Good day, and welcome to this US Airways Q3 2010 Earnings Conference Call. This call is being recorded. At this time for opening remarks and introductions, I’d like to turn this call over to Mr. Dan Cravens, Director of Investor Relations. Please go ahead, sir.

Thanks, Scott, and welcome everybody to the US Airways Q3 2010 earnings conference call. Joining us from Phoenix today are Doug Parker, Chairman and CEO; Scott Kirby, our President; and Derek Kerr, our Chief Financial Officer. Also in the room for the Q&A session are Robert Isom, our Chief Operating Officer; Steve Johnson, our EVP of Corporate; and Elise Eberwein, our EVP of People and Communications. Like we typically do, we’re going to start the call with Doug. He will provide an overview of our Q3 financial results. Derek will then walk us through the details on the quarter, including our costs and liquidity. Scott will then follow with commentary on the revenue environment and our operational performance, and then after we hear from all those 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 statements concerning future revenues and fuel prices. These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ materially from those projected. Information about some of these risks and uncertainties can be found in our earnings press release issued this morning, our Form 10Q for the quarter ended September 30th, 2010, and our 2009 Form 10K. 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 Company Information/Investor Relations section. A webcast of this call is also available on our website and will be archived 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. Thanks again for joining us, and at this point I’d like to turn the call over to Doug.

Thank you, Dan. Thanks, everybody, for being on. We reported this morning a profit of $240 million – excluding special items it’s $243 million – and that compares very nicely to a loss excluding special items last year of $80 million. So a large improvement quarter over quarter, which we’re obviously extremely happy to see. It’s also worth noting it’s the highest Q3 profit in company history, and that includes all the predecessor companies; so the best quarter that this company’s produced since the merger or that any company prior to the merger produced. So that obviously is something we’re pleased to report. It’s thanks, of course, to the work of our 30,000 hardworking employees. They’re doing a phenomenal job of taking care of our customers. They’re doing that by providing industry-leading operational reliability, which is leading to these record results. So we’re also extremely happy that our year-to-date results include $60 million for profit sharing accruals and operational incentive payouts, and that we’re recalling flight attendants and pilots as well as hiring in our other work groups. These results are, as I say, they’re the result of a lot of hard work and focus by our team. The things we did to get through crisis have gotten us to these record results. Those include reducing capacity, redesigning our network to focus on areas where we really have a competitive advantage, maintaining our cost discipline, increasing insulary revenues, and establishing our industry-leading operational reliability. That’s good news for US Airways, but frankly we believe that this quarter’s results are a watershed event, not just for US Airways but for the US airline industry. I mean today, with oil at over $80 a barrel, an economy that’s slowly and begrudgingly pulling out of a recession – yet the airline industry is…

Thanks, Doug. We did file our Q3 10Q this morning, and as Doug said, we reported a net profit of $240 million, or $1.22 per diluted share. And again, this is our highest Q3 net profit in the company’s history. This compares to a net loss of $80 million, or $0.60 per share, in the Q3 of 2009. We did have net special credits totaling $30 million in the Q3 2009 and a net charge of $3 million in special items this year. When you exclude these special items, the company’s net profit for the Q3 was $243 million, or $1.23 per diluted share, versus a net loss of $110 million, or $0.83 per share in the Q3 last year. Today’s results produced a pre-tax margin excluding special items of 7.6%, an improvement of approximately 12% year over year. In addition, our EBIDTA margin – which we believe is the correct way to look at operating margins in our industry –was 17.3%, which improved nearly 10 points on a year over year basis. For the quarter, total capacity was 22.9 billion ASMs, up approximately 1.6% versus 2009. ASMs came in slightly higher year over year due to a higher completion factor as we continued to run an efficient operation. Our mainline capacity for the quarter was 19.1 billion ASMs, up 2.3% from a year ago. Express capacity was 3.7 billion ASMs, down 1.5% from 2009. We continue to maintain our previous ASM guidance. Mainline ASMs are projected to be 71.6 billion this year, which is up approximately 1% versus 2009. Domestic mainline is still expected to be down approximately 1%. Q4 ASMs – mainline ASMs are forecasted to be 17.4 billion, up 4.1 % from 2009. We’re still completing our 2011 planning process, so formal ASM guidance for 2011 will…

