USAirways

Joe BeerySr Vice President and Chief Information

Officer

For the Record• Yes your aircraft is very safe you have nothing

to worry about

• I do not control where we fly to, I can not get another flight into your city or more First Class Seats

• I did not cancel your flight

• I did not lose your luggage and I can not find your luggage

USAirways Who We Are

PWM

OAJ

MGW

LEB

AOO

ISP

RKD

ABE

ALB

AVL

AVP

BTV

BUF

CAECHA

CHS

CLT

CMH

CRW

ELMERI

FAY

GSO

GSP

HPN

ILM

ITH

LGA

LWB

MDT

MHT

ORF

PVD

RICROA

ROCSYR

TRITYS

OGSMSS

HVNERI

ACKMVY

ART

BFDFKL

JHW

LBE

DUJJST

PQI

HYA

AUG BHB

PHF

SBY

CHOCVG SHD

HGR

HTS

LYH

CKBLNS

FLO

EWNPGV

AHN

AGS

BLF

BKW

HHH

SWFBGM

IPT

SCE

GCK

DDC

HYS

GBD

MHK

ALBBUF

CAE

CHS

CMH

LGA

MDT

ORF

PVD

YYZ

SLN

SAV

TLH

CAKCMH

DAY

YUL

CAK

CHA

DAY

HSV

TYS

YUL

CAK

YOW

LIT

SCE

BGR

JAN

GNV

MGM

MOB

SDF

XNA

GRR

JAX

LEX

PNS

EYW

LAS

GCM

BHM

STTSXM

NAS

SDQ

BDA

BNA

JAX

MBJ

MSY

RSW

SJU

SRQ

AUA

FPO

BGI

CZM

BZE

PLSPUJ

SJOSAL

GUA

PTYKIN

LGW

FCO

MAN

CDGFRA

MADMUC

AMS

GLA

YYC

YVR

SNAPSP

YUM

OGG

SJD

PVR

SAN

LIH

MZT

SJC

HNL

SFO

HII

HMO

GYMGDL

AUS

BOI

MEXCUN

ORD

ATL

BDL

BOS

BWI

CLE

CMH

DCADEN

DFW

DTW

EWR

FLL

IAD

IAH

IND

LAS

LAX

MCI

MCO

MEM

MIA

MKE

MSP

PBI

PHL

PHX

PIT

RDU

SEA

TPA

STL

ABQ

ANC

ASEBFL

BIL

BUR

CLD

COSDRO

DSM

ELP

EUG

FAT

FCA

FLG FMN

GEG

GJT

ICT

IGM PRC

JFK

RNO

SBA

SBP

SLC

SMF

TUS

LGB

MFR

MRY

OAK

OMA

ONT

PDX

SAT

KOA

TEX

YEG

32 Countries/Territories (Europe, Mexico and Caribbean)

223 Total Destinations

The Merger

A Tale of Two Cities

(East and West)

BackgroundUS Airways (East)

– Outsourced to Sabre/EDS since 1998 prior to Y2K – Similar to American Airlines– Limited new development, no technology refresh– Legacy systems and infrastructure – Survived 2 Bankruptcies

America West (West)– EDS hosted Reservations System– Internal development in most areas– Recent upgrades were Tier 1 providers– Modern network and infrastructure in the field

Integration Strategy

• Migrate to lower cost internally supported systems • (In sourcing)• Scale and integrate current applications• Add functionality where needed (international)

• Leverage internally developed distributed applications• Americawest.com will be re-branded to USAirways.com• Americawest kiosks will be re-branded • FlightFund system will be renamed to Dividend Miles

Achieve synergy savings $100 Million

Challenges

• Run 2 airlines daily operations

• Move the from an outsourced model to a hosted model (new EDS contracts)

• Ramp up staffing in the IT department

• Integrate the systems and upgrade the infrastructure

Infrastructure

• Convert from a legacy multi protocol environment to a modern IP network.– $45M Airport upgrades

• 10,000 new desktops• All new switches, hubs and routers• 800 new kiosks

– Voice upgrades• Call center and campus switching• 2nd Datacenter upgrades

Reservations System Specifications

• US Airways operated with approximately 3M Passenger Name Records and 5M e-tickets.

