Daniel Cravens - Director of Investor Relations Doug Parker - Chairman, Chief Executive Officer Derek Kerr - Senior Vice President, Chief Financial Officer Scott Kirby - President Robert Isom - Chief Operating Officer

Michael Linenberg - Merrill Lynch Analyst for William Greene - Morgan Stanley Jamie Baker - JPMorgan Kevin Crissey - UBS Ray Neidl - Calyon Securities Gary Chase - Lehman Brothers Daniel McKenzie - Credit Suisse Robert McAdoo - Avondale Partners

Dawn Gilbertson - The Arizona Republic Donna Hogan - East Valley Tribune Ann Marie O’Keefe - WSOC-TV Susan Carey - The Wall Street Journal Ted Reed - TheStreet.com. Tom Olson - Pittsburgh Tribune-Review [Megan Gong] - Flight International

Welcome to the US Airways second quarter 2008 earnings conference call. (Operator Instructions) At this time for opening remarks and introductions, I would like to turn the call over to the Director of Investor Relations, Dan Cravens.

With us in the room today is Doug Parker, our Chairman and CEO; Scott Kirby, our President; Robert Isom, our Chief Operating Officer; Derek Kerr, our Chief Financial Officer; Janet Dillon, our General Counsel; C. A. Howlett our Senior Vice President of Public Affairs and last but least Elise Eberwein our Senior Vice President of People, Communications and Culture. As we usually do, we are going to start the call with Doug. He’ll provide general comments on our second quarter financial results and provide an industry overview. Derek will then walk us through the detail on the quarter, including our cost structure and liquidity. Scott will follow-up with commentary on the revenue environment and our operational performance during the quarter and then after we hear from those comments, we’ll open the call for analyst questions and lastly, questions from the media. But before we begin, we must state that today’s call contains forward-looking statements, including statements concerning future fuel prices and our future financial performance. These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ materially from those projected. Information about some of these risks and uncertainties can be found in our earnings press release issued this morning, our Form 10-Q for the quarter ended March 31, 2008 and other SEC filings on the company. In addition, we will be discussing certain non-GAAP financial measures this morning, such as net loss and CASM excluding unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings release and that can be also found on our website under the “About Us, Investor Relations” tab. A webcast of this call is also available on our website, usairways.com. That will be archived on the website for one month. The information that we are giving you on the call today is as of today’s date and we undertake no obligation to update the information subsequently. At this point, I’ll turn the call over to Doug and thanks again for joining us this morning.

I would like to start actually by thanking our 25,000 employees who have just done an amazing job in turning this airline around. We are so far on a year-to-date basis in on-time performance number one amongst the major carriers, which is an amassing turnaround from being 10th out of ten last year at the same point, so anyway thanks to all of our team for doing that and if you haven’t seen it, there is a nice article in this morning’s Wall Street Journal detailing that turnaround which is well deserved by the team. So thanks everyone for that truly remarkable turn around. These results for the quarter, we reported this morning a loss of $567 million. Excluding special items, the loss was $101 million but we made a $261 million profit in the second quarter of ’07. That change year on year, of course, was driven by higher fuel prices. Had our fuel prices remained unchanged year-over-year, our second quarter fuel expense would have been $390 million lower. We ended the quarter with a very strong cash balance of $2.8 billion and Derek will talk more about all that in a minute. The actions we are doing, we believe are working and will continue to work well. We are reducing capacity as are majority of our competitors. We announced today a number of additional 1% and 2% cuts announced today, Scott will talk more about that. We’ve been very pleased with the reception that we’ve been giving to our à la carte pricing initiatives. The results we’ve seen so far have been strong enough that we’ve already revised upward our estimates for these programs in aggregate. We now believe we raised those estimated on a full year run rate basis from our previous guidance of $300 million to $400 million of increase, which is now $400 million to $500 million. Furthermore we are encouraged by the industry’s actions so far. The aggressive capacity cuts that we are seeing from all the major carriers, we think we are going to have material impact as they actually take place later this year and we are also encouraged by the fact that most of the à la carte initiatives are being matched throughout the industry which is I think something that is very helpful for all of us. : So I will turn it over to my colleagues Derek and Scott to talk more and give you more details on all of that and then we’ll take questions.

