Dan Cravens – Director, IR Doug Parker – Chairman and CEO Derek Kerr – EVP and CFO Scott Kirby – President

William Greene – Morgan Stanley Mike Linenberg – Bank of America Jamie Baker – JPMorgan Gary Chase – Barclays Capital Justine Fisher – Goldman Sachs Kevin Crissey – UBS Sarah Batista – WBTV Dawn Gilbertson – Arizona Republic Tom Belden – The Philadelphia Inquirer Aaron Karp – Air Transport World Josh Freed – Associated Press Ted Reed – TheStreet.com

Good day, and welcome to the US Airways first quarter 2009 earnings conference call. This call is being recorded. At this time for opening remarks and introductions, I’d like to turn the call over to Mr. Dan Cravens, Director of Investor Relations. Please go ahead, Mr. Cravens.

Good morning, everybody, and thanks for joining us today for our first quarter 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; Steve Johnson,, General Counsel; C.A Howlett, Senior Vice President of Public Affairs; Elise Eberwein, Senior Vice President, People and Communications; and Kara Gin, our Vice President of Finance. As we usually do, we’re going to start with Doug. He will provide some general comments on our first quarter financial results and provide an industry overview. Derek will then walk us through the details 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 comments, we will open the call for analyst questions and lastly questions from the media. Before we begin, we must state that today’s call contains forward-looking statements, including statements concerning future fuel prices and 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 Form 10-Q for the quarter ended into March 31, 2009 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 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 archived on the website for approximately one month. The information that we’re 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’m going to turn the call over to Doug, and thanks again for joining us.

Thanks, Dan. All right. We reported this morning a net loss for the first quarter of $103 million versus a loss of $237 million in the same quarter last year. Excluding special items, we lost $260 million versus $240 million in ’08. But even excluding special items, does it really give a reflection of the fundamental earnings of the company. That’s primarily because that measure is highly affected by realized gains and losses on fuel hedging. For example, last year we had to realize gain of $81 million from fuel hedging activities. This year we had to realize loss of $197 million. And of course, hedging gains and losses, they are not long-term sustainable items, but rather more timing issues. So you get a better look at the fundamental change in earnings. We think you need to look at the earnings, excluding special items and hedges. And when you do that, as we outlined in our release, you see we had an operating profit of $8 million for the quarter and a net loss of $63 million. That is versus an operating loss of $287 million and a net loss of $321 million in the first quarter of ’08. That clearly is material year-over-year fundamental driven. And it’s a result of a series of initiatives we’ve taken to improve the profitability of US Airways. Also note that on a relative basis, that’s much more improvement than any of our large hub-and-spoke peers have reported so far this quarter. The steps that we have taken include dramatically improving our operations. Our on-time performance for the quarter was 80% versus 78% in the same period last year. And of course, last year for the full year ’08, US Airways was number one in on-time performance among the Big Six hub-and-spoke airlines. So improving year-over-year is a good thing. We instituted and have reduced [ph] a la carte revenues, which we continue to expect to generate between $400 million and $500 million of revenue for us 2009. We have improved our liquidity. We ended the quarter with $2.1 billion in total cash, which is up from year-end 2008. On a relative basis, it is higher than most of our hub-and-spoke peers. So in summary, we almost had a difficult time for our business due to the global economic recession and airlines are clearly not immune to that. However, we’ve taken significant steps at US Airways to adapt to this environment, and those steps are working. Our employees are doing a fantastic job of taking care of our customers. I want to thank them for that. But as a result of all this, we believe we are well positioned to meet the challenges that may lie ahead. Derek will talk a lot more of the numbers, Scott will talk more about what’s driving this relative performance – outperformance versus our peers, and then we will take your questions. So Derek?