Thanks, Derek. And as always, I’ll take a minute to talk briefly about our operational results and then turn to the revenue environment. We’re extremely proud of our team who continue to run a superb operation in the Q3. The operational numbers are so good that I’m running out of superlatives to compliment the people of US Airways, but we were #1 in MBR, which is mishandled baggage rate, for each month in the quarter; #1 for departures within zero; and consistently at the top of the industry ranking in all operational metrics. So the team accomplishing all this and keeping a lid on expenses at the same time. Turning to the revenue environment, during the Q3 our total RASM increased 15%, the past year RASM increased 14.4%. Compared to 2008, our Q3 RASM was still down 4%, though of course Q2 and Q3 of 2008 represent the all-time high for airline revenues as the economy was strong and airlines responded to high fuel prices with aggressive price increases. Revenue at an industry level continues to be down almost 10% compared to 2008, but the RASM results are down slightly less due to the 5% reduction in capacity over the last two years. The Q3 was largely a continuation of the revenue environment that we experienced in the Q2, neither an acceleration nor a deceleration in the revenue trends. For some regional color, trans-Atlantic RASM was up 32% and domestic was up 11%; versus 2008, trans-Atlantic was down 6% compared to 2% domestically. As we move into the Q4, the comps get more difficult across the board, particularly for international markets, and we expect trans-Atlantic to outperform by a much lesser margin in Q4 and beyond. To be clear, however, that’s simply a function of the comps getting more difficult…

Thanks, guys. Operator, we’re ready for questions.

(Operator Instructions) Our first question comes from Jamie Baker of JP Morgan. Jamie Baker – JP Morgan: Hey, good morning, everybody. Can you hear me?

We can. Jamie Baker – JP Morgan: Great. Doug, just following up on a question that I asked of Delta this morning on the topic or rather definition of “discipline,” a term that’s increasingly thrown around these days; you used it this morning, for example. And it’s sometimes thrown around a bit loosely. Can you articulate precisely what the term means to US Airways?

I’ll try. Discipline. I think in the generic term, discipline is a focus on what you’re supposed to do and not succumbing to temptation. And those that are disciplined do just that, and those that don’t remain disciplined end up succumbing sometimes to temptation. What that means for business, for the airline business, I think what you’re supposed to do is clearly defined for us. It’s to work for the people that own the company – our shareholders – and to maximize their long-term value. And that’s what we’re supposed to do. So those that are disciplined remain focused on that. Temptation, I guess, in our business comes in all sorts of different shapes and sizes from time to time. Sometimes the temptation is, as opposed to creating value it’s you know, wanting to be the biggest or caring more about market share than you do about profitability. We’ve certainly seen that happen in the past in our business. We’re competitive people and you don’t like to see someone else getting more share than you do sometimes – that’s temptation. Sometimes it’s public perception. Things like baggage fees are not well-received by consumers. We know that. We have to manage that, but it’s the right thing to do for our airlines and therefore for our customers. So it’s different, they’re hard decisions, but again, sometimes airlines just succumb to public perception and push back and do so at the expense of their companies. You know, sometimes… Look – our employees have been through so much. There’s huge temptation to go and take care of your employees and restore them to positions they’ve been in the past even though the airline can’t afford it. And those that are disciplined work hard with their employees to help make sure they understand that…

I can comment on both. First on the Mesa deal, we’re happy to have that done and have a degree of certainty around what’s going to happen with that contract going forward but also reducing our costs. It will save us about $28 million per year on the expenses. If you recall, this is I think one of the only contracts that hasn’t gone through a restructuring – most of the regional contracts got restructured in bankruptcy. This was one that was originally signed in 1999 so effectively it’s now been marked to market. So we’re happy about that and happy to support Mesa’s exit from bankruptcy with that contract. As to the rest of our contracts, I’m not sure if they’re the lowest in the business. My guess is they actually aren’t because some of the others got remarked to market after ours. But to me the next one doesn’t come off of lease for several years, so I don’t anticipate any significant change in the rest of our regional feed for several years. Jamie Baker – JP Morgan: Okay, excellent. And Doug, thanks again. I do appreciate the comments today, and for reminding me and everybody how long I’ve been around.

I’ve been around longer, I’m afraid. Thanks, Jamie. Jamie Baker – JP Morgan: Thanks.

Our next question comes from Michael Linenberg of Deutsche Bank. Michael Linenberg – Deutsche Bank: Yeah, hey – good morning, guys. A couple questions here. Doug, can you just update us on where we are with the pilots and that process? And I think what’s kind of interesting about sort of where everything is, is even though they haven’t fully integrated it hasn’t stopped you from putting up record profits, which is very interesting. So if you can sort of talk where you are and maybe even just comment on potential savings that you could get as a result of having an integrated work force, if at all.

