The
information in this preliminary prospectus supplement is not
complete and may be changed. This preliminary prospectus
supplement and the accompanying prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is
not permitted.
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Filed
pursuant to rule 424(b)(5)
Registration No: 333-137806
SUBJECT TO COMPLETION, DATED
SEPTEMBER 22, 2009
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 4, 2006)
26,315,790 Shares
US Airways Group,
Inc.
Common Stock
We are selling 26,315,790 shares of our common stock.
We have granted the underwriter an option to purchase up to
3,947,369 additional shares to cover over-allotments.
Our common stock is listed on the New York Stock Exchange under
the symbol “LCC.” The last reported price of the
common stock on September 22, 2009, was $5.23 per share.
Investing in our common stock involves risks. See “Risk
Factors” beginning on
page S-3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement and the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriter has agreed to purchase the shares of common
stock from us at a price of $ per
share, which will result in net proceeds to us, after deducting
estimated expenses related to this offering, of approximately
$ million assuming no
exercise of the over-allotment option granted to the
underwriter, and $ million
assuming full exercise of the over-allotment option. The
underwriter proposes to offer the shares of common stock from
time to time for sale in negotiated transactions or otherwise,
at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or otherwise.
The underwriter expects to deliver the shares to purchasers on
or about September , 2009 only in book entry
form through the facilities of The Depository Trust Company.
Citi
September , 2009
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not, and the underwriter has
not, authorized anyone to provide you with different
information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not,
and the underwriter is not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not
permitted. You should not assume that the information contained
in this prospectus supplement or the accompanying prospectus is
accurate as of any date other than the date on the front of this
prospectus supplement or the accompanying prospectus.
TABLE OF
CONTENTS
Prospectus
Supplement
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Prospectus
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i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering.
The second part, the base prospectus, gives more general
information, some of which may not apply to this offering. You
should read both this prospectus supplement and the accompanying
prospectus, together with the additional information described
below under the headings “Where You Can Find More
Information” and “Incorporation of Certain Documents
by Reference.”
If the description of this offering varies between this
prospectus supplement and the accompanying prospectus, you
should rely on the information in this prospectus supplement.
Information contained on our website does not constitute part of
this prospectus supplement or the accompanying prospectus.
In this prospectus supplement, all references to “we,”
“us,” “our,” “US Airways Group,”
the “Company” and similar designations refer to US
Airways Group, Inc. and its consolidated subsidiaries, unless
the context indicates otherwise. References to “US
Airways” refer to US Airways, Inc.
SPECIAL
NOTE ABOUT FORWARD-LOOKING STATEMENTS
Statements in this prospectus supplement and in the accompanying
prospectus and other materials filed or to be filed with the
Securities and Exchange Commission (“SEC”) (or
otherwise made by US Airways Group or on US Airways Group’s
behalf) contain various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange
Act, which represent our management’s beliefs and
assumptions concerning future events. When used in this
prospectus supplement and in the accompanying prospectus and in
other materials filed or to be filed with the SEC (or otherwise
made by US Airways Group or on US Airways Group’s behalf),
forward-looking statements include, without limitation,
statements regarding financial forecasts or projections, and our
expectations, beliefs, intentions or future strategies that are
signified by the words “may,” “will,”
“expect,” “intend,” “indicate,”
“anticipate,” “believe,”
“forecast,” “estimate,” “plan,”
“guidance,” “outlook,” “could,”
“should,” “continue” and similar terms used
in connection with statements regarding the outlook of US
Airways Group. These statements include, but are not limited to,
statements about the benefits of the business combination
transaction involving America West Holdings Corporation
(“America West Holdings”) and US Airways Group,
including future financial and operating results, our plans,
objectives, expectations and intentions and other statements
that are not historical facts. These statements are based upon
the current beliefs and expectations of management and are
subject to significant risks and uncertainties that could cause
our actual results and financial position to differ materially
from these statements. These risks and uncertainties include,
but are not limited to, those described below under “Risk
Factors,” and the following:
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the impact of future significant operating losses;
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economic conditions and their impact on passenger demand and
related revenues;
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a reduction in the availability of financing and changes in
prevailing interest rates that result in increased costs of