Okay. Thanks, Doug. And I’ll just go with a little more detail on what Doug talked about. We did file our first quarter Q this morning. And in that Q, Doug said we reported a net loss of $103 million or a loss of $0.90 per diluted share compared to a net loss of $237 million last or $2.58 per share a year ago. When you exclude the special credits, the company’s net loss for the first quarter was $260 million or a loss of $2.28 per diluted share versus a net loss of $240 million or $2.61 per share in the first quarter of last year. Doug told [ph], I just want to touch on it again due to the results – the results of 2009 show a significant improvement over 2008 and reflect the steps that we took from our performance for last year. He said the operating income of $8 million was a great number and a net loss of $63 million for the first quarter of 2009. That compares year-over-year to the $287 million that we had in operating loss of last year and $231 million respectively. So those numbers I just wanted to repeat them again, as Doug alluded to earlier. It shows the great improvement we’ve had year-over-year on that basis. During the first quarter of 2009, the company recognized net special credits totaling $157 million. These items include $170 million of unrealized net gains associated with the change in fair value of the company’s outstanding fuel hedge contracts, the unrealized gain of the results of the application of mark-to-market accounting, in which unrealized losses recognized in 2008 will reverse this hedge transactions, are settled in the current period. In addition, we did have a $7 million impairment loss considered to be other than temporary on certain available for sale auction rate securities. And in connection with our previously announced capacity reductions, the company recognized $5 million in charges for aircraft lease returns and $1 million in severance costs. For the quarter, total capacity was 20.4 billion ASMs, down 6.8% from 2008. ASMs came in slightly higher than our previous guidance due to a higher than planned completion factor, which is another indicator that our operation in running very well. Our mainline capacity for the quarter was 17 billion ASMs, down 7.4% from a year ago, and Express capacity was 3.5 billion ASMs, down 4.4% from 2008. We did end the quarter with 347 mainline aircraft and air fleet and still plan on having 351 aircraft by the end of 2009. We continue to replace our older 737 and 757 aircraft with new more fuel efficient aircraft, which will reduce cost over time. In the first quarter, we did return five A320s, two 737-300s, and two 757 aircraft, and we took delivery of two A321 aircraft. For the remainder of the year, we plan to retire 20 aircraft; 13 75s, six 73s, and one A320, and add 23 new aircraft. And I’ll talk about financing for those deliveries in a little bit. We continue to remain disciplined on capacity and therefore have not adjusted our previous guidance of this time. We will, however, continue to monitor the state of the economy and are prepared to make adjustments if necessary. ASMs are projected to be 70.8 billion this year, which are down approximately 4% to 6% versus 2008. Domestic mainline is still expected to be down approximately 8% to 10%. The ASMs breakdown by quarters is as follows. 18.2 billion in the second, which is down 6%; 18.7 billion in the third; and 16.9 billion in the fourth. The recession has had a major impact on our revenues. Scott will go into more detail on the impact later in this call. Total operating revenues for the quarter were 2.5 billion, down 13.5% for the same period in 2008 on a 6.8% decline in total ASMs. Total revenue per available seat mile was 12.02 cents, down 7.5% versus the same period last year. During the quarter, other operating revenues were up $75 million or 39% versus 2008 due to the a la carte pricing model we implemented in the second quarter of 2008. Since that implementation, these programs have generated more than $255 million in revenues and were still on target to generate the $400 million to $500 million that we talked about on previous calls. Mainline passenger revenue was down $1.6 billion, 17.5%. Mainline passenger revenue per available seat mile in the first quarter was 9.49 cents, down 10.9%. Total mainline and Express PRASM was down 11.1% for the first quarter of 2008. On the expense side, the airlines operating expenses for the first quarter were $2.5 billion, down 18.3% compared to a year ago due to a 53% decrease in mainline and Express fuel expense. Mainline cost per ASM was down 12% period-over-period on a 7.4% decrease in mainline capacity. We are very pleased with our cost discipline. Importantly, we did an excellent job successfully controlling costs associated with our capacity reductions. Even with the 7.4% reduction in mainline ASMs during the quarter, we were able to keep our costs in line. Excluding special items, fuel and realized gains and losses on fuel hedging instruments, our mainline cost per ASM was 8.63 cents in the quarter, an increase of only 0.7% versus 2008. Express operating CASM ex fuel was around $0.14 for the quarter, up 3.4% versus 2008. Our average mainline fuel price, including taxes and realized losses on fuel hedging instruments for the first quarter of 2009, was $2.23 per gallon versus $2.60 per gallon in the first quarter of 2008. For the first quarter, we did add 29% of our total fuel consumption hedged. In the first quarter, we settled transactions, which resulted in a realized loss of $197 million or $0.76 per gallon with the impact on the fuel hedge loss in the first quarter. The unrealized loss position maintained at the end of the fourth quarter of $375 million was decreased by $170 million. That’s the 179 realized, offset by a $27 million additional mark-to-market loss. During the quarter, since fuel price did rise through the quarter, which leaves the company in a liability position of $205 million at March 31 for hedges in place for the second and third quarters of 2009. The realization of that $205 million loss in 2009 is included in our forward fuel price guidance. At the end of the first quarter, we had $244 million collateralizing positions held by our hedge counterparties. There was $165 million in letter of credit and $79 million in cash deposits. As of today, the total amount of collateral has decreased to approximately $180 million to $165 million in letter of credit and only $15 million in cash, as our first quarter hedge positions were settled in April. If fuel price remains at today’s level, we would have approximately $80 million in cash in collateral at our counterparties at the end of the second quarter and $5 million at the end of the third. As we talked about in our last call, we did suspend our fuel hedge program in August due to concerns about the impact cash collateral requirements could have on our liquidity resulting from further declines in price of fuel. Given that continued volatility in fuel prices, we have not changed that position and have not added any new hedges since the last call. For guidance on fuel, we are forecasting fuel price in the range of $1.96 to $2.01. That’s based on the April 13 forward curve. Our forecast breaks down as follows. $2.03 to $2.08 in the second; $1.87 to $1.92 in the third; and $1.73 to $1.78 in the fourth. We have 19% hedged in the second quarter and only 8% in the third quarter when our last hedge transaction expires. The impact on our hedge program on fuel cost is currently forecasted for the full year to be an incremental $0.37 for the full year. For the first quarter it was $0.76, as I said earlier; second quarter it’s $0.52; and in the third quarter it’s $0.20. We are revising our unit cost gains downward from our previous levels. Our CASM ex fuel guidance for the remainder of 2009 has mainline CASM ex fuel to be up 1% to 35 versus 2008. Second quarter should be up zero to 2%, third quarter up 1% to 3%, fourth quarter up 2% to 4%. And our Express CASM is forecasted to be up 4% to 6% for the full year. From a balance sheet standpoint, we ended the quarter with $2.1 billion of total cash and investments, of which $1.4 billion was unrestricted. Our total unrestricted cash and investment balance increased by $202 million from the end of the year. Total cash included $180 million of auction rate securities at 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 a $165 million of cash collateralizing letters of credit, with certain counterparties to the company’s fuel hedge transactions that I just talked about. Not included in our cash balance as of March 31 is the $79 million in cash deposits held by fuel hedge counterparties. Please remember for modeling purposes that you need to add back this $244 million, as unrestricted cash throughout the last three quarters of 2009 to reflect the expiration of our hedges since it’s already reflected in our fuel price guidance, comes back as follows. $164 million in the second quarter, $75 million in the third quarter, and the remaining $5 million in the fourth. In the second quarter, we expect total and unrestricted cash to build. And as of today, we have a higher cash balance than we ended the quarter. Although the capital markets remain extremely tight, during the quarter we closed on a series of financial transactions, which raised approximately $115 million in net proceeds. The company’s first quarter financing transactions included additional loans under a separate parts loan agreement, a loan secured by certain airport landing slots and an unsecured financing with one of the company’s third party Express carriers. Looking at CapEx, we continue as always to have tight restrictions on capital spending. We have reviewed all the capital items and we will continue to closely monitor all capital spending. Our first quarter CapEx was $35 million. We continue to forecast total CapEx to be $365 million in 2009. Let me just go back. The first quarter CapEx is non-aircraft. Our first quarter aircraft CapEx was about $80 million. This includes non-aircraft CapEx. For the full year, the CapEx is broken down to non-aircraft CapEx of $180 million and net aircraft CapEx of $185 million. We take a moment to review aircraft CapEx. We have 25 deliveries in 2009, of which 20 have committed financing. Two of those came in this quarter and were delivered. So we have 23 left. The company is currently evaluating alternatives for its five A330 deliveries and expects to obtain financing for these aircraft at customary advance rates on terms and conditions acceptable to the company. As we talked about in the last call, the manufacturers working with us to complete a transaction for the first two aircraft that deliver in May and June. So in summary, we are in the industry of lot of uncertainty around where this year will take as we continue to take the steps necessary to make it through this uncertain environment. We have reduced capacity, increased a la carte revenues, maintained our cost discipline, and enhanced our liquidity position. So with that, I’ll turn over to Scott to go through the rest.

