Dan Cravens – Director of Investor Relations Doug Parker – Chairman and Chief Executive Officer Derek Kerr – Senior Vice President and Chief Financial Officer Scott Kirby – President Robert Isom – Executive Vice President and Chief Operating Officer C.A. Howlett – Senior Vice President of Public Affairs [Kara Gin] – Vice President of Finance

William Green – Morgan Stanley Gary Chase – Barclays Capital Kevin Crissey – UBS Tom Belton – Philadelphia Inquirer Josh Reed – Associated Press Ann Marie O’Keefe – WSOC TV Channel 9 Jamie Baker – JP Morgan Mike Linenberg – Bank of America Ray Neidl – West Calyon Justine Fisher – Goldman Sachs Helen Beckett – Jessup and Lamont Seth Caplan – Airline Weekly Jefferson George – Charlotte Observer Dawn Gilbertson – Arizona Republic Mary Kirby – Flight International Ted Reed – TheStreet.com

(Operator Instructions) I would like to turn the call over to Mr. Dan Cravens, Director of Investor Relations. Please go ahead Sir.

Good morning everybody and thanks for joining us today for our fourth quarter and full year 2008 earnings call. 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, C.A Howlett, our Senior Vice president of public affairs, and [Kara Gin], our Vice President of Finance. As we usually do we’re going to start with Doug. He’ll provide general comments on our fourth quarter financial results and provide an industry overview. Derek will then take us through detail on the quarter including our cost structure and liquidity. Scott will then follow with commentary on the revenue, environment and our operational performance during the quarter, and then after we hear from those comment 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 does contain forward-looking statements including statement concerning future fuel prices and our future financial performance. These statements represent our predictions and expectations as to future events, but numerous risk and uncertainties could cause actual results to differ materially from those projected. Information about some of these risk and uncertainties can be found in our earnings press release issued this morning, our last Form 10-Q for the quarter into September 30, 2008 and other SEC filings on the company. In addition, we’ll 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 found on our website at usairways.com under the about us/investor relations tab. A webcast of this call is also available on our website usairway.com that will be achieved on the website for approximately one month. The information that we’re giving you on the call 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.

I want to start actually by talking about, not just earnings, but the events of a couple of weeks ago, Flight 1549, just briefly. Obviously, we are very proud of our crew and professionalism that they portrayed during this event, but over the last couple of weeks what we’ve been particularly pleased about is how this event has helped the flying public to better appreciate and value pilots, flight attendants, mechanics, frankly all airline employees and the important work that we do, and that’s just been extremely nice to see. So I want to start again by thanking the outstanding crew of Flight 1549, but also each of the 34,000 members of the US Airways team who are out there every day, trained and ready to handle whatever situation comes their way. And they’re doing a great job, as evidenced by industry leading operating performance in 2008, so thanks again to all of you. Turning to the earnings, we announced earlier today that we had a loss in the fourth quarter of $220 million, excluding special charges. For the full year, the loss was $803 million, excluding charges, and Derek will explain that in detail here shortly. Clearly, from a financial perspective, we’re happy to put 2008 behind us. Due primarily to extraordinarily high fuel cost, it was an extremely difficult year for the airline industry and US Airways. However, in many respects it was a very good and important year for US Airways. Thanks to our team, we ran a fantastic operation and are first among the big six airlines in on-time performance, which is a dramatic turnaround from where we finished in 2007. We took aggressive steps to respond to high fuel prices, such as reducing capacity, instituting new a la carte fees and increasing our liquidity in a very difficult credit environment. So as a result we head into 2009 with many positives. We’re running a great airline with a restructured business model, reduced capacity and increased liquidity, and that combined with falling fuel prices has us well prepared for 2009, and we’re extremely proud of the job our team is doing. With that said, I’ll turn it over to Derek to give you more detail on the financials.