As Doug said this morning we reported a net loss of $567 million or a loss of $6.16 per diluted share. This compares to a net profit of $263 or $277 per share a year ago. When you exclude special items, the company’s net loss for the second quarter was $101 million or $1.11 loss per share versus the net profit of $261, last year’s second quarter. The second quarter loss was driven by record high fuel prices. As Doug said if fuel price had remained constant, our earnings would have been $390 million lower. I would like to touch on the $466 million net special items included in our second quarter results. These special items included a non-cash accounting charge of $622 million to write off all the goodwill created by the merger of US Airways Group, Inc. and America West Holdings Corporation in September 2005. There is a non-cash accounting charge of $18 million related to the decline in fair market value of certain spare parts associated with our company's Boeing 737 aircraft and a $10 million in merger related transition costs and $6 million charge for lease returning costs and the lease cancellation penalties related to certain Airbus aircraft as a result of the fleet reductions announced in June 2008. As we announced in our 8-K filed on July 14, we anticipate we will record additional accounting charges in future quarters related to our capacity reductions including severance and cost associated with fleet reductions. These second quarter charges were offset by a $190 million non-cash, unrealized net gain associated with the change in fair value of the company's outstanding fuel hedge contracts. While this is included in our P&L in accordance with generally accepted accounting principles, we believe the $190 million unrealized gain is a special item. Given the market volatility of jet fuel, the fair value of our fuel hedge instruments is expected to change until settled. We have therefore excluded this gain from our second quarter results and our GAAP to non-GAAP reconciliation. If we have not excluded this gain as few other carriers have reported results have done, we would have recognized a second quarter profit of $89 million. I had excluded these special items from the remainder of the call to better reflect our performance on an ongoing basis. For the quarter, total capacity in mainline and Express was $23.3 billion ASMs, up 0.9% from 2007. Our mainline capacity for the quarter was $19.4 billion ASMs down 0.7% from the year ago. Expressed capacity was up 9.4% from 2007. As a result of the record high fuel prices, we have once again taken steps to reduce our capacity in the second half of the year. The airline will reduce its fourth quarter and 2009 capacity by additional 1% to 2% on a year-over-year basis. Reductions were made through lower utilization flying. Throughout the year we will continue to replace older aircraft with new fuel-efficient aircraft ending the year with 354 aircraft. This will continue over the next few years as we continue our fleet modernization. During 2008, we planned to return 21 older aircraft and adding 19 new ERJ-190s and A321 aircraft. ASMs are now projected to be $74.1 billion for the year 2008, which is down 2.3% versus 2007. For the quarters, in the third quarter it will be at $19.3 billion down 1.6% and in the fourth quarter it will be at $17 billion, which is 6% down from 2007. We are still working on our 2009 plan. At this point preliminary ASM numbers project domestic ASMs down 8% to 10% for the full year with total ASMs down 4% to 6%. On the revenue side we’ve taken aggressive steps to mitigate the impact of record high fuel costs. During the quarter we implemented an à la carte pricing model, which includes the first and second bag charge, new choice seat option and sale of beverages. Scott will talk more about this, but our initial results are very encouraging. We are increasing our estimate of the annual benefits of this program by $100 million to $400 million to $500 million per year. For the quarter our operating revenues were $3.3 billion up 3.2% from the same period in 2007. Our mainline passenger revenues were $2.2 billion, up about 1% and mainline revenue passenger miles were 16.2 billion, resulting in a load factor of 83.5%, which is the same as we had in the second quarter of 2007. Our total passenger RASM was up 2% versus our second quarter in 2007. During the same period combined yields increased 2.5% to $15.79 and our combined load factor was 82% down 0.5% from 2007. On the expense side, we remain committed to maintaining a low cost structure and exercising tight cost controls. As a result of our capacity reductions we have implemented a few initiatives whereby we reduced the number of employees by approximately 2000. We’ve reduced capital spending and we’ve closed uneconomic facilities. Most importantly we continue to reduce our period-over-period cost by running an excellent on-time airline. The airline’s operating expense for the second quarter was $3.3 billion, up 15.8% compared to a year-ago. Mainline cost PRASM was $12.92 up 13.6% year-over-year and 0.7% decrease in mainline capacity. As we’ve said many times record high fuel costs continue to be the story for us in the industry. Our average mainline fuel price including taxes and realized gains and losses on fuel hedge instruments for the quarter was $2.99 per gallon versus $2.15 per gallon in the second quarter of 2007. As we said earlier if fuel price had remained constant, our second quarter 2008 fuel expenses would have been $390 million lower. In the second quarter, we had 57% of our fuel consumption hedged which resulted in a realized gain of $192 million or $0.67 per gallon. Fuel conservation continues to be a top priority for us. In 2008 we continue to replace older aircrafts with more fuel efficient aircrafts, have added wing widths to all long-haul 757 aircraft and we removed nonessential weight from all of our aircraft. We recently announced we will remove our in-flight entertainment system, saving over $10 million in expense per year primarily due to lower fuel burn. For the full year we are forecasting fuel price to remain high in the range of $3.20 to $3.25 and this is based on the July 8 fuel curve. Our forecast breaks down by quarters as far as $3.45 to $3.50 in the third and $3.76 to $3.81 in the fourth. In terms of fuel hedging, we continue to actively increase our hedge positions in this environment. We have 58% of our mainline volume hedged in the third quarter, 47% in the fourth, so for the full year we are at 53% hedged. Third quarter fuel hedges are capped at $97 per barrel and the caps increase throughout the year to about $108 per barrel in the fourth quarter and as I said earlier the value of the unrealized hedges that are in place right now are about $190 million. Excluding special items, fuel, unrealized gains, losses on fuel hedging instruments, our cost PRASM was $8.32 in the quarter, an increase of 4% versus 2007. Express operating cost PRASM fuel was down 5.3%. The increases in mainline costs, excluding fuel in the second quarter were driven by higher maintenance costs due to more engine overhauls performed in ‘08 versus ’07, the continued implementation of operational improvement plan and higher depreciation due to our capital improvements we had put in place. The company’s operational improving plan continues to produce industry leading on-time performance results with six consecutive months of top three finishes in on-time performance. This is credit to the 35,000 great employees we have and I am proud to say that we have paid out approximately $10 million in performance bonuses so far this year. In terms of CASM ex fuel guidance for the remainder of 2008, we are forecasting mainline CASM ex fuel to be up 5% to 7% versus 2007. As we said on the last call, a big portion of that increase is due to the higher year-over-year engine overhaul volume throughout the year and the reduction in the domestic mainline capacity on the back half of the year. This breaks down by quarter as follows, the third quarter was up 3% to 5% and the fourth quarter should be up 5% to 7%. Expressed CASM is forecasted to be flat to down 2% in 2008. Next I’ll talk about the balance sheet. We finished the quarter with $2.8 billion of total cash and investments, of which $2.3 billion was unrestricted. The unrestricted balance does include $285 million of auction rate securities, which at fair market value we had $411 million of par value and that currently is reflected in non-current assets on our balance sheet. We have written down approximately $23 million as other than temporary and about $100 million as temporary and we still believe over time we will substantially recover these securities. During the first half of 2008 we were successful in accessing the financial markets completing three transactions, entering into a financing agreement for thirteen A321s, so we have all of our deliveries financed through mid-2009. We completed the PDP financing agreements for the A320 family and we refinanced certain debt, but our total cash balance is relatively strong. Given the industry environment we are actively pursing additional financings and believe will be successful in that regard in the third and fourth quarters. Like most airlines we are working on a number of initiatives including the pre-purchase of miles and more efficient use of the collateral currently committed to our bank facility. Our debt maintenance for the second quarter was approximately $20 million. For the remainder of the year we only have $65 million of scheduled debt payments with most of our significant payments pushed out until 2014. Also, as you may recall, the only restrictive financial covenant in our bank loan is a minimum cash balance and that is $1.25 billion of unrestricted cash. Looking at CapEx, we continue to monitor capital spending and have again revised our outlook for 2008. We’ve reviewed all capital items and reduced spending to only projects that are mandatory or are in line with our operational improvement plan. We have reduced our CapEx by $90 million since the beginning of the year. We are currently forecasting total CapEx to be $345 million in 2008. This includes non-aircraft CapEx of 225 and net aircraft CapEx which includes deliveries and pre-delivery deposits of $125 million. So in summary, we’ve made significant progress in our operational improvement plan, but high fuel prices continue to be a major concern for us in the industry. The company has taken aggressive steps to mitigate the high cost of fuel through capacity reduction, the implementation of à la carte pricing and other cost savings initiatives. We have a strong balance sheet, with significant cash on hand and minimal debt payments through 2013 and are working diligently to bolster liquidity by raising cash, reducing CapEx and reducing unnecessary spending. One last item, we did now file our second quarter 10-Q today, as we are still in the process of finalizing our goodwill impairment related disclosures. We anticipate that effort should be complete by week’s end and our 10-Q will be filed with the SEC and with that, I will turn it over to Scott.