Thanks, Derek. And I’ll take a minute to talk briefly about our operational results and then turn to the revenue environment. We are extremely proud of our team that continues to do a superb job operationally with an 80% on-time performance in the first quarter. The significant improvement offer other operational metrics by mishandled bag ratios, complaints, et cetera. Turning to the revenue environment, during the first quarter we saw consolidated passenger RASM down 11% while total RASM was down 7%. Importantly, the impact of ancillary revenues significantly cushioned the fall-off in passenger revenues. The US Airways had the best year-over-year total RASM and revenue performance of any other network carriers. During the quarter, we continued to see a decline in business demand. Additionally, we experienced weakness in leisure yield as the industry resorted to aggressive discounting to fill seats. It’s important to note, however, that leisure demand measured by volume – measured by load factor was still strong. Despite the movement of Easter and the decline in business demand, load factor was strong throughout the quarter. I’ll talk more about this in our outlook going forward, but I think it’s an important point that a necessary step to recovery since the foundation of getting yields back up has to begin the strong load factors. On earlier conference calls I said that our bookings depended on the headlines. When headlines are good, bookings are good, and vice versa. Recently that has worked into fare sale activity dependent on the headlines. As the headlines got worse, airlines ran more and more fare sales, which not only impacted leisure yield, but since there are fewer and fewer restrictions, the root of fare sales have also impacted business yield. For some regional color, in the first quarter domestic total RASM, which includes cargo revenue, was down only 4%. Latin was down 10% and Transatlantic was down 20%. We expect that both Latin and Atlantic will underperform domestic by an even wider margin in the second quarter. Across the Atlantic, the costly environment has deteriorated even more than in the domestic environment and the (inaudible) concerns in Mexico were the significantly weaker bookings in that region. So at the moment, we are very happy with our large domestic exposure. With that, I’ll turn to the revenue outlook going forward. I think our view is similar to what investors have heard from other airlines this season. The revenue environment does seem to have earned [ph] out, which means it isn’t getting worse. But there also aren’t yet clear signs of it getting better. There is still the significant uncertainty on the revenue front going forward. We know that leisure yields will be down for the next few months. The for-sale environment has been pervasive. Loans are still strong. So hopefully that should lead to a better pricing environment down the road. And while it hasn’t happened yet, in fact there has been a couple of industry fare increase attempts in the last few weeks is attitudinally important. Those increases wouldn’t have much impact on actual revenues. It’s only applied to structure fares, but nonetheless significant that are perhaps a sign that others are also seeing a strengthening in demand. And we are still waiting for business demand to recover. With the US Airways, no other airways are going to be able to predict this very far advance that’s obviously dependent on the economy and business confidence. Today we haven’t seen it, but are hopeful that all the macroeconomic signs, maybe the economy has turned the corner which (inaudible) ready to improve business demand. But we can’t yet make a prediction on the full quarter RASM. We do obviously have good visibility of April. For our network, we think that Easter caused March to be about four points worse than April, while April is about four points better in terms of RASM. We currently expect April RASM to be down about 10%. So when adjusted for Easter, April is right in line with March result and consistent with a flattening revenue environment. While we can’t give you a great read on the longer term outlook, the one thing that we do feel highly confident about is that US Airways will continue to outperform the industry in terms of total RASM and revenue performance because, A, domestic continue to outperform international and then even wider margin going forward; B, we have the highest exposure to ancillary revenues of any network carrier because of our domestic focus in shorter step; and C, we are less exposed to the deteriorating international cargo environment. So in summary, the macroeconomic environment remains a concern and generate significant uncertainty about the future outlook. We are hopeful that the tentative signs of bottoming that we and others are seeing means the economy has turned the corner and will lead to improving revenue results in the future. Regardless, however, we forget about US Airways ability to continue outperforming the industry (inaudible). So I’ll turn it back to Doug.