As announced in our press release this morning and Doug just alluded to, we recorded fourth quarter net loss of $541 million or $4.74 loss per diluted share. That is versus a $79 million loss a year ago. When you exclude the special items, the company’s loss for the fourth quarter was $220 million or a $1.93 loss per diluted share versus a loss of $42 million or $0.45 per share in the fourth quarter of last year. During the fourth quarter, the company recognized $321 million of net special items. These special items include $234 million unrealized net loss associated with the change in fair value of the company’s remaining outstanding fuel hedge contracts. We had a $74 million impairment loss on certain available for sale auction-rates securities, considered to be other than temporary, and a note here is none of the auction-rate securities we have had failed and are still performing. Seven million dollars in charges for lease returning cost and penalties relating to certain airbus aircraft, as we have returned them early bringing our ASMs down throughout the year. A $5 million charge related to the write-off of debt issuance cost resulting from the loan repayments we made in the fourth quarter due to our financing initiatives and $1 million in severance charges. For the numbers, the total capacity was 20.5 billion ASMs down 5.1% from 2007. Mainline capacity was 17 billion ASM down 5.9% from a year to ago. Express capacity was also down in the quarter 1.3% to 3.5 billion ASMs. We ended the year with 354 mainline aircraft in our fleet and plan on reducing that to 350 aircraft by the end of 2009. As we have discussed on a prior calls, we continue to replace older aircraft with new fuel efficient aircraft and will continue to do that throughout the next few years. In 2009, we plan to return 29 aircraft throughout the year, mostly 737 and 757 aircraft, while adding 25 new aircraft, most of those A321 and A320 aircraft. Our operating revenues for the quarter were $2.8 billion down slightly from the same period in 2007. Mainline passenger revenues were $1.8 billion down 4.4%. During the quarter, other operative revenues were up 46% versus 2007, due to the a la carte pricing model we implemented in the second quarter. During the fourth quarter, we recognized approximately $100 million of a la carte revenue and we are still on target to realize the annualized benefit of $400 to $500 million as we have previously announced. Cargo revenues for the quarter were down only 10% due to much less exposure to international markets that we have than we have than other airlines. Mainline revenue passenger miles were 13.6 billion resulting in a record load factor for the quarter of 80%, which is 1.8 points higher than the same time last year. Fourth quarter 2007 total RASM was up 1.6% to a little over $0.12 for the same period combined yields decreased 0.5% and our combined load factor was 78.6 up 1.7 points from 2007. Total RASM for the fourth quarter was up 4.8% largely due to that increase in a la carte revenues that I previously mentioned. The airlines operating expenses for the fourth quarter were $3.1 billion up 10.1% compared a year ago. Mainline operating cost per ASM, excluding special items, was $0.132 up 12.4% year-over-year driven by higher fuel prices. Excluding special items, fuel and realized gains and losses on fuel hedging instruments our mainline cost per ASM was $0.849 in the quarter, an increase of 5% versus 2007 on a 5.9% decrease on ASMs. As we talked about throughout 2008, the increase in mainline costs per ASM was driven primarily by higher maintenance cost due to more engine overhauls. The impact on the quarter was about 2.5 points, so half of the five point increase. Higher rents and landing fees in 2008 made up another point of that increase. Express operating cost per CASM ex-fuel was about $0.128 for the quarter which was 1.1% higher than 2007. As Doug said, the company has made significant progress in its operational improvement plan. That plan continues to produce industry leading on-time performance results, and we were number one among the six largest hub and spoke carriers through the first 11 months of 2008, as reported by the DOT. Due to this remarkable turnaround, I’m happy to say that we have paid out approximately $18 million in performance bonuses to our employees in 2008. Our average mainline fuel, including taxes and realized losses on fuel hedging instruments for the fourth quarter of 2008, was $3.08 per gallon versus $2.30 per gallon in the fourth quarter 2007. For the fourth quarter, we did have 45% of our total fuel consumption hedged using cost as collars, which established an upper and lower limit on heating oil future prices to provide protection from fuel price risks. The significant decline in the price of oil during the fourth quarter resulted in a realized loss of $202 million about $0.78 per gallon as the price of heating oil fell below the lower limit of these collar transactions. Year-to-date, we have realized $140 million in net gains from our 2008 hedging program, or overall hedging program. As spot prices for fuel have declined dramatically throughout the quarter, the unrealized loss position maintained at the end of the third quarter of $141 million was increased by $234 million, leaving the company in a liability position of $375 million at December 31st for hedges in place during the first three quarters of 2009 The realization of that loss in 2009 will be included in the forward guidance that I give at the end of my remarks. At the end of the fourth quarter, we had $461 million, $185 of that as a letter of credit and in restricted cash, and $270 million in cash deposits, collateralizing positions held by our hedge counterparties. As of today, that total amount of collateral has decreased to approximately $365 million, so the cash has come down about $100 million to $180 million, as our fourth quarter hedge positions have been settled. If fuel price remains at $45 per barrel, we would have approximately $250 million in collateral at our counterparties at the end of the first quarter, $90 million at the end of the second, and only $10 million at the end of the third. As we talked about on our last call, we suspended our fuel hedge program in August, due to concerns about the impact cash collateral requirements could have on our liquidity resulting from the significant decline in the price of oil. Given the continued volatility in fuel prices, we have not added any new hedges since the last call. We ended the quarter with $2 billion of total cash and investments, of which $700,000 was restricted. The total cash includes $187 million of auction-rate securities of fair market value that currently are reflected as non-current assets on our balance sheet. Also included in the company's restricted cash balance was $185 million in letter of credit, collateralizing certain counterparties in the company's fuel hedged transactions that I just talked about. Not included in our cash balance of December 31st is the $276 million in cash deposits held by fuel hedging counterparties. As we announced on our last call, the company closed down approximately $800 million of financing and near-term liquidity commitments from several of its strategic business partners during the fourth quarter. We used $400 million of proceeds to prepay the company's $1.6 million bank debt facility. In exchange for this prepayment, the unrestricted cash covenant contained in the loan agreement for that bank debt facility has been reduced from $1.25 billion to $850 million. The loan agreement's term remains the same at seven years with substantially all the principal amount, the $1.2 billion left, payable at maturity in March 2014. The remaining proceeds from these financing transactions, approximately $370 million after payments of certain bank and other service fees, increased the company's total cash position. At the same time, we announced another $150 million in commitments we were working to close by the end of the year with cash benefits to be realized through 2009. We have closed most of these transactions, where you will see $30 million of deferred payments that were realized in 2008, so increased our cash balance at the end of the year, $98 million should be realized in the first quarter, with the remaining $25 to be realized throughout 2009. In December, we also used $100 million to prepay a portion of our spare parts facility to avoid syndication of the loan in this environment. In January, the company did exercise its right to obtain new loan commitments under the same agreement and raised $50 million against the spare parts loan. That number is included in the $98 million I talked about above that we will realized in the first quarter. Our low point for cash during the year occurs in early January and we expect to generate cash throughout the first quarter. Looking forward to 2009, we continue to remain disciplined on our capacity. As I mentioned on our last call, we plan to shrink overall capacity in 2009 by 4% to 6%. Domestic mainline is expected to be down approximately 8% to 10%. Mainline ASMs are projected to be approximately 70.5 billion for the year. The ASM breakdown by quarter is as follows, 16.6 billion in the first, 18.1 billion in the second, 18.9 billion in the third, and 16.9 billion in the fourth. As for fuel, we are forecasting fuel price to be significantly lower in 2009. For the full year, we expect a fuel price in the range of $2.07 to $2.12 a gallon. This is at a spot price for the year of $52 a barrel for the full year. This translates into a $1.7 billion reduction in total fuel expense for the full year and that translates into an equivalent of about 15% of our revenues. Our forecast breaks down by quarter as follows, $2.35 to $2.40 in the first quarter, $2.17 to $2.22 in the second, $1.96 to $2.01 in the third, $1.93 to $1.98 in the fourth. In terms of hedging, I talked about a little earlier we still only have 14% of our total volume hedged in 2009, which has turned out to be an advantage as fuel prices have dropped. We have 29% of our total fuel hedged in the first quarter and 19% in the second, only 8% in the third and 0% in the fourth. In terms of CASM ex-fuel guidance for 2009, we plan to keep our costs in line, despite the 4% to 6% reduction in capacity. For the full year, we are forecasting mainline CASM ex-fuel to be up only 2% to 4% versus 2008, driven primarily by higher depreciation expense on owned aircraft and higher airport rent and landing fees due to the pull-down in ASMs by all the airlines. First quarter mainline CASM will be up between 5% and 7%, primarily due to the increase in salary and benefits due to the annual impact of contracts signed in 2008, and step and scale increases in existing contracts, as well as the other two, the increase in depreciation and airport rents and landing fees in the first quarter. The second and third quarter should be up only 1% to 3%, and the fourth quarter up 3% to 5%. Express CASM is forecasted to be up 4% to 6% in 2009. Looking at CapEx in 2008, we made a significant investment in our product in the operations. In 2009, we plan to continue that investment and we have set aside a significant portion of our capital plan to do just that. We are forecasting total cash CapEx to be $365 million in 2009. That includes non-aircraft CapEx of $180 million and net aircraft CapEx of $185 million. So, in summary, we have taken aggressive steps in this uncertain environment through capacity reductions, the implementation of the a la carte pricing model, and other cost saving initiatives, which include continuing to maintain our excellent operational performance. During the quarter, we completed a comprehensive liquidity program, which raised approximately $1.2 billion, with a portion of those proceeds going to reduce our minimum cash covenant, and the remainder significantly improving our liquidity position. With a lot of uncertainty in 2009, we are focused on keeping our costs in line, which is helped by the significant decline in fuel costs. With that, I'll turn it over to Scott to talk about the revenue environment.

