SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,2002 OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
-------- -------

COMMISSION FILE NUMBER 1-12649
----------------------------------

AMERICA WEST HOLDINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 86-0847214
- --------------------------------- -------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

111 WEST RIO SALADO PARKWAY, TEMPE, ARIZONA 85281
- -------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (480) 693-0800
- -------------------------------------------------------------------------------

N/A
- ---------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)

AMERICA WEST AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 86-0418245
- --------------------------------- -------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

4000 EAST SKY HARBOR BLVD, PHOENIX, ARIZONA 85034
- -------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (480) 693-0800
- -------------------------------------------------------------------------------

N/A
- ---------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)

INDICATE BY CHECK MARK WHETHER EACH REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

YES [XX] NO [_]

AS OF APRIL 19, 2002, AMERICA WEST HOLDINGS CORPORATION HAS 941,431 SHARES OF
CLASS A COMMON STOCK AND 32,786,451 SHARES OF CLASS B COMMON STOCK OUTSTANDING.
AS OF APRIL 19, 2002, AMERICA WEST AIRLINES, INC. HAS 1,000 SHARES OF CLASS B
COMMON STOCK OUTSTANDING, ALL OF WHICH ARE HELD BY AMERICA WEST HOLDINGS
CORPORATION.

PART I - FINANCIAL INFORMATION

ITEM 1A. CONSOLIDATED FINANCIAL STATEMENTS - AMERICA WEST HOLDINGS
CORPORATION

AMERICA WEST HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
2002 2001
---------- ----------
ASSETS (UNAUDITED)
------

Current assets:
Cash and cash equivalents .................... $ 415,400 $ 156,865
Short-term investments ....................... 5,277 --
Accounts receivable, net ..................... 165,222 109,012
Expendable spare parts and supplies, net ..... 49,638 51,833
Prepaid expenses ............................. 83,996 43,688
---------- ----------

Total current assets ..................... 719,533 361,398
---------- ----------

Property and equipment:
Flight equipment ............................. 1,112,665 1,082,649
Other property and equipment ................. 225,494 258,400
Equipment purchase deposits .................. 46,150 49,650
---------- ----------
1,384,309 1,390,699
Less accumulated depreciation and amortization 592,211 564,796
---------- ----------

Net property and equipment .............. 792,098 825,903
---------- ----------

Other assets:
Restricted cash .............................. 58,300 54,546
Reorganization value in excess of amounts
allocable to identifiable assets, net ...... -- 272,284
Other assets, net ............................ 166,457 56,778
---------- ----------

Total other assets ....................... 224,757 383,608
---------- ----------
$1,736,388 $1,570,909
========== ==========

See accompanying notes to condensed consolidated financial statements.

AMERICA WEST HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
2002 2001
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED)

Current liabilities:
Current maturities of long-term debt ......................... $ 28,538 $ 119,141
Accounts payable ............................................. 166,651 253,318
Air traffic liability ........................................ 260,973 187,714
Accrued compensation and vacation benefits ................... 41,880 41,470
Accrued taxes ................................................ 20,430 59,240
Other accrued liabilities .................................... 41,097 29,643
----------- -----------

Total current liabilities ................................ 559,569 690,526
----------- -----------

Long-term debt, less current maturities .......................... 826,958 222,955

Deferred credits and other liabilities ........................... 151,369 133,779

Deferred tax liability, net ...................................... 461 1,306

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued ................................. -- --
Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 941,431 shares at
March 31, 2002 and December 31, 2001 ..................... 9 9
Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued 49,070,346 shares at March 31, 2002 and
December 31, 2001 ........................................ 491 491
Additional paid-in capital ................................... 629,167 593,784
Retained earnings (deficit) .................................. (125,430) 232,875
Accumulated other comprehensive income ....................... -- 1,390
----------- -----------
504,237 828,549

Less: Cost of Class B Common Stock in treasury, 16,283,895
shares at March 31, 2002 and December 31, 2001 ........... (306,206) (306,206)
----------- -----------

Total stockholders' equity ............................... 198,031 522,343
----------- -----------
$ 1,736,388 $ 1,570,909
=========== ===========

See accompanying notes to condensed consolidated financial statements.

AMERICA WEST HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
2002 2001
--------- ---------

Operating revenues:
Passenger ..................................................... $ 436,975 $ 552,766
Cargo ......................................................... 7,320 9,998
Other ......................................................... 15,996 24,709
--------- ---------

Total operating revenues .................................. 460,291 587,473
--------- ---------

Operating expenses:
Salaries and related costs .................................... 142,531 148,995
Aircraft rents ................................................ 72,891 87,878
Other rents and landing fees .................................. 41,430 35,373
Aircraft fuel ................................................. 58,088 101,434
Agency commissions ............................................ 14,249 23,305
Aircraft maintenance materials and repairs .................... 65,258 65,164
Depreciation and amortization ................................. 16,658 14,518
Amortization of excess reorganization value ................... -- 4,974
Special charges ............................................... 60,255 --
Other ......................................................... 111,622 130,338
--------- ---------

Total operating expenses .................................. 582,982 611,979
--------- ---------

Operating loss .................................................... (122,691) (24,506)
--------- ---------

Nonoperating income (expenses):
Interest income ............................................... 2,789 3,032
Interest expense, net ......................................... (17,173) (5,495)
Other, net .................................................... (2,458) 59
--------- ---------

Total nonoperating expenses, net .......................... (16,842) (2,404)
--------- ---------

Loss before income tax benefit and cumulative effect of change
in accounting principle ....................................... (139,533) (26,910)
--------- ---------

Income tax benefit ................................................ (53,512) (14,074)
--------- ---------

Loss before cumulative effect of change in accounting principle ... (86,021) (12,836)
--------- ---------

Cumulative effect of change in accounting principle ............... (272,284) --
--------- ---------

Net loss .......................................................... $(358,305) $ (12,836)
========= =========

Basic loss per share:
Loss before cumulative effect of change in accounting principle $ (2.55) $ (0.38)

Cumulative effect of change in accounting principle ........... (8.07) --
--------- ---------

Basic loss per share .......................................... $ (10.62) $ (0.38)
========= =========

Diluted loss per share:
Loss before cumulative effect of change in accounting principle $ (2.55) $ (0.38)

Cumulative effect of change in accounting principle ........... (8.07) --
--------- ---------

Diluted loss per share ........................................ $ (10.62) $ (0.38)
========= =========

Shares used for computation:
Basic ......................................................... 33,728 33,621
========= =========
Diluted ....................................................... 33,728 33,621
========= =========

See accompanying notes to condensed consolidated financial statements.

AMERICA WEST HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
2002 2001
--------- ---------

Net cash provided by (used in) operating activities .............. $ (82,349) $ 81,020
--------- ---------

Cash flows from investing activities:
Purchases of property and equipment .......................... (43,717) (111,862)
Purchases of short-term investments .......................... (5,277) (16,949)
Proceeds from sale and leaseback of aircraft ................. -- 53,538
Equipment purchase deposits and other ........................ 21 5,000
--------- ---------
Net cash used in investing activities .................... (48,973) (70,273)
--------- ---------

Cash flows from financing activities:
Repayment of debt ............................................ (4,303) (120,238)
Proceeds from issuance of debt ............................... 430,500 49,422
Payments of debt issue costs ................................. (36,340) --
Other ........................................................ -- (132)
--------- ---------
Net cash provided by (used in) financing activities ...... 389,857 (70,948)
--------- ---------

Net increase (decrease) in cash and cash equivalents ............. 258,535 (60,201)

Cash and cash equivalents at beginning of period ................. 156,865 144,138
--------- ---------

Cash and cash equivalents at end of period ....................... $ 415,400 $ 83,937
========= =========

Cash, cash equivalents and short-term investments at end of period $ 420,677 $ 151,573
========= =========

Cash paid (refunded) for:
Interest, net of amounts capitalized ......................... $ 6,652 $ 8,414
========= =========
Income taxes paid (refunded) ................................. $ (33,803) $ 23
========= =========

Non-cash investing and financing activities:
Issuance of convertible notes ................................ $ 104,465 $ --
========= =========
Issuance of warrants ......................................... $ 35,383 $ --
========= =========
Equipment acquired through capital lease ..................... $ 16,878 $ --
========= =========
Notes payable canceled under the aircraft purchase agreement . $ 3,500 $ 10,500
========= =========

See accompanying notes to condensed consolidated financial statements.

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements include the
accounts of America West Holdings Corporation ("Holdings" or the "Company") and
its wholly owned subsidiaries, America West Airlines, Inc. ("AWA") and The
Leisure Company ("TLC"). These statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission and, in
accordance with those rules and regulations, certain information and footnotes
required by generally accepted accounting principles have been omitted. In the
opinion of management, the condensed consolidated financial statements reflect
all adjustments, which are of a normal recurring nature, necessary for a fair
presentation. Certain prior year amounts have been reclassified to conform with
current year presentation. The accompanying condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001.