I’ll take a minute to talk briefly about our operational results and then I’ll turn to the revenue environment. Operationally, the second quarter continued the remarkable turnaround that started in last year’s fourth quarter. So, once again finishing the top three on-time performances in all three months and this now make six months in a row we’ve had a top three on-time performance finish and that streak look like it’ll continue going forward. I’d like to again second Doug’s thanks to all of our 35,000 employees for the truly remarkable operational turnaround that they have engineered since just last summer. Additionally, I want to call special attention to our employees working together with the Philadelphia Department of Aviation who have combined to continue the huge operational turnaround in Philadelphia even as we’ve gone through the busy summer travel season. Turning to the revenue environment, during the second quarter we saw RASM up 2% despite a 4.5% increase in stage length. While RASM was up and demand was generally strong we did see some weakening in close end business demand during the quarter. Looking forward, bookings remain strong for the balance of the year as leisure bookings still are being made at levels higher than last year in terms of both price and volume. As a result of continued high fuel prices however we’ve lowered our capacity guidance by a further 1% to 2% in the fourth quarter and into 2009. The big question for the third and fourth quarter revenues are the impact of à la carte revenue and the industry capacity cuts. We expect that the already announced à la carte initiatives will generate $70 million in incremental revenue in the third quarter and $90 million in the fourth quarter. So far the implementation is going smoothly in terms of both operational and in customer impacts. As Derek said we’ve also upped our guidance for already announced programs to $400 million to $500 million annually. The bigger unknown for us in the entire industry is how much impact the unprecedented industry capacity cuts will have on industry RASM. From a historical perspective in the 12-month period that followed the U.S. AWA merger and the bankruptcy filings of Delta in Northwest, which led to overall industry capacity reductions of just 1%. Industry RASM was up 12% in the 12 months following that. Starting in the middle of August we’ll see industry capacity begin to decline and expect that it will be down 9% in the fourth quarter and into 2009, so we just have to wait and see what happens with RASM. But given the historical RASM increases associated with even modest capacity reductions we feel cautiously optimistic about the revenue outlook for the balance of the year and into 2009. Given the uncertainty however, we aren’t going to give a specific RASM forecast for the third and fourth quarters because it’s just too early to definitively quantify the capacity impact on business demands, but currently our advanced bookings are ahead and importantly our average yield is up over 12% for the September to December bookings as compared to the same point in time last year. In conclusion, we’re extremely pleased and grateful for the great job our employees have done in turning around the operation. Industry capacity discipline combined with à la carte pricing is encouraging and as I said we’re cautiously optimistic about the impact that these moves can have on revenue. With that I’ll turn it back to Doug.