financing;
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our high level of fixed obligations and our ability to obtain
and maintain financing for operations and other purposes and
operate pursuant to the terms of our financing facilities
(particularly the financial covenants);
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the impact of fuel price volatility, significant disruptions in
the supply of aircraft fuel and further significant increases to
fuel prices;
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our ability to maintain adequate liquidity;
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ii
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labor costs and relations with unionized employees generally and
the impact and outcome of labor negotiations, including our
ability to complete the integration of the labor groups of US
Airways Group and America West Holdings;
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our reliance on vendors and service providers and our ability to
obtain and maintain commercially reasonable terms with those
vendors and service providers;
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our reliance on automated systems and the impact of any failure
or disruption of these systems;
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the impact of the integration of our business units;
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the impact of changes in our business model;
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competitive practices in the industry, including significant
fare restructuring activities, capacity reductions and in court
or out of court restructuring by major airlines;
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the impact of industry consolidation;
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our ability to attract and retain qualified personnel;
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the impact of global instability, including the current
instability in the Middle East, the continuing impact of the
military presence in Iraq and Afghanistan and the terrorist
attacks of September 11, 2001 and the potential impact of
future hostilities, terrorist attacks, infectious disease
outbreaks or other global events that affect travel behavior;
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changes in government legislation and regulation;
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our ability to obtain and maintain adequate facilities and
infrastructure to operate and grow our route network;
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the impact of environmental laws and regulations;
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costs of ongoing data security compliance requirements and the
impact of any data security breach;
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interruptions or disruptions in service at one or more of our
hub airports;
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the impact of any accident involving our aircraft;
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delays in scheduled aircraft deliveries or other loss of
anticipated fleet capacity;
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the impact of weather conditions and seasonality of airline
travel;
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the cyclical nature of the airline industry;
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the impact of possible future increases in insurance costs and
disruptions to insurance markets;
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the impact of foreign currency exchange rate fluctuations;
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our ability to use NOLs and certain other tax attributes;
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our ability to maintain contracts that are critical to our
operations;
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our ability to attract and retain customers; and
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other risks and uncertainties listed from time to time in our
reports to and other filings with the SEC.
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These forward-looking statements are subject to risks,
uncertainties and assumptions that could cause our actual
results and the timing of certain events to differ materially
from those expressed in the forward-looking statements. There
may be other factors not identified above, or in “Risk
Factors,” of which we are not currently aware that may
affect matters discussed in the forward-looking statements and
may also cause actual results to differ materially from those
discussed. We assume no obligation to publicly update any
forward-looking statement to reflect actual results, changes in
assumptions or changes in other factors affecting these
estimates other than as required by law.
iii
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights selected information about us and the
offering of the shares. This summary is not complete and does
not contain all of the information that may be important to you.
You should read carefully this entire prospectus supplement and
the accompanying prospectus, including the “Risk
Factors” section, and the other documents that we refer to
and incorporate by reference herein for a more complete
understanding of us and this offering. In particular, we
incorporate by reference important business and financial
information into this prospectus supplement and the accompanying
prospectus.
US
Airways Group, Inc.
We operate the fifth largest airline in the United States as
measured by domestic mainline revenue passenger miles
(“RPMs”) and available seat miles (“ASMs”).