2. AIR TRANSPORTATION SAFETY AND SYSTEM STABILIZATION ACT

In the wake of large financial losses attributed to the terrorist attacks on
the United States that occurred on September 11, 2001, the Senate and House of
Representatives of the United States of America passed, and the President signed
into law H.R. 2926, the Air Transportation Safety and System Stabilization Act
(the "Act"). The intent of the Act is to preserve the continued viability of the
United States air transportation system. The Act includes the following key
provisions:

- Airlines will receive immediate cash compensation up to an industry total
of $5 billion, including up to $500 million in the aggregate for cargo
carriers and up to $4.5 billion in the aggregate for commercial carriers
based upon each carrier's share of available seat miles during the month
of August 2001. Airlines must demonstrate that their losses equal or
exceed the amount granted. AWA recognized $108.2 million of federal
government assistance as nonoperating income in 2001, of which $98.2
million was received in 2001, because direct and incremental losses
resulting from the terrorist attacks exceeded that amount. In April 2002,
the Department of Transportation ("DOT") issued final rules for air
carriers making applications for payment of compensation under the Act.
The Company will submit its application for at least the $10.0 million of
compensation that was recognized in 2001, however, not yet paid.

- The federal government will guarantee credit instruments issued to air
carriers of up to $10 billion. A newly created Air Transportation
Stabilization Board ("ATSB") will have authority to set all terms and
conditions, including determining the amounts and recipients of the loans.
The Act also allows the government to take an equity stake in the airlines
receiving federal loan guarantees as collateral. AWA applied to the ATSB
for a loan guarantee in November 2001. In January 2002, AWA closed a $429
million loan supported by a $380 million government loan guarantee (see
Note 3, "Government Guaranteed Loan.")

- The Act establishes forgiveness of Internal Revenue Service ("IRS")
penalties for late payment of certain taxes, provided they were paid by
November 15, 2001, or, at the discretion of the Secretary of the DOT, as
late as January 15, 2002. AWA deferred payment of approximately $58.1
million of transportation taxes to the IRS until January 15, 2002 under
the Act.

- The Act provides for reimbursement to air carriers and their vendors or
subcontractors for increases in the cost of war risk insurance for the
period up to October 1, 2002. The Act also limits the amount of liability
for claims against an air carrier attributed to the terrorist attacks to a
total not to exceed the limits of the liability coverage maintained by the
carrier. In October 2001, AWA received approximately $1.3 million under
the Act to reimburse increases in war risk insurance premiums for the
period October 2001 through October 2002, of which approximately $0.3
million was recognized as a reduction of insurance expense in the first
quarter of 2002.

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

3. GOVERNMENT GUARANTEED LOAN

In January 2002, AWA closed a $429 million loan supported by a $380 million
government loan guarantee. This loan triggered concessions and additional
financing (primarily aircraft rent reductions and future financing commitments),
resulting in a restructuring of AWA's indebtedness and lease commitments. The
major components of the restructuring are:

- Government Guaranteed Loan - The catalyst for AWA's restructuring plan was
a $429 million loan backed by a $380 million federal loan guarantee. The
loan has a seven-year term with ratable amortization in years three
through seven, an interest rate of three month LIBOR plus 40 basis points
paid quarterly and annual guarantee fees payable to the U.S. Treasury
Department and other loan participants of 550 basis points in year one and
approximately 800 basis points thereafter.

- Aircraft Deferrals/Financing - AWA restructured its aircraft purchase
commitment with AVSA S.A.R.L., an affiliate of Airbus Industries ("AVSA"),
to defer 17 new Airbus aircraft previously scheduled for delivery in 2003
and 2004 by a total of 505 aircraft-months to 2004 through 2007. New
financing commitments were obtained for 11 aircraft which were either
already delivered in 2001 or scheduled to be delivered in 2002 and 2003.
Financing for three of the aircraft is subject to achieving a minimum
liquidity threshold and financing for two of the aircraft is subject to
attaining established financial performance goals. As a result, AWA is now
financed for all scheduled aircraft deliveries through the fourth quarter
of 2003.

- Aircraft Returns/Rent Reductions - Through negotiations with approximately
twenty aircraft lessors, AWA has retired nine aircraft and plans to retire
two additional aircraft in the second quarter of 2002 to better size its
fleet to the current industry demand environment. For the aircraft that
remain, annual rent payments have been reduced for each of the next seven
years.

- Term-out of Line of Credit - AWA's $89.9 million secured credit facility
was converted into an $89.9 million secured term loan maturing at year-end
2007. The loan has a six-year term with ratable amortization in years four
through six and an interest rate of one month LIBOR plus 225 basis points
from the closing date through December 31, 2004 and one month LIBOR plus
475 basis points from January 1, 2005 and thereafter. In addition, AWA
will pay interest in kind on the aggregate outstanding principal amount of
the loan at a rate of two percent per annum from the closing date through
December 31, 2004.

- State/City Financing - From the State of Arizona and the City of Phoenix,
AWA received $1.25 million in job training grants and $1.5 million in
other financing and expects to receive $8.5 million through the sale and
leaseback of jetways at Phoenix Sky Harbor International Airport.

- TPG Undertaking - At the request of the ATSB, TPG partners, L.P., and its
affiliates, owners of all 941,431 shares of America West Holdings Class A
common stock, have undertaken not to dispose of their Class A stock other
than in connection with an offer to acquire all the shares of the
Company's Class B common stock accepted or approved by the holders of a
majority of the Class B stock. This undertaking is subject to certain
exceptions, including transfers to TPG affiliates, repurchase of the Class
A stock by Holdings and exercise of TPG's rights to convert the Class A
stock into Class B stock, and will terminate when the warrants issued in
connection with the term loan transactions discussed below expire or are
exercised and the underlying shares of Class B stock are sold, or TPG and
its affiliates no longer hold the Class A stock.

- Warrants/Convertible Senior Notes - As compensation for various elements
of the restructuring plan, Holdings issued a warrant to purchase up to
18.8 million shares of its Class B common stock to the federal government
and additional warrants to purchase up to 3.8 million shares of its Class
B common stock to other loan participants, in each case at an exercise
price of $3 per share and a term of ten years. For accounting purposes,
the warrants were valued at $35.4 million, or $1.57 per share, using the
Black-Scholes pricing model with the following assumptions: expected
dividend yield of 0.0%, risk-free interest rate of 4.8%, volatility of
44.9% and an expected life of ten years. Holdings also issued
approximately $104.5 million in convertible senior notes as partial
compensation to aircraft lessors. The notes have a seven-year term and a

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

coupon rate of 7.5% with interest paid in kind for years one through
three. The notes are convertible after three years into Class B common
stock at $12 per share.

4. FLIGHT EQUIPMENT

In the first quarter of 2002, AWA entered into an aircraft lease arrangement
for one new A320 aircraft with a lease term of 22 years.

As a result of the rent restructuring associated with the government
guaranteed loan, one aircraft lease was amended to include a bargain purchase
option. As a result, this lease has been classified as a capital lease in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases," as amended, with an asset value and corresponding lease
obligation of $16.9 million.

5. COMPREHENSIVE LOSS

Comprehensive loss includes unrealized gains and losses on available-for-sale
securities and changes in the fair value of derivative financial instruments
that qualify for hedge accounting. For the three months ended March 31, 2002 and
2001, the Company recorded a total comprehensive loss of $359.7 million and
$14.6 million, respectively. The difference between net loss and comprehensive
loss for the three months ended March 31, 2002 and 2001 is detailed in the
following table:

THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2001
--------- --------
(IN THOUSANDS)

Net loss ............................................... $(358,305) $(12,836)
--------- --------

Unrealized losses on derivative instruments,
net of deferred taxes ........................... -- (1,720)
Reclassification adjustment to net loss of previously
reported unrealized losses on derivative
instruments, net of taxes ....................... (1,390) --
Unrealized losses on marketable equity securities,
net of deferred taxes ........................... -- (88)
--------- --------
Total other comprehensive loss ...................... (1,390) (1,808)
--------- --------

Comprehensive loss ..................................... $(359,695) $(14,644)
========= ========

6. SPECIAL CHARGES

In the first quarter of 2002, the Company recorded a pretax special charge of
$60.3 million, primarily related to the restructuring completed on January 18,
2002, resulting from the events of September 11, 2001. Components of the special
charge are as follows:

SPECIAL CHARGES
---------------
(IN THOUSANDS)

Impairment of owned aircraft and engines (based on appraised value) $ 39,225
Fleet restructuring costs ......................................... 9,915
Losses on sale-leaseback transactions ............................. 6,328
Professional fees ................................................. 4,745
Write-off of computer system and security equipment ............... 3,411
Severance ......................................................... 656
Revision of estimate for second quarter 2001 special charge ....... (4,000)
--------
Total ......................................................... $ 60,280
========

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

Of this amount, $10.0 million, principally related to losses on
sale-leaseback transactions, fleet restructuring costs and severance, was
accrued at March 31, 2002.