Thanks, Derek and Scott. All right. Operator, we are ready for questions.

Thank you. (Operator instructions) And we will take our first question from William Greene with Morgan Stanley. William Greene – Morgan Stanley: Yes, hi. So you placed this large equipment order sometime ago before the credit markets kind of melted down, and I realize you’re trying to get some of this financed. But as we think about coming out of this financial crisis system maybe in the future, I think it may be is reasonable to think that that cost could actually be quite a bit higher. So if demand doesn’t follow a sharp V-curve from here, it’s not clear to me how the math can really work at essentially higher debt costs. So Doug, maybe you can just comment, sort of put your CFO hat back on, and when you think about return calculations for this order, how does this going to evolve? How do we make this math work?

Okay, Bill. I mean, before I get to this note, I don’t think we’ve gone back and done the analysis with the entire debt costs in place. What I know is the analysis when done prior – done before was about replacement. And that I think was nicely being [ph] positive. And my strong expectation is somewhat higher, even largely higher interest costs aren’t going to change that calculation. What these aircraft are coming in to do is replace older airplanes that are less efficient. And when we – so it’s definitely can’t be positive when we had them financed. And again, I don’t want to pretend as though we’ve gone and done that analysis again, Bill, now that you’ve asked, I’ll make sure we’re going to do it. But I’m confident what we do is going to come out to still be a decision we are very happy with because we are replacing older less efficient airplanes with newer more efficient airplanes. William Greene – Morgan Stanley: And so as you look then at the international side as well, because part of the order was also predicated that you can grow pretty dramatically on the international side. Obviously that’s looking quite a bit weaker here. And maybe that’s just temporary, I assume probably is. But how do you think about changing that viewer evolving that? Do you have to slow it a bit, maybe the entry [ph] or it should be deferred?

Let me start on that and Scott will fill in the details. But just on – from a higher level, first off, there is the ability to uses of airplanes replacement. We use 767 that can be transitioned out over time. So if indeed we don’t want to use them as growth, we have the ability for mainly the replacement. And the second thing I’d note is, our international growth is not because of how much smaller we are than others. The routes we are adding are routes like Tel Aviv, which others – you know, routes that have much more profitability than more marginal routes than others. The other airlines, the United is because they are much bigger than us on adding. So our marginal amounts are still (inaudible). Anyway, Scott can do a better job of explaining that for you.

Yes. I’d echo those two points. One, we have near-term flexibility with our 767, a number of which are on month-to-month leases. So we could get out of those airplanes for literally for next year if we wanted from a number of those airplanes and use the A330s as replacement aircraft. Second, we are much smaller internationally than others, which in the near-term will be a positive, but in the long-term it still creates growth opportunities and takes [ph] that we already see like Tel Aviv and Rio as opposed to the more exotic and smaller destinations that some others are adding, because they already have a full international portfolio. And third, despite the fact that international is declining more rapidly than domestic, so the relative results are getting worse. It’s still likely to be more profitable than domestic. So it’s declining more rapidly, but it starts from a higher and more profitable base. So for those three reasons, we have a lot of flexibility, but are still comfortable with growth. And as you alluded to, by the time we have to make decisions on whether to replace airplanes or continue growing, we will have a better read on the economy going forward. William Greene – Morgan Stanley: Right. All right. Maybe just one quick question on costs here. You actually have done a good job here in the first quarter, especially versus where your guidance was. Is that at all related to the disappointed perhaps on how revenue is trended. Maybe there is a component on the revenue side here that affects your costs. And so I’m curious why the good performance in the first quarter maybe didn’t extend into the full year guidance.

Bill, this is Derek. Yes, there is a little bit of that. It’s only probably about one point of the difference. There was a – as in others, we have seen some credits coming back on aircraft, airport rent and things like that in the first quarter that we hadn’t expected. And our maintenance was better by about a point. And that’s more timing related than anything else. So we still see good cost guidance going forward being zero to two in the second quarter, but it’s not – we are not pulling it down as far as our original guidance that we had in the first quarter. I think we’re at five to seven and we came in at about one. So there is still good cost control going forward for the rest of the year. Some of it timing related. William Greene – Morgan Stanley: Got it.

And Bill, you shouldn’t look at our cost guidance as some indication of what we think the revenue (inaudible). They are not really – William Greene – Morgan Stanley: Okay. Thanks for the time.

We’ll take our next question from Mike Linenberg with Bank of America. Mike Linenberg – Bank of America: Yes. Just two things. One, Scott, this is just a clarification on the RASM. You said that you expect it to be down 10%. Is that total RASM or is that PRASM?

That’s passenger RASM. Mike Linenberg – Bank of America: Okay, good then. Hopefully the few RASM numbers down a little bit less.

Yes, total RASM would probably be about four points better than that. Mike Linenberg – Bank of America: Okay. Okay, good. And then my next question is, just regionally – I mean, I know you sort of gave it from a business versus leisure perspective. But regionally maybe what you are seeing, I mean – you know, I think about where you’ve taken some big capacity cuts like Vegas, maybe make the numbers there a little bit better. I’m sure that the shuttle markets are under tremendous pressure. Just within the domestic, maybe where the pockets of strength are, any additional color would be great.