For the years ended December 31, 2008, 2007 and 2006,
passenger revenues accounted for approximately 91%, 93% and 93%,
respectively, of our operating revenues. Cargo revenues and
other sources accounted for 9%, 7% and 7% of our operating
revenues in 2008, 2007 and 2006, respectively. We have primary
hubs in Charlotte, Philadelphia and Phoenix and focus cities in
New York, Washington, D.C., Boston and Las Vegas. We offer
scheduled passenger service on more than 3,000 flights daily to
more than 200 communities in the United States, Canada, Europe,
the Middle East, the Caribbean and Latin America. We also have
an established East Coast route network, including the
US Airways Shuttle service, with a substantial presence at
capacity constrained airports including New York’s
LaGuardia Airport and the Washington, D.C. area’s
Ronald Reagan Washington National Airport. We had approximately
55 million passengers boarding our mainline flights in
2008. During 2008, our mainline operation provided regularly
scheduled service or seasonal service at 135 airports. During
2008, the US Airways Express network served 187 airports in the
United States, Canada and Latin America, including 77 airports
also served by our mainline operation. During 2008, US Airways
Express air carriers had approximately 27 million
passengers boarding their planes. As of June 30, 2009, we
operated 350 mainline jets and are supported by our regional
airline subsidiaries and affiliates operating as US Airways
Express either under capacity purchase or prorate agreements,
which operate approximately 237 regional jets and 66 turboprops.
We are a Delaware corporation formed in 1982 whose origins trace
back to the formation of All American Aviation in 1939. Our
principal executive offices are located at 111 West Rio
Salado Parkway, Tempe, Arizona 85281. Our telephone number is
(480) 693-0800,
and our internet address is www.usairways.com.
Information contained on our website does not constitute
part of this prospectus supplement or the accompanying
prospectus. US Airways Group, Inc. is a holding company whose
primary business activity is the operation of a major network
air carrier through its wholly owned subsidiaries.
Recent
Developments
On August 11, 2009, we entered into a Mutual Asset Purchase
and Sale Agreement (the “Mutual APA”) with Delta Air
Lines, Inc. (“Delta”). Upon the terms and subject to
the conditions provided for in the Mutual APA, we will transfer
to Delta certain assets related to our flight operations at
LaGuardia Airport in New York, New York, including 125
pairs of slots currently used to provide US Airways Express
service at LaGuardia, and Delta will transfer to us certain
assets related to flight operations at Reagan National Airport
in Washington, D.C., including 42 pairs of slots, and the
authority to serve Sao Paulo, Brazil and Tokyo, Japan. One slot
equals one take-off or landing, and each pair of slots equals
one roundtrip flight. The Mutual APA is structured as two
simultaneous asset sales and is expected to be cash neutral to
us. The closing of the transactions contemplated by the Mutual
APA is subject to the receipt of customary and necessary closing
conditions, including approvals from a number of government
agencies including the U.S. Department of Justice, the
U.S. Department of Transportation, the Federal Aviation
Administration and The Port Authority of New York and New
Jersey. The U.S. Department of Justice has requested
additional information regarding the transaction in connection
with its review.
S-1
The
Offering
The summary below describes the shares of our common stock
offered. Certain of the terms and conditions described below are
subject to important limitations and exceptions. Please see the
“Description of Capital Stock” section of the
accompanying prospectus for a more detailed description of our
common stock.
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Issuer |
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US Airways Group, Inc. |
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New York Stock Exchange symbol |
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“LCC” |
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Shares of common stock offered |
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26,315,790 shares. |
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Over-allotment option offered |
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3,947,369 shares. |
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Shares of common stock outstanding following this
offering(1) |
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158,346,970 shares (162,294,339 shares if the
underwriter exercises the over-allotment option in full). |
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Use of proceeds |
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We intend to use the proceeds we receive from this offering,
after deducting underwriting discounts and commissions and
estimated offering expenses, for general corporate purposes. |
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Risk Factors |
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Investment in our common stock involves risk. You should
carefully consider the information set forth in the “Risk
Factors” section of this prospectus supplement and
accompanying prospectus as well as the other information
included in or incorporated by reference in this prospectus
supplement and the accompanying prospectus before deciding
whether to invest in our common stock. |
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(1) |
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The number of shares of common stock to be outstanding after the
offering is based on 132,031,180 shares of common stock
outstanding as of June 30, 2009, and excludes
12,225,433 shares of common stock issuable upon the
exercise of outstanding stock appreciation rights, stock options
and unvested restricted stock units and 40,795,088 shares
of common stock issuable upon conversion of outstanding
convertible debt. |
You should refer to the section entitled “Risk
Factors” and other information included or incorporated by
reference in this prospectus supplement for an explanation of
certain risks of investing in the shares of the common stock.
