered to, or are to be registered or issued in

11
<PAGE>

the name of, any person other than the registered holder of the Old Notes
tendered hereby, or if tendered Old Notes are registered in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer and exchange of Old Notes to the
Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other person)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to the tendering holder.

Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.

6. Waiver of Conditions. The Company reserves the absolute right to
--------------------
amend or waive satisfaction of any or all of the specified conditions to the
Exchange Offer as set forth in the Prospectus.

7. Requests for Assistance or Additional Copies. Questions relating to
--------------------------------------------
the procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter, may be directed to the Exchange Agent at the address
and telephone number set forth above. In addition, questions relating to the
Exchange Offer, as well as requests for assistance or additional copies of the
Prospectus and this Letter, may be directed to the Company at USAir, Inc., 2345
Crystal Drive, Arlington, VA 22227, Attention: Treasurer, (703) 418-5918.

8. Tax Identification Number. Federal income tax law generally requires
-------------------------
that a tendering holder whose Old Notes are accepted for exchange provide the
Company (as payor) with such holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, which in the case of a tendering holder
who is an individual, is his or her social security number. If the Company is
not provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to such tendering holder of New Notes may be
subject to backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an overpayment of
taxes, a refund may be obtained.

Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these

12
<PAGE>

backup withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.

To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding or (ii) the
holder has been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.

9. Mutilated, Lost Stolen or Destroyed Old Notes. Any holder whose Old
---------------------------------------------
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.

13
<PAGE>

TO BE COMPLETED BY ALL TENDERING HOLDERS

(See Instruction 8)

PAYOR'S NAME: USAIR, INC.
<TABLE>
<S> <C> <C>
============================================================================================================================
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN TIN:__________________
Form W-9 IN THE BOX AT RIGHT AND CERTIFY Social Security Number or
Department of Treasury BY SIGNING AND DATING BELOW. Employer Identification Number
Internal Revenue Service -------------------------------------------------------------------------------------

Part 2--TIN Applied For [_]
Payer's Request for Taxpayer
Identification Number ("TIN") -------------------------------------------------------------------------------------
and Certification CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT:

(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me).
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.

SIGNATURE______________________________________
Date___________________
============================================================================================================================
</TABLE>

================================================================================
You must cross out item (2) of the above certification if you have notified by
the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
================================================================================

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF
YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9

================================================================================
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.

________________________________________________________ ____________________
Signature Date
================================================================================