Okay. Well, clearly international is the worst, not only in terms of passenger RASM, but it had deteriorating cargo revenue and doesn’t have the benefit of ancillary revenue. To that end, we typically think of Mexico like the (inaudible) behave like it. But it is also deteriorating significantly with the increasing media related to Mexico. In the domestic environment, business oriented markets are certainly the weakest. The shuttle RASM was down over 20% in the quarter. And the shuttle is just as an example. And other business oriented markets are similarly impacted. Phoenix and Vegas, because they have had more capacity cuts, did relatively well. Hawaii continues to hold up and do well. The pricing environment hasn’t deteriorated as much there, and perhaps people that were going to either Europe or Mexico are now going to Hawaii. So it’s held up further than that. It’s not really much in terms of regional differences. It’s just a matter of what the percentage of business versus the regional demand, and that’s really driven the relative results. Mike Linenberg – Bank of America: Okay. And just one other, Scott. That $5 fee at the airport checking the bags, any early feel on what that can mean on an annual revenue basis? I mean, I know it’s small, but I guess every bit helps.

We aren’t giving a forecast of that. It depends on how much consumer behavior changes. Maybe it will be helpful to us if more customers check-in online for obvious operational reasons or hoping that that happens. But just for some statistics about a quarter of our passengers check in online and 75% at the airport today. Mike Linenberg – Bank of America: Very good. Okay, great. Thanks.

(Operator instructions) And we will take our next question from Jamie Baker with JPMorgan. Jamie Baker – JPMorgan: Hi, good morning, everyone.

Hi, Jamie. Jamie Baker – JPMorgan: Scott, I know we are here to talk about US Air, but I’ve been surprised, as have others I suppose, that Southwest continues to resist the pursuit of bag fees and other ancillary revenues. If one takes them literally, it implies that you are losing share most likely in markets like Phoenix, Vegas and Philadelphia. And I’m wondering if you actually are seeing any evidence of that.

We are not seeing evidence of that. And I think if you drill down into the numbers a little more deeply, you see, for example, our domestic total RASM down 4%, which if you adjust for relative capacity differences and the fact that our domestic has some international component to it, it is frankly right in line with where the low-cost carriers are at a high level. We absolutely can’t see any evidence of that as happening. I would say, I’ve said this before as well though, that while we can’t see evidence that is material enough to counteract the benefit that we get from total RASM, it’s possible that Southwest sees very small market share from a number of carriers that when added all together, the only carrier that doesn’t have bag fees maybe actually is positive for Southwest. So it’s possible this is a stable equilibrium where with only one carrier not matching and all of the others having bag fee is best for that one carrier, but also best for all the other carriers. So we can’t see any evidence. I’m sure that there are customers that have moved, but in such a small amount that it is lost in the noise of our data. We can’t see any evidence and clearly think it is RASM positive, revenue positive for us. It’s harder for me to tell you that for Southwest, but there has [ph] at least been a theory where it’s RASM positive for them as well. Jamie Baker – JPMorgan: Sure. I’m not surprised that that’s the answer I would have expected at March end. A follow-up on the revenue guidance, PRASM that’s with the P as in pappa [ph], down 10 in the month of April with 300 to 400 basis points of positive Easter in there. That would imply that if nothing gets better and nothing gets worse that May and June are looking in the down 13 to down 14 range, or is there something in the year-ago period that we should be taking into consideration?

Well, I’m not giving a forecast for May or June, to be clear. But I think you’re right. If you take the March, April average and call that down 14, and anything worse than that implies that May and June got worse and better implies we got better (inaudible) across the industry just for the math. The one thing I would say is, we still had in March and April some benefit from a better booking period in earlier in the year. So the further we get away from the better fare environment, the more you just expect sequentially based on declining levels. So I would actually say that a slight decline from March/April to May/June means we will dig a system with a bottoming, but not improving revenue environment. Jamie Baker – JPMorgan: Got you. That’s very helpful. Thanks everyone.

Thank you, Jamie.

We’ll take our next question from Gary Chase with Barclays Capital. Gary Chase – Barclays Capital: Guys, I thought the P in RASM wasn’t for pappa, it was for please get better.

That is Jamie’s quote. Gary Chase – Barclays Capital: Yes. Just a couple quick questions. Scott, you said something interesting on the headlines and fare sales. Are we to take that that you are seeing less inventory – less discounted inventory on the market? Has something changed? I mean, certainly the overall headlines have gotten a heck of a lot better than they were a few months ago.

Well, the fare sale environment hasn’t really changed at the moment. It’s still pervasive. But the fact that you’ve seen so far increased attempts on structure, Gary, that’s why I called it attitudinally important. Maybe a sign that others are seeing strengthening demand and other change. I just – I don’t know what others are going to do. But as we run load factors, and I expect that we are going to run load factors that are near or above last year’s level in this quarter, that tends to be a precursor to a stronger fare environment on loads although there is going to always be one or two carriers that decide to discount to fill the empty space. And that just becomes less rational as load factors go up. So I think it’s encouraging that load factors are high, though to be honest, we haven’t really seen that yet. The fare environment is still pretty ugly at the moment. Gary Chase – Barclays Capital: Are there enough structure fares that get sold in June to really moving the yield? I mean, to take your comments mean a fare hike is just symbolic and not really material?

Yes, the fare hike would have been more symbolic. I mean, there are – just a similar interesting data. 40% of our revenue in the first quarter came from structure fares. That was about 53% last year. So, a big decline. I think that gap will widen in the second quarter and be even fewer of fares at a structure level. Gary Chase – Barclays Capital: Sorry, that was 40% versus 53%?

Yes. Gary Chase – Barclays Capital: Of course, they are over 53%. Okay.

Right. Gary Chase – Barclays Capital: And also just curious, I mean, what – as you look at the capacity plan and – just for I guess everybody, as you look at the capacity plan, do you think the need to improve for you to think that maybe you’ve got too much capacity in the system? In other words, if we see no recovery and we just bounce along the bottom, do you have the right capacity plan in place or would you want to go a little further?