S-2
RISK
FACTORS
An investment in our common stock involves certain risks. You
should carefully consider the risks described below, as well as
the other information included or incorporated by reference in
this prospectus supplement and the accompanying prospectus
before making an investment decision. Our business, financial
condition or results of operations could be materially adversely
affected by any of these risks. The market or trading price of
our common stock could decline due to any of these risks, and
you may lose all or part of your investment. In addition, please
read “Special Note About Forward-Looking Statements”
in this prospectus supplement where we describe additional
uncertainties associated with our business and the
forward-looking statements included or incorporated by reference
in this prospectus supplement and the accompanying prospectus.
Please note that additional risks not presently known to us or
that we currently deem immaterial may also impair our business
and operations.
Risks
Relating to Our Business
Certain risks relating to us and our business are described
under the heading “Risk Factors” in our reports filed
with the SEC that are incorporated by reference into this
prospectus supplement, and which you should carefully review and
consider.
US
Airways Group could experience significant operating losses in
the future.
There are several reasons, including those addressed in these
risk factors, why US Airways Group might fail to achieve
profitability and might experience significant losses. In
particular, the weakened condition of the economy and the high
volatility of fuel prices have had and continue to have an
impact on our operating results, and overall worsening economic
conditions increase the risk that we will experience losses.
Downturns
in economic conditions adversely affect our
business.
Due to the discretionary nature of business and leisure travel
spending, airline industry revenues are heavily influenced by
the condition of the U.S. economy and the economies in
other regions of the world. Unfavorable conditions in these
broader economies have resulted in decreased passenger demand
for air travel and changes in booking practices, both of which
in turn have had a strong negative effect on our revenues. In
addition, during challenging economic times, actions by our
competitors to increase their revenues can have an adverse
impact on our revenues. See “The airline industry is
intensely competitive and dynamic” below. Certain
contractual obligations limit our ability to reduce the number
of aircraft in operation below certain levels. As a result, we
may not be able to optimize the number of aircraft in operation
in response to a decrease in passenger demand for air travel.
Increased
costs of financing, a reduction in the availability of financing
and fluctuations in interest rates could adversely affect our
liquidity, operating expenses and results.
Recent global market and economic conditions have been
unprecedented and challenging with tighter credit conditions.
Continued concerns about the systemic impact of inflation, the
availability and cost of credit, energy costs and geopolitical
issues, combined with declining business activity levels and
consumer confidence, increased unemployment and volatile oil
prices, have contributed to unprecedented levels of volatility
in the capital markets. As a result of these market conditions,
the cost and availability of credit have been and may continue
to be adversely affected by illiquid credit markets and wider
credit spreads. These changes in the domestic and global
financial markets may increase our costs of financing and
adversely affect our ability to obtain financing needed for the
acquisition of aircraft that we have contractual commitments to
purchase and for other types of financings we may seek in order
to raise capital or fund other types of obligations. Any
downgrades to our credit rating may likewise increase the cost
and reduce the availability of financings.
In addition, we have substantial non-cancelable commitments for
capital expenditures, including the acquisition of new aircraft
and related spare engines. Although we have in place backstop
financing for the narrow body aircraft we have on order, we have
not yet secured financing commitments or backstop financing for
some of the widebody aircraft we have on order, commencing with
deliveries scheduled for March 2010,
S-3
and cannot assure you of the availability or cost of that
financing. If we are not able to arrange financing for such
aircraft at customary advance rates and on terms and conditions
acceptable to us, we expect we would seek to negotiate deferrals
of aircraft deliveries with the manufacturer or financing at
lower than customary advance rates, or, if required, use cash
from operations or other sources to purchase the aircraft.