In April 2001, Holdings announced a cost reduction plan to respond to a
softening economy. The plan included a slowing of the airline's growth through
the return of seven older 737-300 leased aircraft to the lessors in the second
half of 2001 and January 2002 and significant reductions in overhead due in part
to select reductions-in-force of management, administrative and clerical
personnel.

The Company recorded a pretax charge of $35.7 million in the second quarter
of 2001 related to the earlier-than-planned aircraft returns and
reductions-in-force. The following table presents the payments and other
settlements made during the first quarter of 2002 and the remaining accrual as
of March 31, 2002.

AIRCRAFT RETURNS REDUCTION-IN-FORCE TOTAL
---------------- ------------------ -----

Balance at December 31, 2001 .. $ 16,786 $ 83 $ 16,869
Payments ...................... (4,588) (55) (4,643)
Issuance of convertible notes . (5,000) -- (5,000)
Forfeiture of security deposits (2,289) -- (2,289)
Revision of estimate .......... (4,000) -- (4,000)
-------- ---- --------
Balance at March 31, 2002 ..... $ 909 $ 28 $ 937
======== ==== ========

The Company expects to make the final payments related to these special
charges in the second quarter of 2002.

7. NONOPERATING INCOME (EXPENSE) - OTHER, NET

In March 2002, the Company wrote down an investment in an e-commerce entity,
which was carried at cost, to net realizable value recognizing a pretax loss of
$2.8 million.

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

8. EARNINGS PER SHARE ("EPS")

The following table presents the computation of basic and diluted EPS.

THREE MONTHS ENDED
MARCH 31,
2002 2001
------------ ------------
(IN THOUSANDS OF DOLLARS
EXCEPT SHARE DATA)

BASIC LOSS PER SHARE

Loss before cumulative effect of change in accounting principle $ (86,021) $ (12,836)
Cumulative effect of change in accounting principle ........... (272,284) --
------------ ------------
Net loss ...................................................... $ (358,305) $ (12,836)
============ ============
Weighted average common shares outstanding
33,727,882 33,620,777
============ ============
Basic loss per share:

Loss before cumulative effect of change in accounting principle $ (2.55) $ (0.38)
Cumulative effect of change in accounting principle ........... (8.07) --
------------ ------------
Net loss ...................................................... $ (10.62) $ (0.38)
============ ============

DILUTED LOSS PER SHARE

Share computation:
Weighted average common shares outstanding .................. 33,727,882 33,620,777
Assumed exercise of stock options and warrants .............. -- --
------------ ------------
Weighted average common shares outstanding as adjusted ...... 33,727,882 33,620,777
============ ============
Diluted loss per share:

For the three months ended March 31, 2002, 73,638 incremental shares from
assumed exercise of stock options and 6,538,940 incremental shares from assumed
exercise of warrants issued in conjunction with the government guaranteed loan
are not included in the computation of diluted EPS because of the antidilutive
effect on EPS. In addition, 5,365,055 stock options are not included in the
computation of diluted EPS because the option exercise prices were greater than
the average market price of common stock for the period, resulting in an
antidilutive effect.

For the three months ended March 31, 2001, 221,142 incremental shares from
assumed exercise of stock options are not included in the computation of diluted
EPS because of the antidilutive effect on EPS. In addition, 4,115,238 stock
options are not included in the computation of diluted EPS because the option
exercise prices were greater than the average market price of common stock for
the period, resulting in an antidilutive effect.

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

9. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to their
acquisition. SFAS No. 142 does not permit the amortization of goodwill as
required by Accounting Principles Board ("APB") Opinion No. 17, "Intangible
Assets." Rather, goodwill will be subject to a periodic impairment test, using a
two-step process. The first step is to identify a potential impairment. The
second step of the goodwill impairment test measures the amount of the
impairment loss, using a fair value-based approach. Under SFAS No. 142,
reorganization value in excess of amounts allocable to identifiable assets
("ERV") shall be reported as goodwill and accounted for in the same manner as
goodwill. SFAS No. 142 is effective for fiscal years beginning after December
15, 2001. Upon adoption of this statement on January 1, 2002, the Company
recorded an impairment loss of $272.3 million, which was determined by an
independent valuation of the Company. The impairment loss was recorded as the
cumulative effect of a change in accounting principle.

The following table presents reported net loss and loss per share exclusive
of ERV amortization expense for the three months ended March 31, 2002 and 2001.

FOR THE THREE MONTHS
ENDED MARCH 31,
2002 2001
----------- -----------
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)

Reported net loss .......... $ (358,305) $ (12,836)
ERV amortization, net of tax -- 3,331
----------- -----------
Adjusted net loss .......... $ (358,305) $ (9,505)
=========== ===========

Basic loss per share:
Reported net loss .......... $ (10.62) $ (0.38)
ERV amortization ........... -- 0.10
----------- -----------
Adjusted net loss .......... $ (10.62) $ (0.28)
=========== ===========

Diluted loss per share:
Reported net loss .......... $ (10.62) $ (0.38)
ERV amortization ........... -- 0.10
----------- -----------
Adjusted net loss .......... $ (10.62) $ (0.28)
=========== ===========

10. INCOME TAX REFUND

In February 2002, Holdings filed its 2001 consolidated income tax return with
the IRS, which included a claim to carryback losses incurred in 2001 to the tax
years 1999 and 2000. This resulted in a refund of approximately $33.9 million,
of which $33.8 million was received in the first quarter of 2002 and $0.1
million was received in the second quarter of 2002. In March 2002, Holdings
filed a revised claim for carryback losses under the Job Creation and Workers
Assistance Act of 2002, resulting in an additional refund of approximately $26.4
million. The Company expects to receive this refund in the second quarter of
2002.

11. ELIMINATION OF BASE COMMISSION FOR TRAVEL AGENTS

In March 2002, AWA announced the elimination of base commission for all
travel agency issued tickets in the United States (including Puerto Rico and the
U.S. Virgin Islands) and Canada, effective March 21, 2002. AWA also announced
the introduction of the Agency AWArds commission program for travel agents,
which offers agencies the opportunity to earn commission payments in exchange
for booking more of their business on AWA. The maximum commission payment for
this program is 5%. The elimination of AWA's base commission applies to tickets
issued for both domestic and international travel. The change does not apply to
tickets purchased outside of the United States and Canada.

AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

12. REVISED FARE STRUCTURE

In March 2002, AWA simplified its everyday fare structure in response to
consumer demand, eliminating traditional Saturday night stays and offering
reduced one-way fares throughout the United States and Canada. The new pricing
structure will result in significant reductions to the airline's current,
unrestricted walkup fares. With this new structure, the airline expects to
reduce its reliance on fare sales and off-tariff pricing from discount web
sites.

13. TERMINATION OF CODE SHARE AGREEMENT WITH CONTINENTAL AIRLINES
("CONTINENTAL")

In March 2002, Continental notified AWA of its intention to terminate the
code sharing and related agreements between the two airlines. Continental's
notice stated that code sharing will cease on April 26, 2002. Continental's
notice also stated that the airlines' reciprocal frequent flyer and airport club
agreements will be terminated effective September 24, 2002. AWA estimates that
the code sharing, frequent flyer and club arrangements with Continental
accounted for about $15 million to $20 million in incremental revenue annually
for AWA.

14. SEGMENT DISCLOSURES

Holdings is one reportable operating segment. Accordingly, the segment
reporting financial data required by SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information" is included in the accompanying
consolidated balance sheets and statements of operations.

ITEM 1B. FINANCIAL STATEMENTS - AMERICA WEST AIRLINES, INC.

The unaudited condensed balance sheets of AWA, a wholly-owned subsidiary of
Holdings, as of March 31, 2002 and December 31, 2001, and the condensed
statements of operations and cash flows for the three months ended March 31,
2002 and 2001, together with the related notes, are set forth on the following
pages.

AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
2002 2001
---------- ----------
ASSETS (UNAUDITED)
------

Current assets:
Cash and cash equivalents ............................ $ 412,650 $ 148,520
Short-term investments ............................... 5,277 --
Accounts receivable, net ............................. 155,778 103,431
Advances to parent and affiliate, net ................ -- 265,361
Expendable spare parts and supplies, net ............. 49,638 51,833
Prepaid expenses ..................................... 79,125 40,589
---------- ----------

Total current assets ............................. 702,468 609,734
---------- ----------

Property and equipment:
Flight equipment ..................................... 1,112,665 1,082,649
Other property and equipment ......................... 216,618 249,739
Equipment purchase deposits .......................... 46,150 49,650
---------- ----------
1,375,433 1,382,038
Less accumulated depreciation and amortization ....... 586,284 559,175
---------- ----------

Net property and equipment ....................... 789,149 822,863
---------- ----------

Other assets:
Restricted cash ...................................... 58,300 50,859
Advances to parent company, net ...................... 257,771 --
Reorganization value in excess of amounts allocable to
identifiable assets, net ......................... -- 252,010
Other assets, net .................................... 171,124 61,768
---------- ----------

Total other assets ............................... 487,195 364,637
---------- ----------
$1,978,812 $1,797,234
========== ==========

See accompanying notes to condensed financial statements.

AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
2002 2001
----------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY (UNAUDITED)

Current liabilities:
Current maturities of long-term debt ............... $ 28,538 $ 119,141
Accounts payable ................................... 158,020 243,996
Payable to affiliate, net .......................... 16,388 --
Air traffic liability .............................. 227,913 176,985
Accrued compensation and vacation benefits ......... 41,399 40,912
Accrued taxes ...................................... 49,898 88,382
Other accrued liabilities .......................... 40,836 29,397
----------- ----------

Total current liabilities ...................... 562,992 698,813
----------- ----------

Long-term debt, less current maturities ................ 826,958 222,955

Deferred credits and other liabilities ................. 149,555 131,965

Deferred tax liability, net ............................ 7,724 8,569

Commitments and contingencies

Stockholder's equity:
Common Stock $.01 par value. Authorized, issued and
outstanding; 1,000 shares ...................... -- --
Additional paid-in capital ......................... 555,131 519,748
Retained earnings (deficit) ........................ (123,548) 213,794

Accumulated other comprehensive income ............. -- 1,390
----------- ----------

Total stockholder's equity ..................... 431,583 734,932
----------- ----------
$ 1,978,812 $1,797,234
=========== ==========

See accompanying notes to condensed financial statements.

AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
2002 2001
--------- ---------

Operating revenues:
Passenger ......................................... $ 436,975 $ 552,766
Cargo ............................................. 7,320 9,998
Other ............................................. 9,304 14,243
--------- ---------
Total operating revenues ...................... 453,599 577,007
--------- ---------

Operating expenses:
Salaries and related costs ........................ 142,079 148,480
Aircraft rents .................................... 72,891 87,878
Other rents and landing fees ...................... 41,430 35,373
Aircraft fuel ..................................... 58,088 101,434
Agency commissions ................................ 14,249 23,305
Aircraft maintenance materials and repairs ........ 65,258 65,164
Depreciation and amortization ..................... 16,658 14,518
Amortization of excess reorganization value ....... -- 4,974
Special charges ................................... 60,255 --
Other ............................................. 104,244 121,173
--------- ---------
Total operating expenses ...................... 575,152 602,299
--------- ---------

Operating loss ........................................ (121,553) (25,292)
--------- ---------

Nonoperating income (expenses):
Interest income ................................... 4,498 5,201
Interest expense, net ............................. (18,897) (7,366)
Other, net ........................................ (2,458) 439
--------- ---------
Total nonoperating expenses, net .............. (16,857) (1,726)
--------- ---------

Loss before income tax benefit and cumulative effect of
change in accounting principle .................... (138,410) (27,018)
--------- ---------

Income tax benefit .................................... (53,078) (13,964)
--------- ---------

Loss before cumulative effect of change in
accounting principle .............................. (85,332) (13,054)
--------- ---------

Cumulative effect of change in accounting principle ... (252,010) --
--------- ---------

Net loss .............................................. $(337,342) $ (13,054)
========= =========

See accompanying notes to condensed financial statements.

AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
2002 2001
--------- ---------

Net cash provided by (used in) operating activities ............... $ (76,969) $ 65,130
--------- ---------

Cash flows from investing activities:
Purchases of property and equipment ........................... (43,502) (111,765)
Purchases of short-term investments ........................... (5,277) (16,949)
Proceeds from sale and leaseback of aircraft .................. -- 53,538
Equipment purchase deposits and other ......................... 21 5,000
--------- ---------
Net cash used in investing activities ..................... (48,758) (70,176)
--------- ---------

Cash flows from financing activities:
Repayment of debt ............................................. (4,303) (120,238)
Proceeds from issuance of debt ................................ 430,500 49,422
Payments of debt issue costs .................................. (36,340) --
--------- ---------
Net cash provided by (used in) financing activities ........ 389,857 (70,816)
--------- ---------

Net increase (decrease) in cash and cash equivalents .............. 264,130 (75,862)
--------- ---------

Cash and cash equivalents at beginning of period .................. 148,520 139,150
--------- ---------

Cash and cash equivalents at end of period ........................ $ 412,650 $ 63,288
========= =========

Cash, cash equivalents, and short-term investments at end of period $ 417,927 $ 130,924
========= =========

Cash paid (refunded) for:
Interest, net of amounts capitalized .......................... $ 6,652 $ 8,414
========= =========
Income taxes paid (refunded) .................................. $ (33,833) $ 22
========= =========

Non-cash investing and financing activities:
Reclassification of advances to parent company, net ........... $ 257,771 $ --
========= =========
Issuance of convertible notes ................................. $ 104,465 $ --
========= =========
Issuance of warrants .......................................... $ 35,383 $ --
========= =========
Equipment acquired through capital lease ...................... $ 16,878 $ --
========= =========
Notes payable canceled under the aircraft purchase agreement .. $ 3,500 $ 10,500
========= =========

See accompanying notes to condensed financial statements.

AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002

1. BASIS OF PRESENTATION

The unaudited condensed financial statements included herein have been
prepared by America West Airlines, Inc., ("AWA"), a wholly owned subsidiary of
America West Holdings Corporation ("Holdings" or the "Company"), pursuant to the
rules and regulations of the Securities and Exchange Commission and, in
accordance with those rules and regulations, certain information and footnotes
required by generally accepted accounting principles have been omitted. In the
opinion of management, the condensed financial statements reflect all
adjustments, which are of a normal recurring nature, necessary for a fair
presentation. Certain prior year amounts have been reclassified to conform with
current year presentation. The accompanying condensed financial statements
should be read in conjunction with the financial statements and related notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.

2. AIR TRANSPORTATION SAFETY AND SYSTEM STABILIZATION ACT

- Airlines will receive immediate cash compensation up to an industry total
of $5 billion, including up to $500 million in the aggregate for cargo
carriers and up to $4.5 billion in the aggregate for commercial carriers
based upon each carrier's share of available seat miles during the month
of August 2001. Airlines must demonstrate that their losses equal or
exceed the amount granted. AWA recognized $108.2 million of federal
government assistance as nonoperating income in 2001, of which $98.2
million was received in 2001, because direct and incremental losses
resulting from the terrorist attacks exceeded that amount. In April 2002,
the DOT issued final rules for air carriers making applications for
payment of compensation under the Act. The Company will submit its
application for at least the $10.0 million of compensation that was
recognized in 2001, however, not yet paid.

- The Act establishes forgiveness of IRS penalties for late payment of
certain taxes, provided they were paid by November 15, 2001, or, at the
discretion of the Secretary of the DOT, as late as January 15, 2002. AWA
deferred payment of approximately $58.1 million of transportation taxes to
the IRS until January 15, 2002 under the Act.

AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002

3. GOVERNMENT GUARANTEED LOAN

- Government Guaranteed Loan - The catalyst for AWA's restructuring plan was
a $429 million loan backed by a $380 million federal loan guarantee. The
loan has a seven-year term with ratable amortization in years three
through seven, an interest rate of three month LIBOR plus 40 basis points
paid quarterly and guarantee fees payable to the U.S. Treasury Department
and other loan participants of 550 basis points in year one and
approximately 800 basis points thereafter.

- Aircraft Deferrals/Financing - AWA restructured its aircraft purchase
commitment with AVSA to defer 17 new Airbus aircraft previously scheduled
for delivery in 2003 and 2004 by a total of 505 aircraft-months to 2004
through 2007. New financing commitments were obtained for 11 aircraft
which were either already delivered in 2001 or scheduled to be delivered
in 2002 and 2003. Financing for three of the aircraft is subject to
achieving a minimum liquidity threshold and financing for two of the
aircraft is subject to attaining established financial performance goals.
As a result, AWA is now financed for all scheduled aircraft deliveries
through the fourth quarter of 2003.

- Aircraft Returns/Rent Reductions - Through negotiations with approximately
twenty aircraft lessors, AWA has retired nine aircraft and plans to retire
an additional two aircraft in the second quarter of 2002 to better size
its fleet to the current industry demand environment. For the aircraft
that remain, annual rent payments have been reduced for each of the next
seven years.

AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002

coupon rate of 7.5% with interest paid in kind for years one through
three. The notes are convertible after three years into Class B common
stock at $12 per share.

4. FLIGHT EQUIPMENT

In the first quarter of 2002, AWA entered into an aircraft lease arrangement
for one new A320 aircraft with a lease term of 22 years.

As a result of the rent restructuring associated with the government
guaranteed loan, one aircraft lease was amended to include a bargain purchase
option. As a result, this lease has been classified as a capital lease in
accordance with SFAS No. 13, "Accounting for Leases," as amended, with an asset
value and corresponding lease obligation of $16.9 million.

5. ADVANCES TO PARENT COMPANY AND AFFILIATE

As of December 31, 2001, AWA had net advances to Holdings of $257.8 million,
which were classified in AWA's balance sheet as current assets. In January 2002,
AWA closed a $429 million loan supported by a $380 million government loan
guarantee. See Note 3, "Government Guaranteed Loan." The terms of this loan and
AWA's credit facility restrict Holdings' and AWA's ability to incur additional
indebtedness or issue equity unless the proceeds of those transactions are used
to prepay the government guaranteed loan and the credit facility. Accordingly,
as a result of this transaction, AWA's net advances to Holdings of $257.8
million as of December 31, 2001 have been classified in "Other Assets" on AWA's
balance sheet.