Now we are ready for questions.

(Operator Instructions) Your first question comes from Michael Linenberg - Merrill Lynch. Michael Linenberg - Merrill Lynch: Scott to go back on that piece of information that you indicated that the average yields are up 12% on bookings September through December. We’re talking about a very small percentage though right, of ultimately what gets booked. Can you give us a sense of at this point what percent would be booked up?

Well, the number is actually between 10% and 13% for each of those four month, so for September we probably have 35% to 40%, for December it’s probably 10% to 15%, it’s smaller and so yes there are a lot of bookings and a lot of revenue yet to come. I mainly say that as indicative of the fact that even with the capacity reductions in place already for that time period, you’re already seeing higher effective yields from what's being booked and also comparing it to the same point in time last year where we had a similar lower amount of bookings on the book. So it is hopefully indicative of the fact that we and presumably the rest of the industry will have yield strength largely related to the decline in capacity in the back four months of the year. Michael Linenberg - Merrill Lynch: Derek you talked about how you take out the unrealized gains or gains that relate to future periods and understanding the philosophy behind it, it does make a lot of sense. The problem though is that the rest of the industry is now running those numbers through their P&L. Given that in the near-term it seems like perception is what pumps reality with respect to stock price and call it overall financial strength, is that something that you would reconsidered just so you’re on the same page as everybody else? Doug Parker : We think it’s a proper time, that’s why we do it that way and the fact the matter is, what I really think the proper time is hedge accounting which we lost our qualification for it sometime time ago. I think a lot of the other ones have just got a very, very strict hedge accounting definitions. We clearly had used the hedge, we’re not doing it to try and make money off of buying derivatives, so therefore we think the right way to recognize the gains or the losses which we hope are going to come as the oil price continues to fall. And we are just going to see how those airlines choose to recognize it then and those are special items. I think it should actually be in the period when you’re trying to hedge a field and we can’t do that. So this is the way; we think it’s the proper way to do it. If indeed the rest of the industry moves then we therefore it’s confusing to people because we’re different. We’d have to reassess, although I’m not sure. A couple of them are still on hedge accounting, so I think it’s kind of across the board, but we think it’s a proper accounting and we will reassess the board and outlier, but that’s unfortunately kind of what you have to help people understand and fight through it differently. We have to go do what we think is right for our company.

I would also add Mike, that I think Southwest does the same thing we do. It is the proper accounting to recognize it in the period that it should be.

Your next question comes from Analyst for William Greene - Morgan Stanley. Analyst for William Greene - Morgan Stanley : Derek, could you give us a sense for the oil price that you have baked into your capacity cut guidance?

Our [core] in forecast we used the July 8 curve and I think that number was at $1.38 a barrel when we did this forecast, $138 a barrel. Analyst for William Greene - Morgan Stanley : Doug could you give us an update on how you’re thinking about Continental’s move to join the Star Alliance, is that a strategic and financial positive for U.S. Airways?

I’m glad that they are in Stars. We are in Star. As a result of Continental joining Star we actually we upped our positioned there, so we are now in for, not that there was any question we weren’t going to be in on-time, but its more certain that we will be in for a longer period of time, so we are happy about that. And we are happy that Continental Inc is obviously a great airline to add to the portfolio. I don’t think it has a material impact on the financials if you can go see in terms of our ability to generate even more revenues through Star than we do. It certainly strengthens our position in Star and makes Star a stronger alliance than it even was, which we are happy about.