I'll take a minute to talk briefly about our operational results and then turn to the revenue environment. Operationally, the fourth quarter continued their remarkable turnaround that started in 2007. And, in fact, as Doug said, we expect that when the DOT reports final results, US Airways will wind up as the number one on-time performance airline in 2008, amongst the network carriers. Turning to the revenue environment, during the fourth quarter we saw passenger RASM up 2%. While this underperformed in the industry at large, our total RASM was up 5%, in line with the rest of the industry, as a result of the $100 million in new ancillary revenues, which led to a 46% increase in other revenues. With one of the highest levels of domestic [inaudible] in the industry, a la carte pricing disproportionately benefits US Airways as many analysts and investors have noted, throughout this earning season. However, the future outlook is much more relevant to those on this call, than the fourth quarter's performance. So with that, I'll turn to the revenue outlook going forward. As other airlines have said recently, our ability to forecast forward-looking revenues is extremely murky at this point. Obviously, reduced industry capacity will help RASM regardless of the economic environment, but the real question is what impacts will macroeconomic weakness have on demand. And on that score, our forward bookings and revenue data are significantly more volatile than at any time in the past. As we've said before, business demand was weak in the fourth quarter and that weakness has carried over into 2009. Leisure demand, on the other hand, remained surprisingly resilient throughout 2008. Coming into 2009, leisure demand, at least as measured by volume or bookings data, remained similarly strong in 2009, but as others have reported, we're seeing lower yield on leisure booking, a phenomena that didn’t begin until January of this year. While absolutely leisure demand remained strong, aggressive pricing has carried over from the seasonally week end of 2008 and into January, which is normally a very heavy booking period and as a result usually has very few fare sales. This year's had more aggressive pricing than is normally in place in January, which is leading to lower book yields. But encouragingly, I think it's important to note that absolute leisure demand has remained strong. It's just that the industry is pricing leisure travel more aggressively at the moment. So while the current pricing environment is a bit disappointing compared to the fourth quarter of 2008, it's encouraging that booking volumes remain strong, which so long as that continues could lead to a better pricing environment down the road. For some regional commentary, as expected we're starting to see the international markets under perform the domestic markets, something that is true for both passenger and cargo revenue. I say that this is as expected because of the large domestic capacity cuts that disproportionately benefit the domestic markets. This factor should help carriers with larger domestic exposure outperform in 2009. We saw this trend start to kick in during December when US Airways outperformed industry on passenger RASM and expect that that will continue into 2009. Additionally, we continue to be encouraged by our a la carte revenue initiatives and still expect to generate $400 to $500 million in a la carte revenues in 2009. A la carte revenues also benefit domestic short haul carriers like US Airways the most, since we have a higher number of domestic boarding’s relative to our size. I'd also add that as the economy weakens, US Airways and the industry now have a natural hedge against declining demand in the sense that if macroeconomic issues continue to cause further declines in demand they're likely to drive even lower air prices. And as we said before, at US Airways that each $1 decline in oil translates into $35 million so it would take about a $3 decline in oil to neutralize a single percentage point decline in RASM. So in summary, the macroeconomic environment remains a concern but we feel good about the domestic industry capacity reductions and a la carte revenues, both of which disproportionately benefit US Airways relative to the rest of the industry. With that, I'll turn it back to Doug for closing remarks.

I don't have any closing remarks we're ready for questions.

(Operator Instructions) Your first question comes from analyst William Green – Morgan Stanley. William Green – Morgan Stanley: Scott, I'm wondering if you could follow-up on your comments about the RASM out performance, which you achieved, I guess, in the fourth quarter there. How much better do you think you could actually do than the industry? How much room is there for you to outperform?

I don’t know. It depends on what happens. Without telling you exact magnitude I think there are three things that will cause us to outperform. One, it appears that domestic is going to outperform on passenger revenue by a pretty wide margin, and because we're 80% versus others that will lead to a pretty large out performance I think. Second and similar to that, cargo revenues which are much more important portion of revenues for other carriers because international operations are smaller for us and I think we’ve seen from everyone in this quarter that cargo revenues are getting hit hard, particularly transoceanic. And third, ancillary revenues which we're the shortest haul carrier with exception of Southwest, shortest haul of the network carriers and have the highest domestic exposure. All of which means we generate higher ancillary revenues per pick your unit of you measure ASM than anyone else, so those three should cause us to outperform. I'm not sure how much the number will be, but all three factors should allow us to outperform in 2009. William Green – Morgan Stanley: And how sensitive do you think ancillary revenues are to the economy.