As of December 31, 2001, AWA had net advances of $8.1 million to TLC, a wholly
owned subsidiary of Holdings, including $16.0 million advanced by AWA to TLC
under a revolving line of credit. In January 2002, upon closing of the
government guaranteed loan, TLC repaid the $16.0 million loan in full to AWA.

6. COMPREHENSIVE LOSS

Comprehensive loss includes changes in the fair value of derivative financial
instruments that qualify for hedge accounting. For the three months ended March
31, 2002 and 2001, AWA recorded a total comprehensive loss of $338.7 million and
$14.8 million, respectively. The difference between net loss and comprehensive
loss for the three months ended March 31, 2002 and 2001 is detailed in the
following table:

THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2002 MARCH 31, 2001
--------- --------
(IN THOUSANDS)

Net loss ............................................... $(337,342) $(13,054)
--------- --------

Unrealized losses on derivative instruments,
net of deferred taxes ........................... -- (1,720)
Reclassification adjustment to net loss of previously
reported unrealized losses on derivative
instruments, net of taxes ....................... (1,390) --
--------- --------
Total other comprehensive loss ...................... (1,390) (1,720)
--------- --------

Comprehensive loss ..................................... $(338,732) $(14,774)
========= ========

AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002

7. SPECIAL CHARGES

In the first quarter of 2002, AWA recorded a pretax special charge of $60.3
million, primarily related to the restructuring completed on January 18, 2002,
resulting from the events of September 11, 2001. Components of the special
charge are as follows:

SPECIAL CHARGES
---------------
(IN THOUSANDS)

Impairment of owned aircraft and engines (based on appraised value) $ 39,225
Fleet restructuring costs ......................................... 9,915
Losses on sale-leaseback transactions ............................. 6,328
Professional fees ................................................. 4,745
Write-off of computer system and security equipment ............... 3,411
Severance ......................................................... 631
Revision of estimate for second quarter 2001 special charge ....... (4,000)
--------
Total ......................................................... $ 60,255
========

Of this amount, $10.0 million, principally related to losses on
sale-leaseback transactions, fleet restructuring costs and severance, was
accrued at March 31, 2002.

AIRCRAFT RETURNS REDUCTION-IN-FORCE TOTAL
---------------- ------------------ -----

Balance at December 31, 2001........ $ 16,786 $ 83 $ 16,869
Payments............................ (4,588) (55) (4,643)
Issuance of convertible notes....... (5,000) -- (5,000)
Forfeiture of security deposits..... (2,289) -- (2,289)
Revision of estimate................ (4,000) -- (4,000)
-------- --------- ---------
Balance at March 31, 2002........... $ 909 $ 28 $ 937
======== ========= =========

The Company expects to make the final payments related to these special
charges in the second quarter of 2002.

8. NONOPERATING INCOME (EXPENSE) - OTHER, NET

In March 2002, AWA wrote down an investment in an e-commerce entity, which
was carried at cost, to net realizable value recognizing a pretax loss of $2.8
million.

9. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their acquisition. SFAS No. 142 does not permit
the amortization of goodwill as required by APB Opinion No. 17, "Intangible
Assets." Rather, goodwill will be subject to a periodic impairment test, using
a two-step process. The first step is to identify a potential impairment. The
second step of the goodwill impairment test measures the amount of the
impairment loss, using a fair value-based approach. Under SFAS No. 142, ERV
shall be reported as goodwill and accounted for in the same manner as goodwill.
SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
Upon adoption of this statement on January 1, 2002, AWA recorded an impairment
loss of $252.0 million, which was determined by an

AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002

independent valuation of the Company. The impairment loss was recorded as the
cumulative effect of a change in accounting principle.

The following table presents reported net loss exclusive of ERV amortization
expense for the three months ended March 31, 2002 and 2001.

FOR THE THREE MONTHS
ENDED MARCH 31,
2002 2001
--------- --------
(IN THOUSANDS)

Reported net loss .......... $(337,342) $(13,054)
ERV amortization, net of tax -- 3,083
--------- --------
Adjusted net loss .......... $(337,342) $ (9,971)
========= ========

10. ELIMINATION OF BASE COMMISSION FOR TRAVEL AGENTS

11. REVISED FARE STRUCTURE

12. TERMINATION OF CODE SHARE AGREEMENT WITH CONTINENTAL AIRLINES
("CONTINENTAL")

13. SEGMENT DISCLOSURES

AWA is one reportable operating segment. Accordingly, the segment reporting
financial data required by SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information" is included in the accompanying condensed
balance sheets and statements of operations.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Holdings is the parent company of AWA and TLC. AWA is the eighth largest
commercial airline carrier in the United States operating through its principal
hubs located in Phoenix, Arizona and Las Vegas, Nevada, and a mini-hub located
in Columbus, Ohio. As of March 31, 2002, AWA served 58 destinations in North
America, including seven destinations in Mexico and two in Canada. TLC arranges
and sells leisure travel products that may include airfare, hotel
accommodations, ground transportation and a variety of other travel options.
Holdings' primary business activity is ownership of all the capital stock of AWA
and TLC.

OVERVIEW

During the first quarter of 2002, we continued to feel the negative effects
of the September 11, 2001 terrorist attacks and the soft economic conditions.
Demand for air travel, as shown by advance bookings and enplanements, declined
significantly after the terrorist attacks and still has not recovered. In
addition, a decline in high yield business traffic caused by soft economic
conditions continued to adversely affect our revenues. The airline industry also
incurred, and continues to face, an increase in costs resulting from enhanced
security measures and aviation-related insurance. As a result, Holdings and AWA
both incurred significant operating losses for the first quarter of 2002.

During the second half of 2001, AWA took steps to counter-act the effects of
the terrorist attacks and the softening economy, including obtaining additional
financing from the government and from the sale and leaseback of aircraft and
equipment, reducing costs by reducing its flight schedule, discontinuing meal
service on all flights and eliminating approximately 2,000 employee positions,
and implementing a campaign to win back customers by implementing new security
measures and marketing initiatives. During the first quarter of 2002, we
continued to improve our liquidity as a result of the closing of a $429 million
loan supported by a $380 million government guarantee in January 2002. In
addition, we introduced a new fare structure and we eliminated base commission
for all travel agency tickets issued in the United States.

Despite these efforts and a recent increase in air travel, we believe
near-term revenues will continue to be negatively impacted by the soft economic
conditions and decline in business traffic. In addition, we expect AWA's
revenues and costs to be negatively impacted by the threat of future terrorist
attacks in the near and long-term and the recent rise in oil prices due to the
Israeli-Palestinian conflict and turmoil in Venezuela.

GOVERNMENT GUARANTEED LOAN

In January 2002, AWA closed a $429 million loan supported by a $380 million
government loan guarantee. See Note 3, "Government Guaranteed Loan" in Notes to
Condensed Consolidated Financial Statements. Management estimates this loan
triggered over $600 million of concessions and additional financing (primarily
aircraft rent reductions and future financing commitments), resulting in a
restructuring of AWA's indebtedness and lease commitments valued at
approximately $1 billion. The major components of the restructuring are:

- Government Guaranteed Loan - The catalyst for AWA's restructuring plan
was a $429 million loan backed by a $380 million federal loan
guarantee. The loan has a seven-year term with ratable amortization in
years three through seven, an interest rate of three month LIBOR plus
40 basis points paid quarterly and guarantee fees payable to the U.S.
Treasury Department and other loan participants of 550 basis points in
year one and approximately 800 basis points thereafter.

- Aircraft Deferrals/Financing - AWA restructured its aircraft purchase
commitment with AVSA to defer 17 new Airbus aircraft previously
scheduled for delivery in 2003 and 2004 by a total of 505
aircraft-months to 2004 through 2007. New financing commitments
totaling approximately $200 million were obtained for 11 aircraft
which were either already delivered in 2001 or scheduled to be
delivered in 2002 and 2003. Financing for three of the aircraft is
subject to achieving a minimum liquidity threshold and financing for
two of the aircraft is subject to attaining established financial
performance goals. As a result, AWA is now financed for all scheduled
aircraft deliveries through the fourth quarter of 2003.

- Aircraft Returns/Rent Reductions - Through negotiations with
approximately twenty aircraft lessors, AWA has retired nine aircraft
and plans to retire an additional two aircraft in the second quarter
of 2002 to better size its fleet to the current industry demand
environment. For the aircraft that remain, management projects annual
rent payments will be reduced by approximately $50 million per year
for each of the next seven years.