Sure, I’ll comment on where we are with the pilots, and I’m not sure I understand the second part but you can follow-up if I don’t answer it. The pilot’s situation is not much changed from the last time we spoke. Our pilots remain unfortunately engaged in a seniority dispute that has gotten itself into the federal court system and has yet to be resolved. And again, without going through all the blow by blow, I think you know that’s where we are, Mike, and it’s still going on. So we’re still there. Until we have resolution on the seniority dispute it’s impossible to get to a joint contract. So that continues. As to your question, I think I understood this, I’ll try. And if I don’t have it again, just let me know. As to what it means for us while that goes on, you know, we have an extremely professional and great group of pilots that are doing their jobs while they work through this dispute. And they show up, do their jobs. As a result our customers see no impact whatsoever from this dispute. Having said that, we would very much like to see it get resolved. It’s clearly not the long-term solution and if it’s not the long-term solution we’d better get it done sooner rather than later. It’s not healthy for the organization; it’s been too long. We’re working very hard, trying… We’ve actually now had to enter this litigation fray because we needed some declaratory judgment to understand exactly what we can and can’t do. So now we’re somewhat involved because we had to be. So we’re working really hard to get this resolved because we’d like to, and we think it’s the right thing long-term. So to be clear, what I think you wanted, our goal is not to keep the two groups separate and keep doing what we’re doing just because it saves us some money. We would happily pay the costs necessary to integrate the two workforces and get our team all working as one. Unfortunately it just hasn’t been able to happen because of this protracted seniority dispute. Michael Linenberg – Deutsche Bank: Yeah, you answered it. That’s sufficient. That helps me. And then my second question, I want to go back, Scott, to when you talked about the RASM. And I want to make sure I heard those numbers right, what you said for the month of October and then you said what it was for October. Did you say what – 7% for what you were seeing for this point for October, and you thought RASM could be 5% to 7% for the quarter?

That’s correct. Michael Linenberg – Deutsche Bank: And they’re both RASM numbers? Was it 7% for October RASM and then 5% to 7% for the full quarter?

Yes. Michael Linenberg – Deutsche Bank: And Scott, I guess that does lead to the question – last year when you look at sort of where you were in October versus November and December, as I recall I thought the November/December comps are a lot more difficult than October. Is it more even on a tier stack and that’s what’s influencing kind of the ‘09 versus the ‘10 numbers?

You know, you’re talking about 1- and 2-point differences, and it’s hard, I think, to sort through 2009 – November/December comps are meaningfully more challenging than October. It’s a different answer actually if you look at 2008, and a third different answer if you look at 2007. Michael Linenberg – Deutsche Bank: Alright, that’s what I thought. That’ll be it, okay.

Yeah. We feel pretty good about the forecast, that it’ll come in. We obviously have a lot of certainty about October. We have really good bookings on the books right now for the holidays, both Thanksgiving and Christmas looks strong, and importantly they look strong not only on the peak travel days but also where we see the most load factor strength is on the off-peak days that run at relatively low load factors during that period. So we’re encouraged about the holidays. Don’t have many of the business bookings yet that are going to occur in the first half of November and the first half of December, but again, the business environment’s been strong. So we feel relatively good about the forecast. Michael Linenberg – Deutsche Bank: Yeah, and I just would add, Scott, 5% to 7%, that seems pretty good when you look at your mix. I mean you’re a bit more domestic than many of the other bigger carriers, and you may not be flying to the markets where the currency effect is so much greater. When I think about what’s going on in the Pacific or down to Australia, or even parts of South America. I mean I know you have the one flight down to Rio but that’s really it.

Yeah. I mean, if you look at our network, my guess is our RASM on a year-over-year basis in total will under-perform others’. When you look at it on an entity basis, I mean we’ve only got a couple of reports so far for this quarter, but of the three airlines I suppose that have reported we have the highest domestic RASM and we also have the highest trans-Atlantic RASM. Not being exposed to the Pacific, RASMs are growing 40% to 50%. Ours isn’t the total RASM comparison, but domestically and across the Atlantic we’re doing really well. Michael Linenberg – Deutsche Bank: Okay, very good. Thank you.

Our next question comes from Gary Chase of Barclays Capital.

Hello, Gary. Gary Chase – Barclays Capital: Hi. Hey, guys. Doug, can I just ask you to maybe tighten up, I don’t know, I think the last part of Mike’s question there? As you look at those bookings for the Thanksgiving and Christmas period that you were referring to, is it fair to say that those are significantly better than last year and that’s what’s driving the thought process?