I think it appears that they aren’t particularly sensitive as long as load factors stay high. They are tied and highly correlated with load factors, I believe. William Green – Morgan Stanley: How do you think about then the tradeoff between load and ancillary? Is there a metric that you try to watch or, obviously you don’t want to give away too much fare to get people on to pay ancillary, but to some extent if ancillary were stickier than maybe there is something to that?

We don’t think about it as a tradeoff. We try to maximize passenger revenue and ancillary revenue comes in as it comes in, but we're defiantly trying to just maximize passenger revenue. In this environment right now with the pricing as is, that means we're running higher load factors which we do get some benefit on the ancillary side. But left to our own devices, we would have a firmer pricing environment and slightly lower load factors and higher yields. William Green – Morgan Stanley: Just one quick question on liquidity, Derek do you have a fuel price where the collateral would get to the point where you’d start to run up against the new covenant at 850. Is there a fuel price number if it dropped that far we'd have to worry?

I think the way you want to look at is I said I gave you a number at $45 per barrel. For every $5 per barrel right now with the hedges that we have on, and this goes down as we move forward because all the hedges come off, is worth about $20 million. So at $40 a barrel we'd have $20 more million go out and that, as I said, declines as these hedges come off every month.

Your next question comes from analyst Gary Chase – Barclays Capital. Gary Chase – Barclays Capital: Scott, I wondered two things one, could you give a sense of what your domestic versus international performance was in the fourth quarter?

In the fourth quarter international was down just slightly more than domestic was. That looks like it's going to be down much more in the first quarter of 2009. So without giving you the exact numbers, which would imply RASM forecast for the first quarter, it's probably going to be ten points worse across the Atlantic. Gary Chase – Barclays Capital: For RASM?

Yes. On a year-over-year basis not ten points in absolute. Year-over-year there will probably a ten point difference between domestic and Atlantic. Gary Chase – Barclays Capital: I think we can call that significant. Also any thoughts that you can provide on what you've seen thus far just backward looking in January or not ready to do that?

I guess the thoughts would echo what I said before, but we have seen weakness in the leisure demand. Business demand continued to be weak. We had some hope that it would pick up in 2009 it has not, and if anything coming in 2009 it's been the weakness in leisure yields, I think. Again, that's a negative and certainly near-term, a negative, but I think encouraging, potentially encouraging at least going forward, as the industry runs higher loads, that pricing environment is likely to firm up. We've seen this happen in the past that when you start to see it fall of in business demand fare sales start to proliferate, but then when the loads stay strong it doesn't make economic sense. So carriers stop running fare sales as aggressively. So I'm hoping that that blocked environment will improve as we get to higher demand periods. We're also in six of the slowest weeks of the year with January and the first two weeks of February. So an environment that particularly if you are at an airline are concerned about load factors and demand you already are running low load and are more likely to run fare sales. Hopefully that environment will improve. I think all that's really changed, it seems what's changed in 2009 versus 2008 to me, is mostly leisure yield. Gary Chase – Barclays Capital: Again, this is also a topic, it's a segue into something that you’ve talked about a lot in the past and you've managed aggressively is this concept of off-peak versus peak. Are there opportunities to maybe tweak schedules in a way that you take some of the capacity out of these off-peak periods because you've at least suggested many times in the past that would alleviate some of the pricing pressure that you're now describing? Is there anything you're doing on that front? Might you consider doing more of it and do you think it would have an impact in this economy?

I do believe it would have an impact for every carrier. We've tried to do some of that with pretty dramatic reductions in holiday flying, Saturday flying, utilization flying. W did a lot of that last year a lot of our schedule reduction was doing things like closing the night system in Las Vegas. Going forward, I think the largest thing that we're looking at is Europe and should you fly fewer days per week, as an example, to certain destinations. So no conclusions yet on any capacity decisions like that, but we are looking at those kinds of things obviously in this environment with a bias to downward.

(Operator Instructions) We’ll go next to Jamie Baker – JP Morgan. Jamie Baker – JP Morgan: It’s actually Jamie Baker. They get the Baker and the Becker wrong sometimes but this is a first. Scott, you know Delta’s drawing a line in the sand for industry revenue identifying a potential decline in the 8% to 12% range this year, and it appears that it’s mostly based on their gut feel as opposed to any sort of predictive model that would take into account nominal GDP forecast and fuel and that sort of thing. And I don’t know what sort of science you personally apply at US Airways but I am curious if you’d bite and like to add your own take just on this broader topic.

Well, I’ll start with the simple answer is I won’t bite. It is extremely volatile. I mean we have one week that bookings look good and yield looks bad and then the next week everything looks good and the next week everything looks bad. So it’s extremely volatile right now and I don’t know how anyone could get a credible forecast for the full year and I certainly don’t feel like I could. I, like Delta, don’t think I can give even a reliable forecast for the first quarter so I’m not sure how I could give one for the full year. But we aren’t going to give a full year forecast until we see more data.

Our next question comes from Mike Linenberg – Bank of America. Mike Linenberg – Bank of America: Just a couple questions here. Scott, when you talked about the reasons why US Airways will outperform the group you gave three reasons, and I was just curious when you look at Southwest in effect that they are cutting capacity really for the first time in their history and I believe that you probably have more overlapped with them than anybody else. Is it fair to say that that may be you know another reason why you’re able to outperform the industry, just your thoughts on that?