- Term-out of Line of Credit - At December 31, 2001, AWA had in place a
$125 million senior secured revolving credit facility with a group of
financial institutions that had a three-year term expiring in December
2002. As of December 31, 2001, AWA had drawn $89.9 million under this
facility. In January 2002, upon closing of the $429 million government
guaranteed loan, AWA's secured credit facility was converted into an
$89.9 million secured term loan maturing at year-end 2007. The loan
has a six-year term with ratable amortization in years four through
six and an interest rate of one month LIBOR plus 225 basis points from
the closing date through December 31, 2004 and one month LIBOR plus
475 basis points from January 1, 2005 and thereafter. In addition, AWA
will pay interest in kind on the aggregate outstanding principal
amount of the loan at a rate of two percent per annum from the closing
date through December 31, 2004.

- State/City Financing - From the State of Arizona and the City of
Phoenix, AWA received $1.25 million in job training grants and $1.5
million in other financing and expects to receive $8.5 million through
the sale and leaseback of jetways at Phoenix Sky Harbor International
Airport.

- TPG Undertaking - At the request of the ATSB, TPG partners, L.P., and
its affiliates, owners of all 941,431 shares of America West Holdings
Class A common stock, have undertaken not to dispose of their Class A
stock other than in connection with an offer to acquire all the shares
of the Company's Class B common stock accepted or approved by the
holders of a majority of the Class B stock. This undertaking is
subject to certain exceptions, including transfers to TPG affiliates,
repurchase of the Class A stock by Holdings and exercise of TPG's
rights to convert the Class A stock into Class B stock, and will
terminate when the warrants issued in connection with the term loan
transactions discussed below expire or are exercised and the
underlying shares of Class B stock are sold, or TPG and its affiliates
no longer hold the Class A stock.

- Warrants/Convertible Senior Notes - As compensation for various
elements of the restructuring plan, Holdings issued a warrant to
purchase up to 18.8 million shares of its Class B common stock to the
federal government and additional warrants to purchase up to 3.8
million shares of its Class B common stock to other loan participants,
in each case at an exercise price of $3 per share and a term of ten
years. Holdings also issued approximately $104.5 million in
convertible senior notes as partial compensation to aircraft lessors.
The notes have a seven-year term and a coupon rate of 7.5% with
interest paid in kind for years one through three. The notes are
convertible after three years into Class B common stock at $12 per
share.

AIRLINE OPERATIONS UPDATE

A key element of AWA's strategy to improve unit revenues remains the customer
service initiatives launched in July 2000, which were designed to improve
operational reliability and restore customer confidence by reducing the number
of flight cancellations and improving on-time performance. In the first quarter
of 2002, AWA continued to make improvements in a number of key service areas as
reported to the DOT:

- On-time performance improved to 86.3% in January 2002 from 68.5% in
January 2001 and 88.5% in February 2002 from 68.0% in February 2001.

- The percentage of flights cancelled dropped to 0.8% in January 2002
from 3.8% in January 2001 and 0.3% in February 2002 from 2.8% in
February 2001.

- AWA posted year-over-year improvements in mishandled baggage of 37% in
January 2002 and 34% in February 2002.

- Customer complaints to the DOT declined by 63% in January 2002 and 6%
in February 2002 compared to the comparable periods in 2001.

In February 2002, AWA ranked first in the industry in on-time performance for
the third consecutive month. The improvement in operational reliability,
combined with pricing incentives, resulted in AWA load factors in the first
quarter of 2002 that were among the highest in the industry.

SUMMARY OF HOLDINGS' FINANCIAL RESULTS

Holdings recorded a consolidated loss before the cumulative effect of a
change in accounting principle of $86.0 million in the first quarter of 2002, a
diluted loss per share of $2.55. This compares to a consolidated net loss of
$12.8 million, or $0.38 per diluted share, in the first quarter of 2001.
Including the cumulative effect of a change in accounting principle related to
the Company's adoption of SFAS No. 142, "Goodwill and Other Intangible Assets"
on January 1, 2002, Holdings' net loss for the first quarter of 2002 was $358.3
million, or $10.62 per diluted share. (See Note 9, "Cumulative Effect of a
Change in Accounting Principle" in Notes to Condensed Consolidated Financial
Statements.) The decline in earnings during the period was due primarily to
depressed passenger traffic and revenues following the terrorist attacks on
September 11, 2001 and a reduction in business travel driven by the continuing
soft economic conditions. The first quarter 2002 results include pretax special
charges of $60.3 million ($36.8 million after tax) primarily related to the
restructuring completed on January 18, 2002, including the reduction in value of
owned aircraft, losses on sales of assets, fleet restructuring costs and
professional fees. (See Note 6, "Special Charges" in Notes to Condensed
Consolidated Financial Statements.) The Company also recognized a nonoperating
pretax charge of $2.8 million ($1.7 million after tax) related to the write-off
of the Company's investment in an e-commerce entity. (See Note 7, "Nonoperating
Income (Expense) - Other, Net" in Notes to Condensed Consolidated Financial
Statements.) The first quarter 2001 results included an $11.0 million pretax
gain ($6.8 million after tax) resulting from the settlement in March 2001 of a
lawsuit related to an air-to-ground telecommunication system that was previously
written off. The Company recorded a consolidated income tax benefit for
financial reporting purposes of $53.5 million for the 2002 first quarter on a
loss before income tax benefit and cumulative effect of a change in accounting
principle of $139.5 million. This compares to an income tax benefit of $14.1
million in the first quarter of 2001 on a pretax loss of $26.9 million.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

RESULTS OF OPERATIONS

The following discussion provides an analysis of AWA's results of operations
for the three months ended March 31, 2002 and material changes compared to the
three months ended March 31, 2001.

The table below sets forth selected operating data for AWA.

THREE MONTHS ENDED PERCENT
MARCH 31, CHANGE

2002 2001 2002-2001

Aircraft (end of period)........ 143 141 1.4
Average daily aircraft
utilization (hours)............. 8.8 10.8 (18.5)
Available seat miles (in
millions)....................... 6,077 7,056 (13.9)
Block hours..................... 113,949 136,680 (16.6)
Average stage length (miles).... 922 884 4.3
Average passenger journey
(miles)......................... 1,358 1,254 8.3
Revenue passenger miles (in
millions)....................... 4,262 4,881 (12.7)
Load factor (percent)........... 70.1 69.2 0.9 pts.
Passenger enplanements (in
thousands)...................... 4,303 5,104 (15.7)
Yield per revenue passenger
mile (cents).................... 10.25 11.32 (9.5)
Revenue per available seat mile:
Passenger (cents)............ 7.19 7.83 (8.2)
Total (cents)................ 7.46 8.18 (8.8)
Fuel consumption (gallons in
millions)....................... 91.9 109.9 (16.4)
Average fuel price (cents per
gallon)......................... 63.2 92.3 (31.5)
Average number of full-time
equivalent employees............ 11,506 13,053 (11.8)

The table below sets forth the major components of operating cost per
available seat mile ("CASM") for AWA.

THREE MONTHS ENDED PERCENT
MARCH 31, CHANGE

2002 2001 2002-2001

(in cents)
Salaries and related costs...... 2.34 2.10 11.1
Aircraft rents.................. 1.20 1.25 (3.7)
Other rents and landing fees.... 0.68 0.50 36.0
Aircraft fuel................... 0.96 1.44 (33.5)
Agency commissions.............. 0.23 0.33 (29.0)
Aircraft maintenance materials
and repairs..................... 1.07 0.92 16.3
Depreciation and amortization... 0.27 0.21 33.2
Amortization of excess
reorganization value............ -- 0.07 (100.0)
Special charges................. 0.99 -- --
Other........................... 1.72 1.72 --
---- ----
9.46 8.54 10.9

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

Three Months Ended March 31, 2002 and 2001

For the three months ended March 31, 2002, AWA realized an operating loss of
$121.6 million compared to an operating loss of $25.3 million in last year's
first quarter. Loss before income tax benefit and cumulative effect of a change
in accounting principle for the three month period in 2002 was $138.4 million
compared to $27.0 million in 2001.

Total operating revenues for the 2002 first quarter were $453.6 million.
Passenger revenues were $437.0 million for the three months ended March 31,
2002, a decrease of $115.8 million or 20.9% from the 2001 quarter. A 12.7%
decrease in revenue passenger miles ("RPM") was more than offset by a 13.9%
decrease in capacity as measured by available seat miles ("ASM"), resulting in a
0.9 point increase in load factor (the percentage of available seats that are
filled with revenue passengers). The decline in traffic statistics for the first
quarter of 2002 is a direct result of the terrorist attacks of September 11,
2001 and the ensuing decline in demand for air travel. Passenger revenue per
available seat mile ("RASM") for the quarter decreased 8.2% to 7.19 cents driven
by a 9.5% decrease in revenue per passenger mile ("yield") to 10.25 cents from
11.32 cents. The decline in yield is due primarily to the continuing soft
economic conditions, resulting in a significant decline in business travel, and
decreased demand for air travel following the terrorist attacks. Cargo revenues
decreased 26.8% to $7.3 million due to lower freight and mail volumes following
the September 11, 2001 terrorist attacks. Other revenues decreased 34.7% to $9.3
million for the first quarter of 2002 due primarily to lower net revenues from
AWA's code sharing agreement with Mesa Airlines.