They’re what our expectations are. I think the forecast is driven by… We have a reasonable ideas of where the holidays are going to come in because they start to book in advance, and if you want a little more detail we classify them as off-peak days and peak days during the holidays. And the off-peak days last year ran something like 85% load factors, or the peak days; and the off-peak days ran something like 65% load factors. So the peak days are booked flat year over year, but they’re going to go out at that same kind of load factor; and the off-peak days are booked up about 3%. Yields are good so we feel good about the demand for the two holidays. Again, the first three weeks of November and the first three weeks of December is mostly about business demand; they’re some of the lowest leisure demand weeks of the year. So that traffic has yet to come on the books, but business demand has been consistently strong this year. And absent the economy tipping down, I think that that will come through. You guys all did sequential analysis differently and so I’m hearing my implication from both you and Mike that you’re surprised that both November and December will be as strong as they are relative to October. That’s… Gary Chase – Barclays Capital: I guess what I’m thinking is trying to square with… I head you say and it’s certainly been my perception that the corporate environment has been stronger and that the incremental strength has come on the corporate side. And I just wondered if what you were trying to convey or what you had started to indicate in terms of those bookings for November and December was a break from that. Have you started that?

No. I think it’s the continuation of the same thing. We have confidence about the holidays but also believe that the business revenues will continue to be strong in November and December. Gary Chase – Barclays Capital: Okay. And could you talk specifically about the Atlantic and what’s been going on there? You know, if I think about a typical just RASM change from the Q3 to the Q4 from US Airways and the Atlantic, I’m going historically anyway, based on what’s in Form 441, you know, you’re typically down about, let’s call it somewhere between 15% and 20% – obviously a lot of seasonality in that business. But is there something about what’s happening at US Airways, some of the developmental flying that you’re doing that would mean you should outperform that this year?

I don’t know – I’d have to go through those specific numbers with you. The trans-Atlantic has done really well for us, and that’s despite pretty significant ASM growth on a year over year basis. So the Q2 and the Q3, despite having capacity growth that’s at the top end of the industry, our RASM has also been the best in the industry across the Atlantic. So some of the things that we’ve done, we have much more corporate demand. We’ve actually made a real push to get more corporate business, and that includes a lot of initiatives in Europe to get more corporate business. Our corporate sales team has done a good job of getting a lot more corporate on the books so we have more up-front business demand. Some of those markets are just maturing for us and also as we’re serving more points in Europe – so places like Rome and Charles de Gaulle, which we are not serving both out of Charlotte and out of Philadelphia – we can offer a better, a more comprehensive product to corporate accounts that’s helped us get more business. So I’m not sure why we’re outperforming other than those things, but we have been and I expect that to continue. Gary Chase – Barclays Capital: It sounds like it may continue even incrementally, right?

I don’t know for sure but I certainly hope so. Gary Chase – Barclays Capital: Yeah. And then just a quick one. When Derek was talking about the international growth next year, is that predominantly in the Atlantic?

It is in the Atlantic and also, well I guess it’ll be the end of the year so there’s not a lot of ASMs, but flying from Charlotte to Sao Paulo, which we’re really excited about being able to get into Sao Paulo, the other business market in Brazil, one of the fast emerging market economies. But the rest of it will be to Europe. Gary Chase – Barclays Capital: Thanks very much, guys.

Yep, thank you.

(Operator instructions.) Our next question comes from Hunter Keay of Stifel Nicolaus. Hunter Keay – Stifel Nicolaus: Hi, guys.

Hi, Hunter. Hunter Keay – Stifel Nicolaus: I want to phrase this carefully – I’m curious to get your opinion on why you think there is not first bag fee on almost all international routes, and I’m not asking if you’re going to do one. I’m just wondering what you think maybe has prevented the industry from trying to go down that path.

Well, I think it’s because our international partners are nervous, not just ours but the international partners within all of our alliances are nervous about it because they haven’t done it before. Just like it was hard for all of us to do it the first time, they’re nervous about it. I suspect that eventually it’ll happen but it’s reluctance on the partners’ part I think that stops it. Hunter Keay – Stifel Nicolaus: Okay, that’s helpful and what I thought. I appreciate that. And following the close of the UAL merger, what does this do to your position in Star? And could it ever reach a point where membership becomes somewhat of a hindrance to your own growth opportunities, where maybe you have some better, more unique prospects, sort of a free agent?

Well, we are very happy to be in Star and I think the merger absolutely worst case is neutral to us, but more than likely presents new opportunities. Star is the best alliance in the world; it’s the largest, it’s the most well-integrated, has the most partners in Europe. We carry, I was just talking to Gary about our international improvements – some of those are our international partners in Europe and our ability to carry traffic beyond their hubs. So it is important to us. It’s a significant part of our international business, and we hope there’s opportunities to expand our partnership with Star and particularly expand our partnership with United. Hunter Keay – Stifel Nicolaus: Okay, thank you for the time. I appreciate it.

Thank you.

Our next question comes from Dan McKenzie of Hudson Securities. Dan McKenzie – Hudson Securities: Good morning, guys. Thanks, nice quarter. Based on a read of the schedules data this afternoon it looks like there is some increased competitive capacity in the US airways markets relative to the Q3, primarily from Delta. From your perspective, how material is the increase competitive to passing for US Airways, and in other words, how big an overhang is that on the unit revenue guidance that you’ve put out this morning? And then secondly, what’s the best way to respond to those competitive challenges?