Your next question comes from Jamie Baker - JPMorgan. Jamie Baker - JPMorgan: Derek, can you identify in your release any touch line in your comments, working productively with stakeholders, just wondering if you could expand on that. Because your definition goes as far as to include potential forward mile sales, is this a code for GE and Airbus, any additional color will be helpful in that regard? Doug Parker : : Because it’s really a bigger deal than just those. Before we get into particularly what we are doing, I just want to talk, because there clearly has been some questions about our liquidity issues and where we are, so I just want to take some time on that and with you in particular because you raised some of it. Look I think it’s really important to understand where our liquidity position really is. As we said that we have $2.8 billion in total cash, that’s 23%, 24% or something of our annual revenue base. If you look historically at airlines and the point which they unfortunately if you go seek bankruptcy court protection, which in this business we actually have a lot of data points over time. And the successful restructuring is generally down around 10% of total revenues. They start looking to seek bankruptcy court protection and that’s really one of the big ones that have done well by US Airways towards Delta United. Anyway for US Airways of course 10% of revenues is down, total cash around $1.2 billion. You have to go build in your models, but I think you’ll be extremely hard pressed to build a model that suggests we’d go from $2.8 billion down to $1.2 billion in total cash anytime in the near future. The world [Inaudible] for a long time but we certainly can’t get there and I think you would be really hard pressed to get yourself there. Of course what you noted is that we have a$1.25 billion unrestricted cash covenant in our bank debt agreement and people therefore looked and raised liquidity concerns in just a scenario whereby U.S. Airways has a lot of cash, but the industries there are so bad, the credit card companies begin holding back even though we had a lot of cash. Which then puts that cash in the restricted account and therefore we somehow bank with numbers you can project and we do fall below $1.25 respectively and that we somehow can’t work that out. Now it’s not trying to minimize, I guess it is a scenario that could possibly happen. The problem is that as soon as we do anything to manage it, which of course we are not going to do. We are going to manage this and we will manage this. As Derek noted, we are looking to improve liquidity although when you talk more about your specific questions to what those things are. But suffice it to say things like working with our affinity card provider Barclays or things like prepaid modeling [inaudible] that discount it are on the table. We obviously work with the credit card processors to make sure they understand situations and scenario you suggest that doesn’t happen, which we are doing and they understand completely that situation. Then also you work with the bank group. It’s really that this is a covenant issue where it’s not a liquidity issue. It becomes a covenant issue in that scenario. So, you work with the bank group and there is a lot of collateral in that bank debt agreement, which we can use. While they are continuing looking at it using the existing collateral you can get that refinanced and give the bank group a paydown which is what they want as much as anything else. So those are the type of things that we are aggressively pursuing that we feel confident we will achieve and we will manage through this. It’s fully manageable, we’ll manage through it. The bottom line of all this, this is an industry issue. No one is going to go away and fix our problems and no one should be thinking that anybody else is going to go away and fix theirs. This is an industry and we’re going to get this fixed as an industry. I’m really encouraged with what the industry is doing. I think indeed we are yet to see, but I think it’s not outrageous to suggest that what’s already been done may be enough to get the industry profitable in 2009 between ancillary revenues and the reduction in capacity. If that’s not true, see us do more. But to suggest that the way that’s it’s going to get done and for anyone to believe the way that the industry gets fixed is someone else going away, is hopefully something that people have figured out better work this business. So anyway that’s what we’re working on. We have a lot of support from people we do business with as well as we have a lot of collateral. The bank facility that we use to get it refinanced, that’s what they want, to get a paydown and work through the covenant issue.

Your next question comes from Kevin Crissey - UBS. Kevin Crissey – UBS: Could you give an update on the labor front and then also maybe Scott you could touch on international demand differences versus maybe what you’re seeing in the domestic front?

To start on the labor front, we’ve got all of our agreements done except for two. We continue to work with the positive five things from those agreements, even on the higher side so just getting started on that front. I would characterize our labor relations as generally good when you can look at the operation and how it’s running for a sense of how things are going in the operation. We and our employees would like to finish those other two agreements. There has been a little dust up recently about fuel, but the day-to-day operation of the airline is going well, relations are good and we are anxious to get something done at the table with our pilots union and with fight attendants. So, generally I think in terms of demand in the second quarter our international demand and domestic demand were similar but that’s because we had a lot of international growth in the second quarter. That growth slowed in the third quarter and we are currently anticipating that international RASM would be up about 15% in the third quarter which will be probably higher than the domestic demands. So we are not giving actual forecast for domestic demands but as the capacity situation had a lot of growth in the second quarter and as we go to less growth in the third quarter, international demand remains really strong and we’re expecting about 15% increase in RSAM internationally in the third quarter.

Your next question comes from Ray Neidl - Calyon Securities. Ray Neidl - Calyon Securities: As far as your system goes you seem to be a little bit more limited in maybe ways you can cut future capacity, also with your fleet which I think is largely leased that might limit future capacity cuts. Would you agree with that that you have a little bit more limits than some other airlines in affecting your system with capacity cuts?

Well, I mean Ray this usually comes up in the context of our union agreements that you’re referring to. Well, to start with I’d say we have more flexibility than we currently exercised under our union agreement. Additionally even under those agreements we have the ability to sell the Embraer 190 and are working to further reduce other regional capacity with some of our partners. While everyone does seem to think that the labor agreements are constraining as they are shrinking more, the bigger constraint as you mentioned is actually aircraft equipment. Without breaking aircraft leases, we can’t shrink a lot more than we already have and breaking leases or negotiating ourselves out of the lease right now and negotiating out early would be near term cash negative. As a result of that, making larger material reductions in capacity will be cash negative over the next 12 months and therefore it doesn’t make any economic sense as opposed to that really being a labor issue. If we ever do get to the point where we feel we need to shrink more and found aircraft lessors willing to take back aircraft, we’ll first try to work with our employees, but if necessary there are ways around the flying minimum. But given the aircraft commitments we have, we aren’t to the point of implementing those measures yet. Ray Neidl - Calyon Securities: :

Well, first Virgin’s growth on the West Coast doesn’t have much impact on that, it’s mostly nearly up and down the West Coast, so from between Oregon, Washington and California, places we have very limited service between, because we’ve got to connect backwards through Phoenix or Las Vegas. : The day system actually is still doing okay and we could expect to continue that. Given the large cuts in industry capacity coming forward in Las Vegas, which were actually larger in Las Vegas than the rest of the system, we also expect a larger increase in RASM in Las Vegas so, we don't currently anticipate any further changes in Las Vegas.

Your next question comes from Gary Chase - Lehman Brothers. Gary Chase - Lehman Brothers: Does the $2.8 billion include any counterparty deposits?