An additional source of financing for us is our co-branded
credit card agreement with Barclays Bank Delaware. That
agreement provides for, among other things, the pre-purchase of
frequent flyer miles in the aggregate amount of
$200 million. Barclays has agreed that it will pre-purchase
additional miles on a monthly basis in an amount equal to the
difference between $200 million and the amount of unused
miles then outstanding, which purchases average approximately
$17 million per month. Among the conditions to this monthly
purchase of miles is a requirement that we maintain an
unrestricted cash balance of at least $1.5 billion. For the
months of August through October 2009, Barclays has agreed
temporarily to reduce this requirement to $1.35 billion,
which amount we presently expect to achieve in August, September
and October thereby requiring the continued repurchase of miles
in those months (the $1.5 billion threshold will resume in
November). As part of our initiatives to address liquidity
discussed in the second succeeding risk factor, we are in
discussions with Barclays regarding additional modifications to
our agreement with them providing for the continuation of
monthly purchases of miles, although no agreement has been
reached and therefore we cannot assure you that we will continue
to benefit from those monthly sales.
Further, a substantial portion of our indebtedness bears
interest at fluctuating interest rates. These are primarily
based on the London interbank offered rate for deposits of
U.S. dollars, or “LIBOR.” LIBOR tends to
fluctuate based on general economic conditions, general interest
rates, federal reserve rates and the supply of and demand for
credit in the London interbank market. We have not hedged our
interest rate exposure and, accordingly, our interest expense
for any particular period may fluctuate based on LIBOR and other
variable interest rates. To the extent these interest rates
increase, our interest expense will increase, in which event we
may have difficulties making interest payments and funding our
other fixed costs, and our available cash flow for general
corporate requirements may be adversely affected.
Our
high level of fixed obligations limits our ability to fund
general corporate requirements and obtain additional financing,
limits our flexibility in responding to competitive developments
and increases our vulnerability to adverse economic and industry
conditions.
We have a significant amount of fixed obligations, including
debt, aircraft leases and financings, aircraft purchase
commitments, leases and developments of airport and other
facilities and other cash obligations. We also have certain
guaranteed costs associated with our regional alliances. Our
existing indebtedness is secured by substantially all of our
assets.
As a result of the substantial fixed costs associated with these
obligations:
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a decrease in revenues results in a disproportionately greater
percentage decrease in earnings;
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we may not have sufficient liquidity to fund all of these fixed
costs if our revenues decline or costs increase; and
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we may have to use our working capital to fund these fixed costs
instead of funding general corporate requirements, including
capital expenditures.
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These obligations also impact our ability to obtain additional
financing, if needed, and our flexibility in the conduct of our
business.
Any
failure to comply with the liquidity covenants contained in our
financing arrangements would likely have a material adverse
effect on our business, financial condition and results of
operations.
The terms of our Citicorp credit facility and certain of our
other financing arrangements require us to maintain consolidated
unrestricted cash and cash equivalents of not less than
$850 million, with not less than $750 million (subject
to partial reductions upon certain reductions in the outstanding
principal amount of the loan) of that amount held in accounts
subject to control agreements.
S-4
Our ability to comply with these covenants while paying the
fixed costs associated with our contractual obligations and our
other expenses will depend on our operating performance and cash
flow, which are seasonal, as well as factors including fuel
costs and general economic and political conditions.
In order to strengthen our ability to continue complying with
our liquidity covenants in the event that the factors affecting
our liquidity will in fact be more adverse than we currently
anticipate, management is pursuing a number of initiatives,
including this offering. These initiatives are intended to
provide a cushion to mitigate against such an event. There can
be no assurance that these initiatives will be consummated,
however, and even if these initiatives are consummated, the
factors affecting our liquidity (and our ability to comply with
related covenants) will remain subject to significant
fluctuations and uncertainties, many of which are outside our
control. Any breach of our liquidity covenants or failure to
timely pay our obligations could result in a variety of adverse
consequences, including the acceleration of our indebtedness,
the withholding of credit card proceeds by the credit card
servicers and the exercise of remedies by our creditors and
lessors. In such a situation, it is unlikely that we would be
able to fulfill our contractual obligations, repay the
accelerated indebtedness, make required lease payments or
otherwise cover our fixed costs.
Our
business is dependent on the price and availability of aircraft
fuel. Continued periods of high volatility in fuel costs,
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