Excluding special charges, operating expenses in the first quarter of 2002
decreased $87.4 million or 14.5% as compared to the 2001 first quarter, while
ASMs decreased 13.9%. As a result, CASM, excluding special charges, decreased
0.8% to 8.47 cents in the first quarter of 2002 from 8.54 cents for the
comparable 2001 period. Significant changes in the components of CASM are
explained as follows:

- Salaries and related costs per ASM increased 11.1% primarily due to an
8.6% increase in average salaries and related costs per full time
equivalent employee ("FTE") as a result of higher medical and workers'
compensation insurance costs ($4.9 million). In addition, a smaller
decline in FTEs (11.8%) than ASMs (13.9%) contributed to the increase.

- Aircraft rent expense per ASM decreased 3.7% primarily due to the
reduction of rental rates negotiated with AWA's aircraft lessors as
part of the government guaranteed loan transaction. (See Note 3,
"Government Guaranteed Loan" in Notes to Condensed Consolidated
Financial Statements.)

- Other rents and landing fees expense per ASM increased 36.0% in the
first quarter of 2002 primarily due to higher costs for borrowed parts
($4.0 million) and airport rentals ($2.1 million). The 13.9% decrease
in ASMs also contributed to the increase.

- Aircraft fuel expense per ASM decreased 33.5% primarily due to a 31.5%
decrease in the average price per gallon of fuel to 63.2 cents in the
2002 quarter from 92.3 cents in 2001.

- Agency commissions expense per ASM decreased 29.0% primarily due to a
20.9% decrease in passenger revenues. An increase in the percentage of
non-commissionable revenue in the first quarter of 2002, primarily as
a result of increased usage of the Company's website and other lower
cost distribution channels, and a decrease in the travel agent
commission cap from $50 to $20, effective August 28, 2001, also
contributed to the decrease.

- Aircraft maintenance materials and repairs expense per ASM increased
16.3% primarily due to the 13.9% decrease in ASMs. A $7.0 million
increase in the accrual for the estimated costs of maintenance
required to be performed prior to the return of leased aircraft was
offset in part by a $5.2 million decrease in aircraft C-Check expense.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

- Depreciation and amortization expense per ASM increased 33.2% due
primarily to higher depreciation expense related to rotable aircraft
parts ($0.7 million), an increase in amortization expense related to
computer hardware and facility improvements ($0.7 million) and
aircraft leasehold improvements ($0.4 million). The 13.9% decrease in
ASMs also contributed to the increase.

- Upon adoption of SFAS No. 142, "Goodwill and Other Intangible Assets"
on January 1, 2002, the Company's ERV balance is no longer subject to
amortization, resulting in a $5.0 million decrease in amortization
expense in the first quarter of 2002 when compared to the first
quarter of 2001. (See Note 9, "Cumulative Effect of a Change in
Accounting Principle" in Notes to Condensed Consolidated Financial
Statements.)

- Other operating expenses per ASM were relatively flat
quarter-over-quarter. Decreases in passenger traffic related expenses
including catering costs ($6.0 million), computer reservations system
booking fees ($4.8 million), credit card discount fees ($2.8 million),
advertising expenses ($2.6 million) and lower interrupted trip
expenses ($5.5 million) due to improved airline operating performance
were substantially offset by increases in traffic liability insurance
($7.4 million) and security costs ($2.9 million). The first quarter of
2001 included an $11.0 million recovery from the settlement of a
lawsuit related to an air-to-ground telecommunication system that was
previously written off.

Net nonoperating expenses increased $15.1 million to $16.9 million in the
first quarter of 2002 from $1.7 million in the first quarter of 2001. Net
interest expense increased $11.5 million in the first quarter of 2002 due to
higher average outstanding debt. (See Note 3, "Government Guaranteed Loan" in
Notes to Condensed Consolidated Financial Statements.) The 2002 period also
included a $2.8 million charge related to the write-off of AWA's investment in
an e-commerce entity. (See Note 7, "Nonoperating Income (Expense) - Other, Net"
in Notes to Condensed Consolidated Financial Statements.)

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

In January 2002, AWA closed a $429 million loan supported by a $380 million
government loan guarantee. (See Note 3, "Government Guaranteed Loan" in Notes to
Condensed Consolidated Financial Statements.) Completion of the government loan
and related restructuring increased the Company's liquidity by approximately
$390 million ($429 million loan, less 550 basis point guarantee fee to the U.S.
Treasury Department and other loan participants, and less other transaction
fees.)

At March 31, 2002, Holdings' consolidated and AWA's unrestricted cash and
cash equivalents and short-term investments were $420.7 million and $417.9
million, respectively. Net cash used in operating activities for Holdings and
AWA was $82.3 million and $77.0 million, respectively, in the first quarter of
2002. The year-over-year decrease was due primarily to the loss in the 2002
period. During the first quarter of 2002, the Company paid $58.1 million of
transportation taxes to the IRS that had been deferred from 2001, as allowed
under the Act. (See Note 2, "Air Transportation Safety and System Stabilization
Act" in Notes to Condensed Consolidated Financial Statements.) The Company also
made $72 million of Enhanced Equipment Trust ("EETC") aircraft rent payments
during the period and benefited from a $34 million federal income tax refund.
(See Note 10, "Income Tax Refund" in Notes to Condensed Consolidated Financial
Statements.)

In the first quarter of 2002, net cash used in investing activities by
Holdings and AWA was $49.0 million and $48.8 million, respectively. Principal
investing activities during the first quarter of 2002 included purchases of
property and equipment totaling $43.7 million and the purchase of short-term
investments totaling $5.3 million. The 2001 period included $53.5 million of
proceeds from the sale and leaseback of two new A319 aircraft and purchases of
short-term investments totaling $16.9 million.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

In the first quarter of 2002, net cash provided by financing activities to
Holdings and AWA was $389.9 million, primarily due to the government guaranteed
loan discussed above. The Company also paid $36.3 million in loan-related fees
during the period. The first quarter of 2001 included $49.4 million of borrowing
to fund the acquisition of two new A319 aircraft, which were subsequently
refinanced as the result of a sale-leaseback transaction, and the repayment of
$66.5 million of revolving credit facility debt.

Capital expenditures for the three months ended March 31, 2002 were
approximately $43.7 million for Holdings and $43.5 million for AWA. Included in
these amounts are capital expenditures for capitalized maintenance of
approximately $31.2 million.

Government Guaranteed Loan

In addition to increased liquidity, the government guaranteed loan triggered
concessions and additional financing (primarily aircraft rent reductions and
future financing commitments), resulting in a restructuring of AWA's
indebtedness and lease commitments.

Aside from the government-backed loan proceeds and the corresponding
amortization, the restructuring is expected to improve future cash flows. Cash
interest expense associated with the government-backed loan and the convertible
bonds is expected to be offset by the reductions in aircraft rent obtained in
connection with the closing of the government guaranteed loan and an increase in
interest income.

While closing of the government guaranteed loan has substantially improved
the Company's liquidity position, AWA has not generated annualized positive cash
flows after September 11, 2001. The recent improved traffic and capacity has
significantly decreased the average annualized daily negative cash flow from
operations. Management estimates annualized cash flow from operations as of
April 19, 2002 remains negative at less than $0.5 million per day.

Pass Through Trusts

In May 2001, America West Airlines 2001-1 Pass Through Trusts issued $427.2
million of Pass Through Trust Certificates in connection with the financing of
nine Airbus A319 aircraft and five Airbus A320 aircraft. The combined effective
interest rate on this financing is 7.66% on a fixed rate equivalent basis at the
time of closing. The Pass Through Trust Certificates were issued by separate
trusts that hold equipment notes issued upon delivery of each financed aircraft.
Proceeds from the certificates are deposited in an escrow account pending their
application to purchase the equipment notes. The equipment notes are secured by
a security interest in the aircraft and are issued, at AWA's election, either by
AWA in connection with a mortgage financing of the relevant aircraft or by a
separate owner trust in connection with a leveraged lease financing of the
relevant aircraft. The Pass Through Trust Certificates are not direct
obligations of, nor guaranteed by, Holdings or AWA. However, AWA has certain
indemnity obligations in respect of the trusts and interest on the escrowed
proceeds pending their application to finance aircraft.

Nine A319 aircraft and two A320 aircraft that are the subject of this
financing were delivered in 2001 and one A320 aircraft was delivered in the
first quarter of 2002. The acquisition of the one aircraft delivered in the
first quarter of 2002 was structured as a leveraged lease financing. The owner
trust issued equipment notes in an aggregate amount of $34 million in connection
with the delivery of this aircraft. The remaining two aircraft are expected to
be delivered in the second quarter of 2002.