Yes, there is about a $140 million of fuel counterparty deposits which we would have expected by the year-end would be gone anyway, so this is a timing issue. Gary Chase - Lehman Brothers: On the processor agreement that you discussed on the last call, if I recall you disclosed that you were already held back to the maximum extent allowable under the agreement that you have?

Correct. Gary Chase - Lehman Brothers: So, that’s not something that can change on us between here and say year-end or at least until the term of that agreement expires, right and that’s recently renewed.

Yes, you are right on those. As I said on that call, our credit card provider is Chase Payments Check. As you alluded to we capped the loan back at 25% of our ATL exposure, we do have some fixed charge and covenants in there, but that would bring it down to 15% and 0% and at the end of the quarter we’re at 25%. We’re in discussions with Chase all the time and talking to them and we’ll continue to do that each quarter. So, at this point in time, we don’t believe there will be any increase higher than the 25%. Doug Parker : But, I mean to clear your question Gary there’s a possibility, always have that clause in them and presumably they could declare them back based upon the industry conditions, so I don’t think we want to suggest that they couldn’t find a way to withhold more if they wanted to. But per the contract absence declaring them back, I’m looking at June and I want to make sure I have this right, that’s what the contract calls for the 25% holdback. Gary Chase - Lehman Brothers: I understand the macro. You’ve recently revisited that agreement. Now, it’s not a relic of December 2007.

No, no we signed it right at the end of the first quarter. Gary Chase - Lehman Brothers: Scott the RASM did come in a little bit soft. You noted the close end bookings; you talked to the yield strength in the fourth quarter. What a lot of people are suggesting is that business travel is just booking in advance, so really what you’re seeing in the book is kind of a better mix. Do you have confidence that you’ll be able to monetize business travel demand appropriately in that setting if business travel you are booking is further out. Are you worried that we are going to leak some of the business yields that we would normally get, just through normal revenue management?

I really don’t think that’s what’s happening. I think it really is leisure demand. You can go look at it on a market-by-market basis and Hawaii is strong or Orlando, Las Vegas, places that have more leisure oriented business are the ones further out that are strong. It’s really hard and someone else said this on their conference call I know, but I think it’s hard for businesses to manage far in advance business travel. It’s a good idea to try, but it’s hard to actually implement. Because you just don’t have enough certainty in terms of your schedule and if anything it’s getting harder to do because there are more and more expenses going up in terms of the pricing structure and minimum stays and that makes it more challenging. So, I think that there is generally, which is typical when you see any kind of slowing in the economy and company’s start to see a slowdown in revenues or a slowdown or having a hard time hitting their internal numbers. Just their travel is one of the first things that get cut; it also comes back pretty quick. So, I think that there has been a slowdown in business traffic, you can see it in particular in financial services trying to market and it’s not a change in behavior, but a slowdown that will comeback as the economy recovers. Gary Chase - Lehman Brothers: Is there any way to figure out whether a lot of these ancillary initiatives are effecting your core passenger revenue?

It’s hard to say. There’s two ways that can happen. One, people could just decide not to fly anymore because of it, which I don’t think is happening. The second you could loose market share. We’re watching the second one closely, but the fact is most of the industry or much of the industry has matched that and we certainly can’t see any difference in market share or bookings between carriers that have matched and carriers that haven’t matched. So, it appears to be largely incremental right now though it is something we continue to watch. Gary Chase - Lehman Brothers: When you say $400 million to $500 million, you’re assuming no dilution on the passenger revenue side what would otherwise be.

Correct

Your next question comes from Dan McKenzie - Credit Suisse. Daniel McKenzie - Credit Suisse: Related to a prior question, can you talk about your flexibility to cut flying done by regional partners?

Well, we owned Piedmont and PSA. At PSA we had 50 seaters and 70-seat regional jets so we have a little bit of flexibility there, but its similar to the mainline that we own the debt and have debt against them or lease the airplane, so it’s harder to cut. At Piedmont we own the airplanes and we could ground some of those aircraft if we want. And then we are talking to each of our regional providers, we don’t have anything to announce. We try to get each one of those in that way that we could get our of capacity and potentially do it in a way that works for partners and works for us. Daniel McKenzie - Credit Suisse: I think in the past you’ve talked about experimenting with LiveTV or an on board entertainment systems and it sounds like your tearing those out, so that’s off the table as we look ahead?

That’s not off the table, but buying it for cash is off the table in this environment. So if we find a way to finance it, we continue to work with some of the vendor to try to find a way to finance that. It hasn’t been the top priority in the last couple of months but something we still like to get done. Daniel McKenzie - Credit Suisse: Just by cutting back on capacity and number of markets in the quarter, the unit revenue performance lag your peers, so I’m just wondering about your level of confidence that the capacity cuts looking ahead will be adequate to help you fall back on your performance relative to peers?

Yes, well actually in this quarter relevant to peers we had ASM’s growing. We actually had capacity up, so that is part of our issue relative to peers. Part of it also for us is increasing stay length and the lesser exposure to international markets and others where international markets have shown the strength as we all know of late. I think as we move into the third and fourth quarter however you’re going to see that particular pendulum swing in particular of the international versus domestic. All the capacity cuts coming out domestically and I think that what’s going to happen is domestic is going to start outperforming because there is less capacity while there is still capacity growth internationally. If you remember back to the 2006 time period, investors all wanted to own stock in airlines of big domestic exposure, U.S. Airways, AirTram and Southwest and others that’s because the same thing happened. America West, U.S. Airways merged, Delta Northwest filed bankruptcy and we all turned a bunch of domestic capacity and the domestic environment got a lot better. So, looking backwards we didn’t have as much international exposure, looking forward that may be a good thing for our relative RASM performance.