Yes, I think you should add that fourth reason. Actually I think that’s true. We’ve about that before, too, and thanks for bringing it up, but Southwest reducing also disproportionately benefits those carriers with exposures. Southwest as you point out, we have a higher level of exposure than any other network carriers. Mike Linenberg – Bank of America: And then just my second question and this is over to Derek. Derek, when you gave the cash numbers you have the $700 million that’s restricted, the $1.3 billion that’s unrestricted now that includes, I know you went through it pretty quickly I believe. Does that include the auction- rate security and can you give us that total and maybe as a follow-up, when you do the calculation on the minimum is that inclusive in the calculation, just some clarity on that.

Yes. It does include it so the unrestricted cash portion, I think it adds up to 1.240. That includes $187 million of auction-rate securities, and that is included in the minimum cash requirement we do count those as unrestricted cash.

Our next question comes from Ray Neidl – West Caylon Securities. Ray Neidl – West Caylon Securities: I just wanted to verify the retirement plans. My understanding is that US Airways did terminate all their plans turn them over to PGBC and America West never had any defined benefit plans just 401(k)s. So I just want to make sure there’s no deferred potential liabilities in the current stock market.

That’s correct, Ray. Ray Neidl – West Caylon Securities: And the second thing is, Scott, I know you’re starting more international service from Charlotte but I was a little surprised to see that you want service to Rio. I’m just wondering if 2009 is the right time to start that type of route, and it seems like the preferred area of entrance to Brazil is Sao Paulo, the business city rather than Rio. I’m just wondering what the thinking is going on there.

Well, first we take advantage of particularly for restricted routes like Charlotte to Brazil. We make them available as when they come available and we can’t control the timing of that and so we’re happy that routes are available and think we have by wide margin the best application and hope to get the Charlotte to Rio service. You are right, we would prefer that to be Charlotte to Sao Paulo, but there are no rights open for Sao Paulo and we expect both markets to be profitable. We’d like to start with Charlotte to Rio service because that’s what’s available right now, and somewhere down the road I hope that the U.S. Government can negotiate enough in the bilateral that we’ll be able to also apply for service to Sao Paulo. So we look forward to hopefully someday may be able to serve both. Ray Neidl – West Caylon Securities: Scott, on top of that Southwest pulling back services helped you, The Delta Northwest merger, do you think that’s going to put any pressure on any part of your system or they pretty much outside your system?

Well, as we said before, we are big fans of consolidation. We did a lot of overlap with Delta and Northwest. We viewed that merger as we’ve always said consistently as a positive for the industry. So we view it as an industry positive including us.

(Operator Instructions) We’ll go next to Justine Fisher – Goldman Sachs Justine Fisher – Goldman Sachs: I had a question about the plane that was used in Flight 1549. Have you guys decided whether you’re going to replace that plane in the double ETC that it came from or will you just repay with insurance proceeds?

We have not decided what we’re doing with that. Justine Fisher – Goldman Sachs: Then as far as additional cash raising, so I guess you have $98 million that is coming in the door in the first quarter and then you said $30 million through the rest of the year.

Correct. Justine Fisher – Goldman Sachs: Are there any other avenues that you might explore to raise cash? I mean obviously you definitely still have some room between where you are now and the minimum cash covenant and then again the second and the third quarter, clearly better quarters for cash but are there any other options that you might have a preference for if you need to raise additional cash for the year?

You’ve framed it properly, which is we have sufficient liquidity now and we’re headed into the cash building time of the year. So at this point we’re not looking at any major financing initiatives, but I would just point out last year without any obvious means of additional financing we were able to raise, as Derek noted, over $800 million. So we believe if required we can find additional ways to raise liquidity if required but as you know there’s not a requirement to do so right now. Justine Fisher – Goldman Sachs: Yes and that kind of hit on the last question I was going to ask is from our perspective we can make judgments on whether the financing market may be open or not to airlines, but again your ability to either finance or to refinance is often a lot better than we may think it is. So obviously you guys were able to raise that money in the fourth quarter. How would you characterize the financing or refinancing market on the secured side, refinancing mortgages etc., now versus what it was like in the fourth quarter?

I don’t think it’s gotten any better yet, but again it hasn’t got materially worse either. So any rate, that’s on a secured front but again I just came back to, and again thanks for your comments. The point I think is and we, again, maybe overly sensitive to this but at any rate the point we’d like to make on is liquidity concerns often times end up, the problem with liquidity concerns when they arise. I’m not suggesting there is one now, but when they arose last year what we said was, the problem with the concerns is they assume we don’t do anything and not get into anything and if indeed those situations arise we find that we’re able to do something about it irrespective whether or not we have security to go rated against. So right now again, not an issue to the extent people believe it’s going to be an issue in the future. I Would encourage them to look to our history to raise capital as opposed to security we may have available to do so. Justine Fisher – Goldman – Sachs: Is it reasonable to think that of the three 62 million of short-term that you guys have right now that you know a decent portion that would be able to be refinanced but that’s not necessarily going to be cash out the door that’s you know some of that would be refinanceable through the year? Just as one example of raising additional liquidity that people might not think.

I would say some of it is possible some of it’s not due until the back half of the year anyway so it’s a possibility to refinance that. Some of that though is double ETC aircraft debt that we would pay anyway so. Justine Fisher – Goldman Sachs: So you said most of that is the fourth quarter or is it the third and the fourth?

No, I just said some of it is in the fourth quarter of things to refinance. Justine Fisher – Goldman Sachs: Is there anything particular quarter that it’s weighted to?

No, not at all.

(Operator Instructions) Your next question comes from Helen Beckett – Jessup and Lamont. Helen Beckett – Jessup and Lamont: So this is my question for Scott probably. Have you noticed a difference in booking patterns on the east coast part of your system versus the west coast or is it pretty much good or bad, week to week across the board.

I don’t think we’ve noticed a regional difference to the extent there’s any difference on a route-by-route basis. It’s that more business-oriented routes are weaker in places like the shuttle but no real regional examples of weakness. Helen Beckett – Jessup and Lamont: Then I’m sorry to ask, Derek, this question because I know you said these numbers and you flew through them so fast I missed the CASM guidance for I guess for the year, you gave it for the year and kind of missed that. Is it going to be on the website later so you don’t have to repeat it or can you just say it now?