We are looking at that right now. We are currently in the middle of going through planning for our mid-August schedule change, so in the summer schedule change. So, nothing really significant is going to happen during the summer. My view is that if we’ve bottomed that aren’t improving that we should have probably less capacity. Gary Chase – Barclays Capital: Okay. Okay, thanks very much, guys.

Thanks, Gary.

And we’ll take our next question from Justine Fisher with Goldman Sachs. Justine Fisher – Goldman Sachs: Good morning.

Hi. Justine Fisher – Goldman Sachs: I just was hoping you could remind us of the type of financing that you have in place for the narrow bodies on delivery. Is it just backstop financing?

No. We have – through June, those are completed deals. Bank financing through all the deliveries through June. And then from July to December, those deliveries are backstop financing. Justine Fisher – Goldman Sachs: Okay. And when you guys say that you are looking for financing for A330s, I’m sure that you are looking at options, but are there sale leaseback opportunities such that you may not end up having to shoulder such an expensive interest rate? What kind of options are currently available here?

It is possible I think on the first two deliveries. Those will be debt financed on the last three deliveries. It’s possible sale leasebacks. And also I would have to say on the back half with the A320s and 321 narrow bodies, there is a possibility to do sale leasebacks on some of those aircraft and not use the backstop financing. Justine Fisher – Goldman Sachs: Okay.

I would just add – you shouldn’t just assume that the backstop financing is exceptional expensive, it’s not. Justine Fisher – Goldman Sachs: Is it? Okay. Then I guess I imagine you’re not going to tell the rate of it, but –

I mean, yes. But anyway, it puts your question that the financing is an extraordinary expense, but it’s not. I mean, we would prefer to go out and not do with backstop for a number of reasons. But it’s not a number that’s going to rise to the level of changing your models because we use backstop financing as opposed to using back financing. Justine Fisher – Goldman Sachs: Okay. Can I hesitate to even debt [ph], I mean, would you say it’s in the sort of low-double digits?

No, I cannot. That I can’t do. But – Justine Fisher – Goldman Sachs: I’m going to try.

I don’t want to make you think you are going to make changes to your models in using backstop versus banking condition. Justine Fisher – Goldman Sachs: Okay. And then just to double-check on the cash situation, I mean, you said that you expect the cash build in the second quarter and your liquidity has obviously been in better shape versus the fourth quarter. Do you guys see the need to go – I mean, to me it doesn’t seem necessary. But do you see the need to go out and raise more financing heading into the second half of the year at this point?

What I look at right now is not particularly easy to do so. Of course (inaudible). Look, I mean, I think in this environment I hope I’d like to have much cash in hand than possibly could. But the fact of the matter is we are not looking for financing right now. We agree with you, we certainly don’t see anything right now. That said, but we need to have for cash on hand. But if we do, that’s a big if, we’ll work on that at a later date. Justine Fisher – Goldman Sachs: Okay. And then just to double-check the cash balance on hand as for the credit agreement with about $1.46 million I think this quarter? Is this right?

Yes. Justine Fisher – Goldman Sachs: Okay. Excellent. Thank you so much.

Thank you.

We will take our next question from Helane Becker with Jesup & Lamont.

This is actually (inaudible) speaking for Helane. She was just curious on when you guys are going to file your investor update on your website with the quarterly numbers.

It will be out at 11 o’clock.

11 o’clock?

Our time 11, so 2 o’clock your time.

Okay, thank you.

(Operator instructions) And we’ll take our next question from Kevin Crissey with UBS. Kevin Crissey – UBS: Hi, guys.

Hi, Kevin. Kevin Crissey – UBS: How much of your cash has the related to air traffic liability with it? Well, how much has basically been forwarded from credit cards would be subject to the holdback, if there had been a holdback?

I don’t understand that question.

We have 25% holdback today with our credit card companies, both Amex and Visa, MasterCard. Kevin Crissey – UBS: Okay. So I guess the question is, is the 75% that wasn’t held back, how much of your total cash balance would that represent?

I don’t know. We (inaudible) Kevin. Kevin Crissey – UBS: Okay, no problem. We are looking at things – thanks to the capacity cuts, whether it was locker or – debatable where how much of it was left with fuel running up, but it’s certainly overall good industry discipline with regard to capacity But, say, two years from now, when times are better or maybe hopefully it will be sooner that, if times are better and if profits have returned to the industry and growth returns, I guess the question is – we are seeing the benefits of this and analysts always love when there is cost of capacity. Why should we ever be excited about the ratchet-up of capacity kind of at any point in time. And then it’s going to return. You’re already seeing JetBlue kind of tweak in towards that. Two years from now, if you guys kind of say, hey, our capacity is going to be up 2%, that’s no big deal. Why should we look at that as not a bad thing?

(inaudible) I break the promise. Frankly, Kevin, I think what we’ve gone through the last couple of years, it was maybe longer than that, but it’s hopefully getting us to an industry that actually understands that we have to get to real returns on capital. And in the past we’ve been able to get away with not getting real returns on capital and still growing because we had others who would fund that growth outside of the investment community suppliers, aircraft lessors, manufacturer, et cetera. And I think those days are certainly not going to come back to the way they were, and it’s helpful. And furthermore the management teams, certainly ours, and I believe many others now understand the air those ways. And what we need to do is get this business to where it actually does get returns on capital and that if you’re not going to go invest in airplanes, they need to actually provide a return that (inaudible) bigger. And again, I think our industry has a lot of things still to fix and that’s way up on the list, which is the management focus on returns as opposed to market share. Like I said, I know we did it. I think we talked to most other management teams, they do not get it. We’ve been very encouraged by what we’ve seen from our industry response to crisis in the last year and a half. And I’m hopeful to see change for the future, but you’re right. If we will get through this number and that’s what we need to do is, that would be unfortunate. Kevin Crissey – UBS: Okay. And last question if I could. Any cost-saving opportunities or other opportunities on the distribution side? I mean, that’s for Scott.

