Prospectus Supplement (2009)Full Document 

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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.
 
 
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)
 
(US AIRWAYS LOGO)
 
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.
 
 
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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:
 
  •  the impact of future significant operating losses;
 
  •  economic conditions and their impact on passenger demand and related revenues;
 
  •  a reduction in the availability of financing and changes in prevailing interest rates that result in increased costs of financing;
 
  •  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);
 
  •  the impact of fuel price volatility, significant disruptions in the supply of aircraft fuel and further significant increases to fuel prices;
 
  •  our ability to maintain adequate liquidity;


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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;
 
  •  our reliance on vendors and service providers and our ability to obtain and maintain commercially reasonable terms with those vendors and service providers;
 
  •  our reliance on automated systems and the impact of any failure or disruption of these systems;
 
  •  the impact of the integration of our business units;
 
  •  the impact of changes in our business model;
 
  •  competitive practices in the industry, including significant fare restructuring activities, capacity reductions and in court or out of court restructuring by major airlines;
 
  •  the impact of industry consolidation;
 
  •  our ability to attract and retain qualified personnel;
 
  •  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;
 
  •  changes in government legislation and regulation;
 
  •  our ability to obtain and maintain adequate facilities and infrastructure to operate and grow our route network;
 
  •  the impact of environmental laws and regulations;
 
  •  costs of ongoing data security compliance requirements and the impact of any data security breach;
 
  •  interruptions or disruptions in service at one or more of our hub airports;
 
  •  the impact of any accident involving our aircraft;
 
  •  delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity;
 
  •  the impact of weather conditions and seasonality of airline travel;
 
  •  the cyclical nature of the airline industry;
 
  •  the impact of possible future increases in insurance costs and disruptions to insurance markets;
 
  •  the impact of foreign currency exchange rate fluctuations;
 
  •  our ability to use NOLs and certain other tax attributes;
 
  •  our ability to maintain contracts that are critical to our operations;
 
  •  our ability to attract and retain customers; and
 
  •  other risks and uncertainties listed from time to time in our reports to and other filings with the SEC.
 
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.


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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.


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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.
 
Issuer US Airways Group, Inc.
 
New York Stock Exchange symbol “LCC”
 
Shares of common stock offered 26,315,790 shares.
 
Over-allotment option offered 3,947,369 shares.
 
Shares of common stock outstanding following this offering(1) 158,346,970 shares (162,294,339 shares if the underwriter exercises the over-allotment option in full).
 
Use of proceeds 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.
 
Risk Factors 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.
 
 
(1) 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.


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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,


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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:
 
  •  a decrease in revenues results in a disproportionately greater percentage decrease in earnings;
 
  •  we may not have sufficient liquidity to fund all of these fixed costs if our revenues decline or costs increase; and
 
  •  we may have to use our working capital to fund these fixed costs instead of funding general corporate requirements, including capital expenditures.
 
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.


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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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