It’s on the website but I will give you each one. For the year it’s up 2% to 4%, and then by quarter, first quarter is 5% to 7% up, second quarter is 1% to 3% up, third quarter 1% to 3% up and fourth quarter 3% to 5% up.

And our final analysts question comes from Kevin Crissey – UBS. Kevin Crissey – UBS: I know it’s going to be beating the demand dead horse, but in terms of the looking at it, the concern that I am getting from clients as well as getting myself actually is that we may be still in the early stages of seeing the fall off in travel demand. You had corporate demand, financial services fall off and you’ve seen leisure demand hold up, except for maybe the yields side, but I’m wondering if there’s typically a lag between the unemployment effect, basically you haven’t had the bankruptcies that have been forecasted to come, you haven’t had the unemployment peaked yet. So I am trying to estimate kind of what you’re thoughts are on unemployment versus GDP in terms of which is more of the driver of that, and then also maybe what you’re corporate partners are saying with regard to have they had the full cuts that there are kind of expecting?

Sure, I guess I’d say I’m not sure that I or we are the experts at making long-term GDP or unemployment predictions so I’m not going to try to get those things, and the reality is that our visibility given the data that we have is limited. I imagine any analyst out there could do as good a job as forecasting what’s going to happen for the balance of the year as we could. We may have a little more near-term visibility for the next 30 days, but we really don’t have any visibility in to the rest of the year. So I think it’s an open question, an unanswered question at this point for us and the industry on how deep the recession will go and how much impact that will have on airline revenues. It is encouraging from an airline perspective that oil prices are likely, at least have, and likely to continue to decline. If the recession deepens and our revenues get worse, oil will continue to go down hopefully, which will offset that somewhat. It’s also as an industry we’re better prepared because of the big reductions in capacity and a la carte revenues than others but we just don’t know what’s going to happen for the balance of the year, and I think that’s what you’ve heard on pretty much all of the conference alls. With regard to corporate travel, I think they’re saying the same kind of stuff they said at the end of 2008, which is trying to control their travel budgets as much as possible, limiting internal meetings to not be flying people in for internal meetings for example. And so we have seen a slowdown in corporate demand that started in last year’s fourth quarter and has carried over into the first quarter this year. Kevin Crissey – UBS: I guess one follow up to that is, every carrier we’ve heard is saying the outlook is very hazy. We don’t have a lot of visibility. Things don’t look real good now but we’re kind of hopeful that they’ll get a little bit better, something along those lines. The problem is the history of the industry suggests that airlines because of your short visibility kind of react after the fact and never aggressively enough as a collective. So I guess the question is and, Doug you’d usually speak to these type issues is, is the airline industry any smarter? Because I would argue that a lot of this has been luck thanks to real high fuel right in front of the recession and not so much visibility that the demand was coming despite kind of a lot of headlines that were starting to get shaky into this downturn.

I wouldn’t call it luck. I think we were extremely encouraged by the response of the industry. It was indeed due to higher fuel prices but the response that was taken I think an unprecedented response to get capacity out, to implement a la carte fees things like that that this industry has been reluctant to do in the past. So I’ve been extremely encouraged by what is the actions of the industry to respond and to the extent that we see softening going forward. I think you’ll see additional responses, which again I think is a little new and different. So that’s what I think. I don’t think it was luck. I think it was an absolute response to a difficult situation and to the extent they’re difficult situations in our future. I think you’ll see additional responses by the industry which we’re encouraged by.

Your next question comes from Tom Belton – Philadelphia Inquirer. Tom Belton – Philadelphia Inquirer: One question is about the decision to apply for Charlotte Rio, is Philadelphia being considered or can it be considered under the treaty change in additional rights? Can Philadelphia be considered for South America service, or was Charlotte there because that was what was available in the agreement?

You’re breaking up there, Tom. I was getting kind of every other word but I think you’re asking about Philly relative to Charlotte. We could apply for Philly and that might happen at some point in the future. In this case, we chose Charlotte for the application largely because of geography and the economics of the route. We are able to connect more passengers through Charlotte because it’s further south then Philadelphia than we could through Philadelphia. The reverse is true for Philadelphia going to Europe where Philadelphia makes a better connecting to Europe unless you see a lot more service so Charlotte is just better geographically positioned than Philadelphia, which is why we applied for Charlotte. Tom Belton – Philadelphia Inquirer: Do you ever say what the capacity is, how much capacity has been reduced in the hubs? We can look at the public website and see the number of flights is down slightly and of course as usual I am interested primarily in Philadelphia, but can you say what the capacity reductions have been by hub?

We’ve never disclosed that and I just don’t have the numbers here at my fingertips to disclose ASMs but roughly Charlotte actually is up. Philadelphia is down slightly to flat and larger reductions in Phoenix and Las Vegas.

Our next question comes from Josh Reed – Associated Press. Josh Reed – Associated Press: You talked a little bit before about your theory on the leisure yields and the scenario that might cause them to improve? Does staying above the $850 million covenant level require that leisure yield situation to improve the way you’re looking at? Is avoiding that covenant predicated on better leisure yields?

No. Josh Reed – Associated Press: You mentioned that there are sort of additional ways that you could raise liquidity? Could you outline those a little more? I mean do you have in mind additional aircraft financing? Do you have in mind frequent flyer shenanigans, what are you thinking of there?

I was pretty careful to say we weren’t doing anything right now because we believe we have some additional liquidity. We’re into the cash building part of the year. So we’re not working on any additional financings right now. Josh Reed – Associated Press: I meant more in terms of what you see available to you if the need to arise? I understand that it hasn’t arisen yet.

I’m not going to speculate on what we might or might not do because we’re not working on anything. Thanks.

Your next question comes from Ann Marie O’Keefe – WSOC TV Channel 9. Ann Marie O’Keefe – WSOC TV Channel 9: Wondering if you could give us an idea of if we’ll see anymore a la carte options down the road maybe this year or next year just kind of give the customers a heads up? Do you know if that includes pillows and blankets?