Well, there’s been a number of routes, some of which are already flying and some of which are coming online. The more significant ones are the LLC routes that have come on. And US Airways, we’ve had a benign competitive environment for the past couple of years, and we’re now starting to really in the Q3 and going into the Q4 have a worse than average competitive environment. We actually have done some analysis on that, and I think that that new competitive capacity is probably going to impact our RASM by about 1 point. That’s implicit in the guidance we’ve already given – we have a 1 point kind of annual impact of all those capacity cuts. And what we do to combat that is continue to run a great operation and be the preferred choice of customers, and also make disciplined – back to Doug’s earlier definition – and rational decisions. We now have 99% of our capacity deployed in markets where we have a significant presence, either in Phoenix, Charlotte, the D.C. area or Philadelphia. And so in all of those markets where we’re competing with someone because we can carry more connecting traffic than they can, we have a competitive advantage. And in the long run that competitive advantage wins. So we don’t get into irrational competitive responses to it but continue to compete based on having the best service in the market and having the best position in the market, is how we will compete. That said, the 1% too that’s lost in LaGuardia, hopefully we will be able to get our transaction approved by DOT, particularly with all the changes that have occurred – the most significant and most recent, the Southwest/Airtran merger will allow us to get our LaGuardia DCA slot transaction completed. Dan McKenzie – Hudson Securities: Wow, very good. I appreciate that. And then just a second question here, with unit revenues up 5% to 7%, it does suggest that the Q4 is going to be close in terms of a profit. And I know investors are very interested in this – do you have the confidence at this point to predict a profit for the Q4?

We’re not giving profitability guidance, Dan. We’ve given you a lot of other guidance and you’ve got to come to your own assessment on that. Dan McKenzie – Hudson Securities: Okay, fair enough. I appreciate that, thank you.

(Operator instructions.) Our next question comes from Kevin Crissey of UBS. Kevin Crissey – UBS: Hi, guys. Thanks for the time. Scott, maybe you could talk about… I may have missed it, but RASM, kind of thinking about it by hub rather than by entity, how you’re doing in Philly and Charlotte relative to maybe other locations?

Well, it gets confusing if you just look at it on a year over year basis because you’ve also got to look at the capacity situation. Charlotte is our most profitable hub but it also has RASM up on a year over year basis at least, but that’s because it has pretty significant growth in capacity. Philly and Phoenix are up similar amounts but have capacity reductions; they have a bit of a tailwind in terms of capacity. And DCA is up an amount similar to Philly and Phoenix on a year over year basis, but it never dropped off. The government, I suppose, kept DCA going along just fine even during the 2009 recession so it never dropped off. So just looking at the simple statistic on a year over year basis probably isn’t the fairest way to do it, but I think if you adjusted for all of that we would be seeing strength really in all of those markets. Kevin Crissey – UBS: Okay, thanks. And there’s good news and there’s bad news about being at all-time record profits. The Wall Street cynical view would be that means there’s only one direction to go from here. That’s not necessarily where we’re sitting, but when we think about forward looking revenue outlook and you’re talking about getting back to 2008-type levels of corporate revenue and overall revenue, and however we want to measure it against two years ago, three years ago, whatever – it’s still a good number in historical context. So when we think about projecting forward on the revenue basis, are we going to be at normal revenue-type growth for the industry, below, above? I mean obviously you don’t know for sure, which is maybe how you can talk about it.

Yeah, and you know, this’ll just be my opinion which everyone has, and we don’t have any real reliable data for our long-term forecast. But we’re at an industry level about domestically 10% below where we were in 2008 in terms of total revenue. I think it’ll probably take us a couple of years to close that gap, but I think we will close that gap and I think we’ll close that gap faster than GDP growth. So I think the industry will, my guess is it will beat… If you have capacity growing at the same rate as GDP next year, I think the industry revenue will grow at least a couple of percent beyond that for the next couple of years as we close some of that gap which we lost in 2009. I don’t think we will get back to the GDP revenue ratio as it existed historically; I think we have had a long term secular decline in that. But I think we’re still below that long-term secular trend line so there’s room to bounce back at a better than GDP rate. Kevin Crissey – UBS: Thank you very much.

Thank you.

Our next question comes from Bill Greene of Morgan Stanley. Bill Greene – Morgan Stanley: Hey, Doug, I wanted to ask you about some of the competitive landscape. So you guys have been in favor of consolidation for a long time; the last two attempts didn’t work out when you were involved. So assuming you still believe in consolidation, and your prior remarks certainly suggested that you think that’s certainly been good for the industry, how do you think about making US Air an attractive partner for what I assume will be some consolidation in the future?