Your next question comes from Bob McAdoo - Avondale Partners. Robert McAdoo - Avondale Partners: You’ve been kind of vocal about not having fences and selling one-way fares and simple fares and whatever. Are you unwinding that thought process as some of the others are or are you going to let them put the fences up and you stay with less fence’s. What’s the status there? Scott Kirby : We’ve put, we have to be careful about what we comment on about pricing, but philosophically we have been putting fences up as well and think it’s the right thing to do from the industry. So in some cases we‘ve let our own initiatives particularly in our market, some cases we’ve matched, but in general we philosophically believe that fences are good for the industry. Robert McAdoo - Avondale Partners: In today’s world unlike maybe where you were a couple of years ago? Scott Kirby : Yes.

Your next question comes from Dawn Gilbertson - The Arizona Republic. Dawn Gilbertson - The Arizona Republic: How much cash in total are you thinking to raise? Derek Kerr : Dawn, we don’t have a number on that. Dawn Gilbertson - The Arizona Republic: Even a ballpark? Derek Kerr : No. Dawn Gilbertson - The Arizona Republic: Could you give an update on, when you first announced the layoffs you mentioned 1,700; I think in this conference call you said 2000. Can just give us an update on the status of the job cuts and how much of it you are able to do through attrition and how many layoffs you had to have? Doug Parker : I think what she said was we said 1,700 first, now we are saying 2000, can you just give an update on the job reductions and how much is attrition versus actual layoffs? Dawn Gilbertson - The Arizona Republic: When you first announced and you had said you hoped to achieve a great deal of it through attrition? Scott Kirby : Either attrition or voluntary leave program, so in the management ranks we are probably going to have half-and-half and a total of probably 600 people fall into that group. In the flight attendants the majority, maybe all are going to come from voluntary leave, so there’ll be no furloughs. In the pilots we are still working with the new pilots union and potentially having program that could drop, so we don’t have any update on that. And then in the ground service employees probably 75% of that is going to wind up being furloughs mostly in Las Vegas just because there is such a big cutback in Las Vegas in percentage turns that you can’t get through voluntary kinds of program for attrition. Derek Kerr : And Dawn, the increase from 1.1%, 1700, 2000 is management that we went through a process over the last few weeks ago and management headcount was down 10%.

Your next question comes from Donna Hogan - East Valley Tribune. Donna Hogan - East Valley Tribune: Regarding the capacity cuts, I know a big chunk of it is the Las Vegas night business, but how much of the planned capacity cuts are expected to be at Sky Harbor?

It’s about 10% reduction in Phoenix. Donna Hogan - East Valley Tribune: In that, how about the job cuts? Now you just mentioned about 600 in management, is that all here? Scott Kirby : That’s not all here, but probably two thirds to three quarters of it’s here. Donna Hogan - East Valley Tribune: About 10%, would the assumption be then about 10% of the operational cost job losses would also be at Sky Harbor? Scott Kirby : No, it’s probably less than that just because Las Vegas was bigger and when it comes out of pilots and flight attendances as well, while those are technically Phoenix Sky Harbor jobs, a lot of those are employees that live elsewhere and commute into work. There’s probably less than that in Phoenix. Donna Hogan - East Valley Tribune: Can you tell me of the job losses, how many have already taken place? Do you have a feel for that? Scott Kirby : I don’t have that number. Derek Kerr : The management, 600 have taken place. The management has already taken place and as Scott said half of its attrition and half of its position.

Many of the cuts will come at the end of the summer season and so the operational headcount will come at the end of the summer season. Donna Hogan - East Valley Tribune: If weight is the big issue particularly in burning fuel and that’s why you said you’re removing the in-flight entertainment system, would you ever consider charging passengers by weight? Scott Kirby : I think I could say no on that one. Normally, I would like to keep my options open but on that one I could say no safely.

Your next question comes from Ann Marie O’Keefe - WSOC-TV. Ann Marie O’Keefe - WSOC-TV: Doug, if you can address, you’re the large hub in Charlotte, any flight cuts and any changes that will be here? Doug Parker : Yes, Charlotte by the way is going to be much less effective that the rest of the system. Scott Kirby : Yes, Charlotte actually is about flat in terms of capacity, so anywhere in our system, it’s having the least impact, really almost none at all in Charlotte. Ann O’Keefe - WSOC-TV: And then, with the other routes for the other quarters are you anticipating the same? Scott Kirby : Correct. Ann O’Keefe - WSOC-TV: Anything new as far as flights being added down the road that we haven’t heard about yet. Scott Kirby : Nothing new planned, we still have a long-term growth plan that includes more international service from Charlotte, but high oil prices are more expected than it was before, but that’s still in our plan, but it’s 2011, 2012. Ann O’Keefe - WSOC-TV: And then finally as far as the [Inaudible] Charlotte is affected, do you right now have any number? Derek Kerr : I don’t think there is any change in Charlotte.