Until we’re ready to announce it we’re not going to announce that on a conference call. I do think that the industry is moving that direction so there might be changes around the edges. I think the big ones are probably done but something like pillows and blankets might come on at us or other carriers. Ann Marie O’Keefe – WSOC TV Channel 9: To give this some more perspective over the years through US Airways and America West with a loss like this, let’s say even the $541 million, how does that compare to other years. Is this the deepest loss that you have seen or was that before one of the bankruptcies?

How does the 2008 loss compare to other years? Ann Marie O’Keefe – WSOC TV Channel 9: Right.

I don’t know the full history of US Airways pre-merger. So I don’t know that we know the answer to that question as we sit here right now. Ann Marie O’Keefe – WSOC TV Channel 9: Does anyone there?

What? Again, the history of this company now is from historical reporting purposes, is the America West earnings prior to merger because that was the, for accounting purposes, the acquiring company and US Airways post merger. S anyway, we can go run that down, but I don't know that we know the answer. Ann Marie O’Keefe – WSOC TV Channel 9: Anything else Charlotte specific that we should be passing along as far as changes we will see after 2008?

Other than the exciting announcement of applying for Rio service nothing to announce.

Our next question comes from Seth Caplan – Airline Weekly Seth Caplan – Airline Weekly: Go back to Scott’s case for why this environment could just fortunately benefit you as opposed to other Legacy airlines in particular. The only thing is that a lot of those same conditions were already in place during the fourth quarter. In fact across the industry, the airlines that had less long haul exposure in general, more domestic, less premium, less reliance on premium and so forth did pretty well, namely with the LTCs, and you guys were kind of an exception to that. I'm wondering if you think there's something that's going to change going forward that might not have already been in place that in fact would help to turn things around in terms of operating margin at US Airways?

Well, a couple of points, one, at the start of the quarter our capacity was shrinking at a much lesser rate than the rest of the industry. By December, we were still shrinking at a lesser rate than the industry but we were closer to the industry, and in December we out performed by a fairly wide margin versus the ATA results, while we under performed in October and November. Point one, so that helps us going forward, point two, there was more reductions that started December, January, some of the Southwest cuts so that's going to help us that really didn't kick in until the end of the quarter. And thirdly, I'd say cargo revenue took a dive in December, hadn't happened nearly as dramatically, in October and November. And finally as you look into 2009, I think all of these factors just contribute and some of them didn't start until the end, and some of them are starting at the beginning of 2009. Seth Caplan – Airline Weekly: And speaking of Southwest, their RASM numbers were pretty good, yours as you said, well RASM anyway was pretty much in line with the industry. Any new thoughts on, because you have the most overlap with them of anybody of how they're sticking to the all end pricing, might be effecting shares and those kinds of things.

We don't really see any share effects. I think if you go look at the [inaudible] of RASM performance of various carriers you'll find that capacity in their markets does a lot more to explain it. I think Southwest acknowledges it on their call, huge reductions in capacity by other airlines, by competing airlines, in Southwest markets in 2009 goes a long way to explain the RASM performance. That’s not critical of Southwest I think they're doing a great job, but from the data we look at we don't see any share loss as a result of a la carte revenues. We feel pretty good about where we are right now. Seth Caplan – Airline Weekly: And then one more quickly if you have time, with the operational performance, obviously tremendous turnaround, at the risk of over simplifying things in 2007 you had a real messy operation, but you're making money, you're near the top of the industry. And then you spent a lot of money improving the operation, and now you kind of lag in the industry in terms of operating margin. Do you ever wonder whether, I know you’re not going to come out and say you want to have a messy operation, but do you ever wonder whether that was all worth it whether the operational performance is showing up in terms of financial results?

Yes, that is as you stated, an over simplification of what's happened. And as a result no we don't wonder at all. We knew it's the right thing to do. We need to do it, and in realty there's nothing more expensive than running a bad operation. S while indeed we had better margins in the industry in 2007, and worse margins in the industry in 2008, and while indeed both those times the operation did as you said. The reason for that change in operating margin performance was not driven by us improving our operation. It's driven much more by the fact that in 2008 margin improvement of other carriers was driven largely by international improvement, which we had less exposure to. And, as Scott stated, we believe that in 2009 you'll see that reversed. We're quite happy with the investment we made in the operation and we know is right thing to do and we think that's a definitely a positive for our financial performance going forward.

Our next question comes from Jefferson George – Charlotte Observer. Jefferson George – Charlotte Observer: Doug, quick question regarding possibility in 2009 a couple of times back in December that you given where fuel was going and all the cutbacks that airlines have already made, the U.S. airways and the industry returning to profitability in 2009, is that still the case?

You’re cutting in and out. Jefferson George – Charlotte Observer: Are we going to return to profitability in 2009?

Yes, we haven't made a statement on profitability in 2009 and still aren't. Jefferson George – Charlotte Observer: I know you were optimistic in November and December about that and I just wonder how if that optimism is carried through?

Yes, again I think what I said before was why I said at the start of this call, which is we feel like we made all the right moves to prepare for the environment in 2009. We head in with a lot of momentum because of all the actions we've taken, but I'm quite certain we haven't made any statements about profitability in 2009. I suggest that we do with that; it's just not a statement we made. Jefferson George – Charlotte Observer: One quick follow up, on the RIO side do you have any idea what the breakdown will be from connecting versus OND traffic?

I don't have the exact forecast with me. I don't recall off the top of my head. Jefferson George – Charlotte Observer: I'm assuming it would be majority connected, I just didn't know if you had like a rough percentage.

Yes. It's more than 50% connecting I just don't remember the exact number off the top of my head.

Our next question comes from Dawn Gilbertson – Arizona Republic Dawn Gilbertson – Arizona Republic: I just have a few follow up questions, I think it was you, Scott, that you alluded to possible capacity cut backs for international particularly Europe, can you give any timetable on that and also will it be, you mentioned frequencies, will it be mostly frequencies or any markets in danger of going away?