Thanks, Bill. Let’s back up a little bit. You’re right – for a long time we’ve been on these calls talking about the need for consolidation, and we’ve been active in pursuing consolidation opportunities. And as you say, some of that activity hasn’t resulted in us participating but has resulted in the industry consolidating, which again was the goal. We were always clear to say that the industry needs consolidation. We think we’re better off if we participate but we’re definitely better off if it happens than if it doesn’t happen, irrespective of whether or not we participate. And the reality is it’s happened. I can vividly recall, I don’t know how long ago it was, but seven or eight years ago standing in front of people and telling them that I think this industry’s headed to an industry that one day will have three to four legacy airlines and one or two large nationwide low-cost carriers. And at the time, people were thinking that was not possible and that I was being overly optimistic on the industry’s ability to consolidate. Today we have four legacy carriers and two large, nationwide low-cost carriers. So we’ve gotten to the high end of that range. The question is can you get to the low end? Are there one or two more deals to do? But we’ve gotten to the high end and the result is an enormous difference in this industry’s ability to produce adequate returns for its investors. As it relates to US Airways, we don’t foresee anything happening in the near future. We plan to keep running standalone and proving as I said in my introductory remarks that this is real. I think there’s enormous shareholder value to be created simply by continuing to do what we’re doing. We are…

Yeah, Bill, that’s far enough away and speculative enough that it’s not something I probably need to be commenting on. I’ll stick with what I’ve said, which is that we want to be in a position of strength. And a position of strength means an airline that has done what I’ve said, has done what you’ve said, which is shored up the balance sheet, produced returns over a sustainable period of time, proven itself able to do that. And with that vision of strength any number of opportunities become available to you. Bill Greene – Morgan Stanley: Okay. Thanks for the time.

Thanks, Bill.

Our next question comes from Helane Becker of Dahlman Rose. Helane Becker – Dahlman Rose: Thanks very much, operator, and thanks for squeezing my question in, guys. Just a question with respect to something you alluded to – I don’t know, Doug, if it was you or Scott on the LaGuardia DCA slot swap transaction. Can you just kind of give us a sense of… I know it was in court but where does that stand? What’s the timing of when that can close and things like that?

We’re going to have to let Steve Johnson answer that for you, Helane, who’s been working hard on this.

Hi, Helane. I think as you know and everybody on the call knows, we did initiate litigation with the DOT over the slot swap in July, and that process is working its way through the court system. I think that if that case continues we would have oral argument before the 9th Circuit sometime, or sorry, before the DC Circuit sometime before early next year, and a decision by the pane would follow in the ordinary course, in three or four months’ time. But we’re more excited about the discussions that we’re having with the DOT to resolve the issue, to complete the transaction. The focus of those discussions, well first of all I’ll say that some of you heard Ben Hurst’s comments on the Delta call this morning about this, and I echo those remarks. And I’d just add that the discussions that we’re having with the DOT are about the evolution and the effects of that evolution on the marketplace, both in New York and Washington, D.C., since the order was issued. As Scott briefly mentioned there have been four transactions that have occurred since that order – the Jet Blue/American Airline slot swap at Washington National and JFK, the United/Continental merger, the United/Southwest slot deal at Newark – I guess I should say probably the Continental/Southwest slot swap at Newark – and now Southwest’s proposed acquisition of Airtran which we think will be approved by the NI Trust authorities. In any event, as a result of those deals slots have continued to evolve into the hands of the low-cost carriers, and bother greater New York and greater Washington have gotten less concentrated and a lot more competitive. Indeed, as Ben pointed out this morning, at Washington National there are now more slots in the hands of low-cost carriers today than the number the DOT targeted with the required divestitures in its order, which is a very significant event. In any event, we think those changes have resulted in a significantly different environment, one that should allow the DOT to approve our slot deal without the divestitures and that’s the focus of our discussions and our work with the DOT. And hopefully that’ll bear fruit. Helane Becker – Dahlman Rose: Okay. So in the second part of your statement where you talk about being more excited about those negotiations, are you thinking then that that’s a transaction that could get done by year end? Or are you still thinking it’s a 2011 event?

Well, I don’t know and to the extent that anything can get done before year end, it would just be an announcement of an approval of the transaction. If you’ll recall from our discussions last year that the actual completion of the transaction and the effect on our numbers is actually phased over a period of time. So I think the most we could hope for is that we could start closing the deal in 2011 and complete it over the course of the end of that year. Helane Becker – Dahlman Rose: Okay, great. Thank you very much. I just have one kind of housekeeping-type question, and that’s when I look at your other revenues, is that including change fees plus bag fees and things like that in there? Or is there some number for ancillary revenues that’s also in passenger revenues?