Your next question comes from Susan Carey - The Wall Street Journal. Susan Carey - The Wall Street Journal: I’ve got credit card holdbacks on the brain as a result of the United announcement that you probably saw earlier that they’ve managed with Chase to dramatically reduce their hold back. And I know they were just asked about this in passing, but if your holdbacks at 25%, are you actively trying to reduce that at this point, is that part of your liquidity plan or because you just re-upped on this with Chase, that’s just not in the cards right now. Doug Parker : Susan there is two separate kinds of credit card agreements. One is the affinity card program, and the other one is this holdback issue. In United’s case, it’s the same provider in our case it’s different. So, as it relates to our holdback position, where we are is where Derek said which is they are 25% and that’s where we anticipate they will stay. There are provisions whereby it could get lower, but we are not anticipating that happening. We’re good in this environments, so I think we are where we are. Unlike United, we can’t go back to Chase and say, “Go and cut us a deal for a new affinity card program and then you guys hold back less.” Having said that, what we can do and we are doing is working with our affinity card provider who in our case is Barclays, about the possibility of them providing financing to us. Because as we work with them for prepaying models, a number of things we are talking about and these we aren’t prepared to talk about in detail yet. But we certainly are talking to them about the possibility of them providing some additional liquidity to US Airways in exchange for either prepaid models or extension agreement, any number of things that might work on Barclays end.

Your next question comes from Ted Reed - TheStreet.com. Ted Reed – TheStreet.com.: This morning stock is up 40%, and that was before you said that the airline industry might be profitable in 2009. Do talk to me about how you think that the industry could be profitable this year and also why do think all of the stocks are up so precipitous? The stock is up 40%. A couple of carriers are up 30% to 40% and also the fact that you mentioned that the industry might conceivably be profitable in 2009?

As the stock market it’s anyway I know [inaudible] is down, I’m sure that has some impact, but they are still extremely low, so we don’t get too excited about the daily changes in the stock price even when they are that large. But oil prices going down certainly have an impact and I would imagine this impact, I’ve been sitting in this room for an hour, so I don’t know where oil is, but it was down $4 a barrel or something when I walked in, so that certainly has an impact. Secondly, I think in my announcement it shows people what we’ve been saying for a while which is you can’t just assume that nothing is going to happen and indeed in our business generally, it’s an industry issue as opposed to specific airlines with problems that need to be addressed issue. They generally get fixed and indeed I think that’s what’s going to happen here as we’ve been saying for a while. So, while some might have been thinking that individual airlines were in specific trouble, I think what United showed today is that’s probably less likely than people though it was going to be. But probably a better question from the people that are asking questions earlier than for us, it’s their job to try and understand what the stock market does day-by-day. As it relates to my comment on 2009, all I said was I think what has been done already by our industry is a lot and we haven’t yet seen the impact. That is a 10% reduction in capacity, none of which has been seen yet, because all these peaks start coming out in the fall. We believe has the potential anyway to have a nice impact on unit revenues and what we’re seeing in ancillary revenues looks real and long-term. So those two things combined again, not our job to go project where the industry is going to be next year, but I don’t think it’s irrational to assume that those two things in and of themselves and you’ve got to make your own guesses at where oil is. But based on what we’ve seen in the last week or so I don’t think it’s ridiculous to assume that the industry could actually get profitable in 2009. I don’t think it takes much of a stretch at all to get there. So, anyway that’s all I meant to say, I certainly wasn’t making any projection that the industry will or won’t be. I was just suggesting that a lot is happening and the market didn’t seem to appreciate that and maybe now it’s getting in there.

Your next question comes from Tom Olson - Pittsburgh Tribune-Review Tom Olson - Pittsburgh Tribune-Review: Given what you said about the 1% or 2% capacity reduction in the fourth quarter, could you tell me how much of that will effect the Pittsburgh base?

No, incremental change to Pittsburgh from what we’ve already done. Tom Olson - Pittsburgh Tribune-Review: You mentioned the ground crew job reduction, same question, how much of that might affect the Pittsburgh market? Scott Kirby : I don’t think there’s anything incremental. Pittsburgh, we reduced the capacity a few months earlier, than we’ve done in the rest of the systems, so there aren’t large new impacts in Pittsburgh.

Your next question comes from [[Megan Gong]] - Flight International. [Megan Gong] - Flight International: What kind of savings do you expect from delay in painting the aircraft? Scott Kirby : We don’t have any plan to delay any aircraft this time. [Megan Gong] : No, I don’t mean aircraft delays, I mean painting the aircraft. What are you delaying in painting the aircraft? I was under the impression that the airline was delaying painting some of the aircrafts. What savings are you expecting from that? Flight International: No, I don’t mean aircraft delays, I mean painting the aircraft. What are you delaying in painting the aircraft? I was under the impression that the airline was delaying painting some of the aircrafts. What savings are you expecting from that?

I don’t remember the exact number, but we’re pretty close to having the full fleet painted in like 20% without the new delivery, so maybe $15 million, and $10 million.

We have no other questions left in the queue at this time.

Thank you very much. We appreciate your interest. Any questions give Dan Cravens a call in the investor relations or the corporate communications group if you’re a media. Thanks again.