Well we haven't made any decisions to cutback anything and what I said was we would most likely look at cutting back frequencies in markets, and that's as far as it has gone thus far. Dawn Gilbertson – Arizona Republic: I don't have your numbers in front of me, what is your current capacity planned for international in '09?

It's up about 10%. Dawn Gilbertson – Arizona Republic: But you did, if I recall you said in your comments that you're looking at things with a definite downward bias so can you give a timetable at least there since you said you were considering this or looking at this, given the trends there?

Well, our big international ramp up is during the summer so it would be likely to be for summer. Dawn Gilbertson – Arizona Republic: When might you decide, when might we know?

I don't know. Dawn Gilbertson – Arizona Republic: Okay.

We don't know if we're going to make a decision. Dawn Gilbertson – Arizona Republic: Okay, second question, do you have any thoughts on why you think leisure demand is holding up. I know you said that obviously fare sales lately have helped, but why with the daily drum beat of you know all these layoffs and so forth why do you think people are still flying?

I have a number of theories on that, one I think over the last few years leisure travel has become less discretionary and more something that people just do. Second, and at least it is because of the following because air fares are so cheap. Air fares are down in excess of 50%, in inflation adjusted terms in the last 25 years so air fare is down over 50%. One of the very few goods that can say that and travel is still a great bargain, so people are still traveling. I think that's probably the biggest impact for why people continue to travel. And for what it's worth I think leisure demand from my perspective does remain strong in 2009. We haven't really seen any fall off from 2008 into 2009. All that's happened is the pricing environment has changed. People are booking the same amount, just at lower rates. Dawn Gilbertson – Arizona Republic: Just a couple more quick follow ups, you guys brought back the bonus miles and other changes for dividend miles, can you talk about what you've seen in terms of the impact from that?

We could never see an impact before nor can we see an impact after the fact. We just heard from enough customers and ultimately concluded we were going to be the only ones in the industry with that structure and that was too big a bone of contention if we were the only one in the industry for the prior customers so. We didn't see an impact that we could measure before nor do we see one after. Dawn Gilbertson – Arizona Republic: Just two more, One, Doug or Derek or anybody, do you guys have any sense yet from Flight 1549 of the short and long-term financial impact, to you guys?

There is no impact from that, everything's insured, the aircraft and everything we do spending on getting that completed and worked with the passengers, everything's insured. Dawn Gilbertson – Arizona Republic: Even legal costs and so forth?

Yes

(Operator Instructions) Your question comes from Mary Kirby – Flight International. Mary Kirby – Flight International: Just a couple real quick questions, did you put a figure on the 2008 ancillary revenue gain?

We said approximately $100 million in the fourth-quarter. Mary Kirby – Flight International: Do you have a figure at all for full year or?

We don’t have it right now. We can get back to you. Mary Kirby – Flight International: Then it's $400 to $500 million for 2009.

Correct. Mary Kirby – Flight International: Do you have any kind of fresh ideas for driving ancillary revenue gains this year?

Nothing that we’re ready to announce yet. Mary Kirby – Flight International: At the risk of asking a predictable question, can you talk at all about this trial of [Lamexis] in-flight entertainment system, why you guys are just doing that for one month? Do you have any kind of real intention bringing either in-flight entertainment hardware or say, in-flight connectivity onboard here in 2009 as your competitors are doing?

We would certainly like to and are working on both projects. The [Lamexis] started, I don't know how long ago, started a long time ago, got behind. We had hoped actually, to have it on a larger portion of the fleet by now, but as a lot of new products go to the longer to get developed, certified and installed than we had hoped. But we do believe that in-flight connectivity and entertainment are important and, so, while we don't have anything to announce today that applies to the whole fleet, we are working on both those projects. Mary Kirby – Flight International: You are working with [Lamexis] to further that goal?

Well, that's one of the alternatives. Mary Kirby – Flight International: Okay, thank you. Derek Kerr : Mary this is Derek, that's the number for a la carte for the full year is about 180.

Your next question comes from Ted Reed – TheStreet.com. Ted Reed – TheStreet.com: I just had a quick thing. Scott, you used to talk about a formula for determining airline results in relationship to GDP what was that?

I said take nominal GDP and minus capacity and divide by two. So if GDP's up 3% and capacity's up 1%, I would have said RASM up to 4%, three minus one, divided by 0.5. Sorry, multiply by two. GDP elasticity is minus 0.5. So if GDP is up 3%, capacity up 1%, you have 2% more GDP growth, so you do capacity, which will lead to twice as much RASM growth, 4% RASM growth. Ted Reed – TheStreet.com: For what ever prediction we have for 2009 how does that formula shake-out?

Tell me what GDP is going to be and that can be the formula. It really depends on GDP. And that's why I have a good forecast for airline capacity, but not as much for airlines RASM. I mean not as much for the GDP. Ted Reed – TheStreet.com: Trying to summarize what you've said here. Seems to me that you're saying, you have these pessimistic trends international down, business down, leisure hurt by low yields, but you're also saying you're going to do better than your competitors. Is that right?

I don't know that I used the word pessimistic, but there's optimistic trends in things like capacity being down as well. So anyway I guess what we’re saying is, I think, everyone's been saying, it’s murky at this point and hard to make projections. But again, we’re not here to try to do that. Ted Reed – TheStreet.com: But you do feel you'll do better than competitors because of the fact that you sited, international, particularly.

In 2009 what ever the industry does, yes, we will do better than our competitors is what we believe, yes, in terms of year-over-year change.

That’s all the time we have for questions. I would like to turn the conference back over to the speakers for any additional or closing remarks.

Nothing really to close with other than thank you, very much, and if any further questions just let us know and we'll be happy to answer what we can. So thanks, again, and we'll talk to you soon. Bye.

Again, ladies and gentlemen, this does conclude today’s conference. We thank you for your participation.