Hopefully there will be agreements come up, like others have said on their calls, that model is changing. We expect that model to continue to migrate to lower cost to the airlines and those costs to be born elsewhere and actually the cost of distribution actually to be less. So I think (inaudible) immediate term, but over time I think there will be. Kevin Crissey – UBS: Okay, thank you.

Thank you, Kevin.

And that does conclude the analyst portion of the question-and-answer session. We will now take questions from any media by pressing star one on your telephone keypad. And we will take our first question from Sarah Batista with WBTV. Sarah Batista – WBTV: Hi, how are you?

Good. Sarah Batista – WBTV: Just a question, I’m wondering – you talked a little bit about your plans to save cost by replacing some of the aircraft that fuel cushion planes. But I’m wondering if there are any other changes you’re planning on making to cut cost. Anything that would affect customers particularly here in Charlotte where you’re based?

We don’t have any other plans. In fact, we’ve got a number of items that we are doing to enhance customer services to help improve efficiency for the low cost for us or actually save cost. But all of our plans focused on improving the customer experience. Sarah Batista – WBTV: All right. At this point, you said you were charging fees to check-in. Is that right? Check-in, unless it’s online.

Correct. Sarah Batista – WBTV: Okay. What other fees are you charging right now as far as – I know there are some extra baggage fees?

Well, we have all kinds of fees. We can get back to you with a complete list if you want, but – Sarah Batista – WBTV: Yes, that would be helpful. Okay, that’s it. Thank you.

Thanks.

And we will take our next question from Dawn Gilbertson with Arizona Republic. Dawn Gilbertson – Arizona Republic: Good morning.

Hi, Dawn.

Hi, Dawn. Dawn Gilbertson – Arizona Republic: I just a couple – actually three quick questions. First of all, I don’t know, this is for Doug or Derek. But there seems a disconnect out there on your liquidity and your prospects. I think it was just as Jamie Baker came out with a report saying your prospects are less clear, I mean, as the year gets on, not your prospects for surviving, but in terms of ability to raise cash and set your covenants for looking tight. But yet, Doug, you just said you certainly don’t see anything right now that says we need to have more cash on hand. So can you explain what I see as a disconnect?

Yes, it’s probably a better question for Jamie than for us. Dawn Gilbertson – Arizona Republic: But it’s not just Jamie.

I’m not sure about that. But anyway, I mean, that report, I’m saying it wasn’t upgraded. Anyway, you asked, so I got to comment I guess on Jamie’s report in listening and I’m sure (inaudible). But nonetheless, I mean, first off, just the numbers we released today, we – news to that analysis could think the cash numbers we have in this are about $175 million higher than he had this first quarter and he had this burn in cash in the second quarter. And Derek just said we expect to build cash in the second quarter. So there is just some – the disconnect is in the actual cash balances on hand and what’s going to happen going forward is point one. But then, Dawn, I mean, to be clear though, I mean, none of us I think are sitting around thinking that you can’t develop scenarios that are bad for airlines. What I would point out is, one, in those scenarios, we are starting with more total cash relative to our size and a number of peers. And two, as we’ve outlined, we’re outperforming the other hub-and-spoke carriers on an operating basis on operating cash flow. But we are improving faster than the rest, as Scott has described. (inaudible) we used to have less international exposure than they do, which has turned out to be very good at this point in time. I mean, those margin differentials, as Scott talked about, they were surprising to me even how much does that – I mean, that’s kind of stupid. But it doesn’t mean our numbers like this. It’s not usual that we follow so closely. But the fact domestic total RASM was down 12% while the transatlantic was down 20%. Because we focus so much in our business about passenger RASM, there is a lot of things happening that aren’t in the passenger RASM any more like ancillary revenues and cargo revenues that have a big difference between domestic and international. Anyway, what I’m getting at is, the domestic entity is performing so much better than the international entity. That describes so much on what’s going on in our industry right now. That’s why airlines like AirTran and Southwest (inaudible) so much better than others. It’s just because the domestic community actually is performing reasonably well right now. And so on anyway, our exposure there helps. So those are the two points I made, which we had more total cash on our side and we are outperforming (inaudible). So that gives us some comfort, but we certainly don’t rely on that comfort. And I can say we certainly – knowledge can develop the scenarios that have all airlines. If this global economic recession stays like this for a sustained period of time, we are going to develop scenarios that scenarios (inaudible). Problem with those scenarios is that they always – we don’t really into managing, and we had this exact conversation a year ago where we planned it up. Indeed we wouldn’t sit and not manage, and we didn’t. And in a much more dire situation than where we are right now, we are able to go out and raise $930 million [ph] in new capital last year. So anyway, I’m not about to say that you can’t create scenarios whereby a number of airlines, including those airways find themselves in some liquidity issue. The problem with those scenarios is they (inaudible) we don’t do anything about it. And we’ve done as we have in the past. If indeed we get to that situation again, and it’s a huge if, but if we do, I would just encourage shareholders, customers, everyone not to assume we are going to [ph] do about it in response, because we have never done that before. Dawn Gilbertson – Arizona Republic: Okay. Two more quick ones. You have a pilot trial starting here in Phoenix on Tuesday. What do you see at stake for US Airways in that trial?