Oh no, all that is in other revenues, Helane. Change fees and some of the things like choice seats revenues are in passenger revenues. Most of it’s in other. Helane Becker – Dahlman Rose: Okay, thank you. Thank you very much.

Thanks.

(Operator instructions.) Our next question comes from Glenn Engel of Bank of America/Merrill Lynch. Glenn Engel – Bank of America/Merrill Lynch: Good afternoon. Two questions. You didn’t give Latin RASM for the quarter, and two, people have talked about the Southwest/Airtran transaction and the impact on Delta. You’re a big player in the southeast – how do you think it could affect you?

Okay, I didn’t give Latin RASM because it’s not a terribly meaningful statistic, but it’s 12.4% on a 59% increase in capacity. The reason I say it’s not a terribly meaningful statistic is because that’s largely due to us adding Charlotte to Rio de Janeiro, so the earlier comps are misleading because that’s leads to a 59% increase in capacity. But those are the specific numbers. And as to Airtran/Southwest, as Doug has said and as we’ve said consistently, we think that consolidation is good for the industry and it reduces fragmentation in the industry and creates a more rational industry. Part of the way that the industry has made it through the crises of 2008 and 2009 has been because of consolidation and because of a more rational, less fragmented industry. So we think it’s a positive.

If I can go on, Scott, on account of the larger scale of the Southwest/Airtran transaction, back to this theme we’ve now created of “things are different this time,” I think there are a couple things in there that are noteworthy in terms of how this is different from the past. First, they announced the transaction. I mean the Southwest acknowledgment that they had limited organic growth opportunities is extremely noteworthy. It clearly shows we’re reaching a state whereby the domestic industry, the players in the domestic industry acknowledge that it’s largely mature. Even Southwest giving the acknowledgement that their ability to continue to expand required them to go do a transaction with AirTran is a big statement. So I think that’s noteworthy. The other thing I’d note is you know, Southwest now has also I believe acknowledged what many of us have been saying all along, what all of us have been saying all along primarily, except a few others, which is if indeed you want access to slot controlled airports you should go acquire it. That’s what we did, that’s what America West did to get access, by working to merge with US Airways; that’s what others have done over time to acquire access to slot controlled airports while Southwest and some others have argued in the past they should be given that access. I think this indicates they now acknowledge it’s not something to be given but something you go acquire because it’s something that’s been acquired by the rest of us. So as assets are bought and sold, and Southwest is acknowledging they need to go purchase it. So I think that’s very positive. Glenn Engel – Bank of America/Merrill Lynch: I guess what I was driving at is how is competing against Southwest different than competing against AirTran? I know Southwest has one class, and not necessarily lower fares than AirTran but it does tend to get a much better business mix than AirTran.

Well, we have more experience and more overlap competing with Southwest than anyone, so we feel good about our ability to compete with Southwest. And as to differences between Southwest and AirTran, I’ve heard others comment on things like pricing so I’m going to avoid doing that. But I think both are good competitors, and not large differences. I suppose there’s a little bit of benefit in competing against an airline that won’t have first class as compared to AirTran having first class, but I don’t think that’s meaningful. And Southwest is a very effective competitor and will likely cancel out any of that benefit. So I mean it is still net good for the industry, but not any big product reasons to prefer one versus the other. Glenn Engel – Bank of America/Merrill Lynch: Thank you.

Thanks, Glenn.

And this concludes our Question-and-Answer session with the analysts. We will now take questions from the media. (Operator instructions.) Our first question comes from Megan Neighbor of the Arizona Republic. Megan Neighbor – Arizona Republic: Hey guys, how are you doing?

Great, thanks. Megan Neighbor – Arizona Republic: Good. I wanted to direct this to Scott. What if anything could change your Q4 forecast for US Airways?

Well, it could just be wrong. Or, you know, there could be further strengths in the economy, further weakness in the economy. We give that forecast but the truth is we probably have only 40% of the revenue booked for the quarter, so we have a lot of bookings left to come in. So we can be off by a little bit. But barring some shot to the economy or terrorism, we probably are going to be pretty rival on the forecast. Megan Neighbor – Arizona Republic: Okay, thank you.

Thanks, Megan.

Our next question comes from John Crawley of Reuters. John Crawley – Reuters: Hi, guys.

Hi, John. John Crawley – Reuters: Doug, I think you said a few minutes ago that you don’t perceive anything happening in the near future. Were you talking about, I know you were talking about US Airways, but were you also talking about the industry? Or just for your airline?