• America West operated with approximately 2M Passenger Name Records and 3M e-tickets.

• Cut Over in 8 hours

Airline Operations

• Phased approach based on Fleet type, migration happened over time.

• Massive data migration – Aircraft parts– History

• Migrated the dispatch center over night

• Currently building a new command center

IT systems were merged in 25 months achieving a single

operating certificate.

Sept 2005 – Oct 2007

• A “needy” business group is a good indication that they are very engaged and consequently well prepared for cutover.

• Small program team was able to maintain tight control over the entire program, managing changes well with a high quality of communication.

• Dress rehearsals were invaluable in uncovering issues with timing, and technology.

• Migrations are so complex, it’s best to have it in-house. There is an important difference between high level working knowledge and a deep understanding of how things actually work.

Lessons Learned –What Worked Well

Lessons Learned – What Didn’t Work Well

Training Training Training • Insufficient process testing by airport team

did not reveal Agent training shortcomings prior to cutover.

• Still working on the labor contracts

IT Strategy Today and Going Forward

IT Investment ModelIT Market Place is broken up into 4 major sectors:

Hosting

Buy

Build

Out Source

Sabre EDS

AWA

USUS

New

Our Goal is to move

more to the middle

Build vs. Buy

Build Criteria:

1. Significant competitive advantage

2. Speed of execution is desirable and the environment is very dynamic

3. No provider exists in the market place

Buy Criteria:

1. Tier 1 provider

2. Strong market position

3. Solid technology with a good investment plan

Innovation

Leading

Edge

First

Follower

Late

Adopter

Bleeding

Edge

Innovation is based on desired risk/cost and ROI.

Cost and Risk

$$$

Return on Investment

(ROI)

We will be a good “First Follower”

US

New

Internet and AirportsBuild

• Self Service Kiosks and Gate Readers

• Internet Distribution – USAirways.com– USAirwaysVacations.com

Employee and Back Office

Continued implementation of the ORACLE Suite.- Human Capital Management - Payroll- Purchasing - Fixed Assets - I-Learning- I-Recruiting - Cash Mgmt - Accts Rec - Contract Mgmt - Budget and Forecasting

• Enable self service options for Human Resource Functions.

• Enable all employee travel benefits on-line including family members.

• Provide on-line training for Airport and Reservations.• Standard industry proven package

Buy

Buy

Longer Term 3 to 5 Years• We are going to have to upgrade the

reservations system. There are other partners that may have options in 3-5 years, we are currently evaluating all options.

• Service Oriented Architecture (SOA) will enable more seamless application integration at much lower costs (Microsoft, ORACLE).

• All applications will have to operate in a handheld mobile configuration (In-flight entertainment, reservations, customer/employee notifications).

Where are we Today

The Industry

• Unprecedented financial crisis because of fuel (again)

• Consolidation continues – America West – USAirways (Done)– USAirways - Delta (Almost)– Delta – Northwest (Working)– USAirways – United (Almost)

2008: The Price of Fuel• Fuel expense will cost the industry an additional $18 billion in 2008

versus 2007 and US Airways nearly $2 billion

WTI ($/bbl)

Historical Industry Fuel Prices

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

$21 $14 $19 $30 $26 $26 $31 $41 $57 $66 $72 $118

GC

Je

t ($

/ga

l)

Gulf Coast Jet

Fuel Expense Mainline Passenger

$70 $65$55

$65$84

$118

$150 $151

$299

2000 2001 2002 2003 2004 2005 2006 2007 Current

• US Airways’ average fuel expense per round trip mainline passenger will average approximately $300 in 2008.

Fuel Prices Impacting Entire Industry

Industry Response

• Significant Capacity Reductions– All major airlines reducing U.S. capacity– Domestic Available Seat Miles (ASM) expected to

be down 9% in 4Q08 and down 9% in 2009 vs. 2008

• New Revenue Streams and Cost Reductions– Baggage fees (First Bag, Second Bag, Third Bag)– Choice seating– Removal of in-flight entertainment system – Removal of ovens

Industry Response

• Introducing a new in-flight beverage purchase program.

• Amending the airline’s Dividend Miles frequent flyer program.

These are aggressive responses that will have a material impact on future industry

financial performance

Thank You