Well, hopefully we’ll get some closure on this dispute. So anyway, what we would like from a company’s perspective is that the closure on this has been, as you know, a highly emotional issue for our former US Airways pilots and our former America West pilots. They have not been able to resolve amongst themselves. So now it’s going to court, and we need to get result. So we’d like to see resolution. Dawn Gilbertson – Arizona Republic: What’s the state on the illustrations right now?

We continue talks on a regular basis. They clearly – I mean, I just give you no answer. They clearly are covered by the fact that we don’t have scenarios. So we need to get that as a result in some point. Dawn Gilbertson – Arizona Republic: Okay. One last quick one. On the delta $50 second checked bag fee for international, Scott, have you made decision on that front?

We have not yet – we are looking at it and can’t comment on specific plans. Dawn Gilbertson – Arizona Republic: Okay, thanks very much.

Thanks, Dawn.

And we will take our next question from Tom Belden with The Philadelphia Inquirer. Tom Belden – The Philadelphia Inquirer: Yes, thank you. Good morning, afternoon.

Hi, Tom. Tom Belden – The Philadelphia Inquirer: Have you been rethinking given the decline in RASM on the transatlantic services, in the rethinking, some of the thinner routes that you have been flying to the smaller markets, are all of those performing well? Or do you think that out of Philadelphia (inaudible) that you may have to rethink some of those markets?

It’s really too early for us to make any kind of decision about that. The environment looks really weak on year-over-year basis for the next few months, but there are some signs the economy has bottomed. And we expect that if the economy has bottomed and recovered, the things will be good again. So we aren’t going to make a knee-jerk response from a capacity perspective until we have more information. If anything, I think what we might do is turn back some of the services in the off-peak period. Hopefully things recover in 2010 and get right back to flying the region. Tom Belden – The Philadelphia Inquirer: Some of that you now fly year around?

Right. So we might not fly them year around or we might fly them fewer days per week. We are in the early stages of looking at that. But I expect it to have dramatic changes in our international schedule any time soon. Tom Belden – The Philadelphia Inquirer: All right. Good, thank you.

And we will take our next question from Aaron Karp with Air Transport World. Aaron Karp – Air Transport World: Yes. How do you think the full year is going to look for the US industry in general? I mean –

I’m sorry, we cannot hear you. Aaron Karp – Air Transport World: Can you hear me now?

Yes. Aaron Karp – Air Transport World: Based on all the results that come out, things look a bit mixed right now. You before have been somewhat optimistic about how this full year could go for the US industry. What do you think now with all the first quarter results in the books?

I’m sorry, can I ask –

Well, I think the question is related to comments earlier that the industry can be profitable even in recession. Is that what you’re asking about? Aaron Karp – Air Transport World: Yes. Do you think that that’s still possible for this year in the US industry?

Yes. I mean, again, this is – again, I’m careful not make in this environment – I will be very careful (inaudible) so volatile. But clearly, it’s not because it’s volatile. What’s happened here is some demand has dropped off currently for business travelers (inaudible). And it all depends on your assumptions as to when that happens and if it happens. But clearly, I mean, these – like I said, what you’re seeing right now is in all cases, the industry is doing much better than even last year. And it’s – I don’t think it would stretch at all to create a scenario that the industry being profitable for 2009. Aaron Karp – Air Transport World: Thank you.

Your next question comes from Josh Freed with the Associated Press. Josh Freed – Associated Press: Hi there. On the new $5 fee for checking the bag at the airport, can you say a little more about what the thinking is behind that? What I mean is, is it because you’re going to actually clip the $5 and realize the revenue that way or is it because you are hoping to drive more online check-ins? And if that’s the case, could you say a little more on what the value of that is financially to the company?

It’s more about trying to get less – to have less go-on at the airport in terms of the processing of passengers at the airport. So what we’d like to do that we have this functionality is encourage customers that are checking bags could go before they can [ph] check-in online and pay for it there. And if they choose not to, we will charge them to have a processing fee. But it definitely is designed to make the experience better for our customers by having shorter lines. Again I mean, we are managing the process well right now. We haven’t had major issues with processing times since the new baggage fees have been put in place, but clearly drives some additional time to collect $5 fee or $15 for a first check bag. And if we can streamline that way because we are doing online. We think that – we know that’s better for our processing time and we think it’s a better customer experience. So that’s what we’re trying to accomplish with this. Josh Freed – Associated Press: Okay. Have you attached any dollars in terms of savings on that processing time? I mean, can you leaner staff at the counters then? Does that translate financially for you at all?

(inaudible) about it, just shorter lines. We are not looking at this as a way to reduce our cost through less staff, but more of a way to make the experience for the customer easier. Josh Freed – Associated Press: Okay, thank you.

Yes.

Our next question comes from Ted Reed with TheStreet.com.

Hi, Ted. Ted Reed – TheStreet.com: Hi, thank you. Maybe you’ve talked about this before, but I haven’t heard you. I know that impact of 15.49 was very positive for the industry and for all the airlines. But did it have any economic benefit for US Airways?

I don’t think so. We didn’t see the increase in bookings or anything like that, if that’s what you’re referring to. Ted Reed – TheStreet.com: All right. Yes, I was. All right, just a thought. Thank you.

And at this time, we do not have any further questions. I’d like to turn the call back over to Doug Parker for any closing comments.

Let me close it. Now, thank you all very much for your time. If you have any additional questions, I think you know where to find it (inaudible). We’d be happy to do if we can answer your questions. Thanks again for your time.