I was speaking about US Airways, John. I can speak a lot more intelligently about it than I can anything else. But having said that and if you want me to speak about the industry, I think… I don’t know what others are up to but I don’t imagine there’s much else going on. Again, I mean we’ve gotten to the point where there’s not much else to do. Certainly among the legacy carriers I don’t think there’s any chance of any activity going on if US Airways isn’t involved; and then amongst low-cost carriers, I just don’t know. John Crawley – Reuters: Okay, alright. Thank you.

Thank you.

Our next question comes from Josh Freed of the Associated Press. Josh Freed – Associated Press: Hi there. Delta on their call seemed to suggest that they were going to be more aggressive about yield management sort of around the holiday time. And I’m just wondering if you can say anything about your approach to yield management, and whether it’s more aggressive in terms of holding out seats for later sale; if you’re approaching that differently than you used to.

We always approach it in an aggressive manner, and as demand strengthens you naturally are more aggressive in terms of yield management. So I think that that’s not something to talk about on an earnings call because it’s just part of the day-to-day business. Josh Freed – Associated Press: Alright, thanks.

And our next question comes from Ted Reed of TheStreet.com. Ted Reed – TheStreet.com: Thank you, I have just two things. Derek, I wondered if this was the most profitable Q3, what was the most profitable quarter of all time.

I don’t know that answer, Ted.

We’ll get back to you, Ted. Ted Reed – TheStreet.com: Alright. And secondly, so there’s four network carriers left, three of them have about 50% of revenues from international and one has about 25% to 30% of revenue from international. Is that sustainable?

Well, that’s an opportunity for US Airways, and we are currently generating margins that are at the top of that group of airlines, despite the fact that we don’t have as much international and despite the fact the international is a higher margin. And it’s the reason we’re growing internationally, and it creates a unique opportunity for US Airways that others don’t have, or at least others don’t have nearly to the same degree. Ted Reed – TheStreet.com: And where would that growth be do you foresee initially? Would it be South America or Europe and is it constrained by fleet?

Well, you’ve seen our growth in the last few years. Most of its been to Europe. We’ve now gotten access to Rio and have access to Sao Paulo coming up. So we’ll continue to try to go to South America as the opportunities are there and as the rights are there. We’ll obviously also continue to grow from Charlotte to Europe; that will continue as will, I think we will eventually have service from Phoenix to Europe – at least it’s in our plan. And eventually I expect that we will have service to Asia. Service to Asia will be facilitated by having the A350, but there are probably some routes that we could fly without it. But we may wait until we have the A350s until we have service to Asia. Ted Reed – TheStreet.com: And will South American growth probably be through Charlotte?

Well South American, it doesn’t mean necessarily that all of it will, but Charlotte is the most natural hub for our South American growth. So that’s why we’ve started Rio from Charlotte and Sao Paulo from Charlotte. Ted Reed – TheStreet.com: Thank you.

Hey Ted, it’s Doug. I just wanted to get back to your second question, though, because Scott answered it right, the international piece; but your question about sustainability. To be clear, those airlines that have larger networks have more international flying than we do, have more revenue generating capabilities than we do. We’re well aware of that. What that means, of course, is we have to have a cost advantage and fortunately we do, which is why we’re able to produce the same or better margins as Scott said. And what we have to keep doing going forward, the way you do that is continue to keep the cost advantage in place. And as I think you know, it’s largely a labor cost advantage, one that… What that means for us is it doesn’t mean that we can’t increase the wages of our employees because we plan to. As contracts get consolidated and as we move to new contracts there’s a good bit of room there, but what we cannot do is get to a position where our labor costs are the same as those who have higher revenue generating capabilities. Our team knows that, we talk about it all the time. It’s a source of some consternation for all of us because we’d like to be in the situation where our revenue generating capabilities were as high as the others, but it’s a reality. We’re US Airways and this is where we need to stay. If you don’t do that, you’re the old US Airways – an airline with less revenue generating capabilities than other airlines and the same cost structure and we see what happens in that case. Ted Reed – TheStreet.com: I do recall that.

Exactly. So we know what we have to do, our team knows what we have to do, and that’s how you answer. Well, Scott’s right – there’s an opportunity to expand the international growth that will not close the revenue gap. And what we have to do is keep the cost advantage in place. Ted Reed – TheStreet.com: Thank you very much, Doug.

Thanks, Ted.

And Ted, in answer to your question, it’s the Q2 ‘06. Ted Reed – TheStreet.com: Q2 ‘06, and that was the highest for all of the history of US Airways?

Correct. Ted Reed – TheStreet.com: Okay, thank you.

And that concludes today’s question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Management is done. Thank you very much. We appreciate all of you listening in and your continued support. Let us know if you have any further questions.

That concludes today’s conference. Thank you for your participation.