In addition to the 2001-1 Pass Through Trusts, since AWA's restructuring in
1994, AWA has set up ten other Pass Through Trusts, which issued an aggregate of
approximately $1.0 billion of pass through trust certificates. All aircraft
financed by these trusts are currently structured as leveraged lease financings.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

Commitments

As of March 31, 2002, the Company had $855.5 million of long-term debt
(including current maturities), net of debt discount of $33.0 million. This
amount consisted primarily of the $429 million government guaranteed loan, an
$89.9 million secured term loan with a group of financial institutions, $104.5
million of convertible senior notes and principal amortization of notes payable
secured by certain of AWA's aircraft.

The following table sets forth the Company's cash obligations as of March 31,
2002.

BEYOND
2002 2003 2004 2005 2006 2006 TOTAL
(IN THOUSANDS)

Long-term debt:
Equipment notes - 2001-1 EETC(1) $ 9,112 $ 7,259 $ 5,036 $ 9,440 $ 7,170 $ 58,983 $ 97,000
Equipment notes - Non EETC (2) 5,370 9,674 8,989 8,305 8,305 22,854 63,497
Term loan(3) -- -- -- 30,000 30,000 29,855 89,855
7.5% Convertible Senior Notes due
2009 (4) -- -- -- -- -- 104,465 104,465
Government guaranteed loan (5) -- -- 85,800 85,800 85,800 171,600 429,000
State loan (6) -- -- 750 250 250 250 1,500
10 3/4% Senior Unsecured Notes due
2005 -- -- -- 49,998 -- -- 49,998
Industrial development bonds(7) -- -- -- -- -- 29,300 29,300
AVSA promissory notes(8) 7,000 -- -- -- -- -- 7,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
21,482 16,933 100,575 183,793 131,525 417,307 871,615
Cash aircraft rental payments (9) 200,148 304,285 285,386 275,296 254,230 1,947,442 3,266,787
Lease payments on equipment and
facility operating leases(10) 13,876 15,621 14,446 13,929 12,068 65,432 135,372
Capital lease obligation 2,383 3,118 3,270 3,390 3,491 1,226 16,878
Special facility revenue bonds (11) 1,644 1,644 1,644 1,644 1,644 20,546 28,766
Aircraft purchase commitments (12) 157,492 166,413 74,408 -- 223,466 264,103 885,882
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total $ 397,025 $ 508,014 $ 479,729 $ 478,052 $ 626,424 $2,716,056 $5,205,300
========== ========== ========== ========== ========== ========== ==========

(1) Includes approximately $85.4 million of equipment notes issued to the 2001-1
pass through trusts with fixed interest rates of 7.10% to 8.37%, averaging
7.29%, with installments due 2002 through 2021 and $11.6 million of
equipment notes with a variable interest rate of 5.72% with installments due
2002 through 2005.

(2) Includes approximately $63.5 million of equipment notes with variable
interest rates of 2.94% to 3.19%, averaging 2.99%, installments due 2002
through 2008.

(3) Includes an $89.9 million secured term loan maturing at year-end 2007 with a
variable interest rate of 4.19%.

(4) Includes $104.5 million of 7.5% convertible senior notes due 2009, the
interest on which is paid in kind for years one through three.

(5) Government guaranteed loan includes $429.0 million due September 2008 with a
variable interest rate of 2.44%. Guarantee fees of 5.5% of the outstanding
guaranteed principal balance in 2002 and approximately 8.0% of the
outstanding guaranteed principal balance in 2003 through 2008 are payable to
the U.S. Treasury Department and other loan participants.

(6) Arizona State loan includes $1.5 million due December 2007 with a variable
interest rate of 5.50%.

(7) Includes $29.3 million of 6.3% industrial development bonds due April 2023.

(8) Includes AVSA promissory notes of $7.0 million due 2002 with variable
interest rates of 3.11% to 3.17%, averaging 3.14%.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

(9) Includes non-cancelable operating leases for 131 aircraft with remaining
terms ranging from one month to approximately 22 years. Management estimates
the debt equivalent value of these operating leases approximates $2 billion
using an interest rate of 10%.

(10)Includes leases for terminal space, ground facilities, computer and other
equipment under non-cancelable operating leases.

(11)Includes Series 1999 Terminal 4 Improvements Bonds, due 2019.

(12)Includes commitments to purchase a total of 24 airbus aircraft and spare
engines for delivery in 2002 through 2007.

AWA expects to fund these cash obligations from funds provided by operations,
the proceeds of the government guaranteed loan, the $200 million of financing
commitments for Airbus aircraft obtained in connection with the government loan,
and future financings, if necessary. The cash available to AWA from these
sources, however, may not be sufficient to cover these cash obligations because
economic factors outside its control may reduce the amount of cash generated by
operations or increase its costs. For instance, a further economic downturn or
other unforeseen events could reduce the demand for air travel, which would
reduce the amount of cash generated by operations. An increase in borrowing
costs, either due to a reduction in our credit rating or due to a general
increase in interest rates, or in the cost of maintenance, aircraft and aircraft
engines and parts, could increase AWA's costs, which could decrease the amount
of cash available to cover the cash obligations. In addition, AWA may be
required to prepay portions of the government guaranteed loan if its employee
compensation costs exceed a certain threshold and AWA may fail to meet the
minimum liquidity threshold or the financial performance goals required to
obtain financing for certain Airbus aircraft. See "Government Guaranteed Loan"
above. In any of these cases, its liquidity may be adversely affected and it may
not have sufficient cash to prepay the government loan and meet its other
obligations. Moreover, certain of its long-term debt agreements contain a $100
million minimum cash balance requirement. As a result, AWA cannot use all of its
available cash to fund operations, capital expenditures and cash obligations
without violating this requirement.

In January 2001, AWA entered into a development agreement and ground lease
with the City of Phoenix pursuant to which AWA has constructed a flight
operations and training facility on land located adjacent to Phoenix Sky Harbor
International Airport. The initial lease term is 20 years with two five-year
extension options. The facility contains approximately 164,000 square feet and
accommodates AWA's pilot and in-flight training, systems operational control and
crew scheduling functions. The estimated cost to design and construct the
facility is $35 million, of which the Company has paid approximately $23.8
million as of March 31, 2002. The Company currently intends to fund the
remaining construction costs with operating cash flow.

Financial Covenants and Credit Rating

Certain of AWA's long-term debt agreements contain minimum cash balance
requirements and other covenants with which Holdings and AWA are in compliance.
Thus the Company cannot use all of its available cash to fund its operations and
commitments without potentially violating these minimum cash balance
requirements. In addition, certain of these covenants restrict AWA's ability to
pay cash dividends on its common stock and make certain other restricted
payments (as specified therein). Under these restrictions, as of March 31, 2002,
the Company's ability to pay dividends, together with any other restricted
payments, was limited. Moreover, under the terms of the government guaranteed
loan (see Note 3, "Government Guaranteed Loan" in Notes to Condensed
Consolidated Financial Statements), the Company is prohibited from paying cash
dividends prior to repayment of the loan in full. Finally, AWA's long-term debt
agreements contain cross-default provisions, which may be triggered by defaults
by AWA under other agreements relating to indebtedness. As of December 31, 2001,
AWA had suspended payment under certain aircraft leases and, as a result, had
received notices of default from certain aircraft lessors. In January 2002, AWA
paid in full approximately $81 million in deferred aircraft lease payments
simultaneously with the funding of the $429 million government guaranteed loan,
thereby curing the defaults. See "Risk Factors Relating to America West and
Industry Related Risks - Our high leverage, fixed costs and the financial and
other covenants in our debt instruments may limit our ability to fund general
corporate requirements, limit our flexibility in responding to competitive
developments and increase our vulnerability to adverse economic and industry
conditions."

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

The government guaranteed loan contains a $100 million minimum cash balance
requirement and other covenants with which Holdings and AWA are in compliance.
These covenants are consistent with those in AWA's other long-term debt
agreements in that AWA's ability to pay dividends, together with any other
restricted payments (as defined therein), is limited and defaults by AWA under
other agreements relating to indebtedness may trigger a default under the
government guaranteed loan.

Both Moody's and Standard & Poor's have downgraded the credit ratings of AWA
over the past twelve months. In a series of downgrades, Moody's assessment of
AWA's senior implied rating and senior unsecured debt rating went from B1 for
both ratings before April 19, 2001 to Caa3 and Ca, respectively, on November 21,
2001. Standard & Poor's did a similar series of downgrades, taking AWA's credit
rating from B+ before September 19, 2001 to CCC- on November 1, 2001. Due to the
relationship between Holdings and the Airline, Holdings' credit ratings were
similarly downgraded by the rating agencies. Standard & Poor's currently rates
AWA's senior unsecured debt at C and Holdings' senior unsecured debt at CCC-. As
a result of these downgrades, our ability to incur additional indebtedness may
be impaired. The rating agencies base their ratings on the Company's financial
performance and operations, its cash flow and liquidity, the level of its debt
and industry conditions in general. If the Company's financial performance or
industry conditions do not improve, it may face future downgrades, which could
further negatively impact its costs and the prices of its equity or debt
securities. See "Risk Factors Relating to America West and Industry Related
Risks - Because our credit rating has been downgraded, our borrowing costs may
increase and our ability to incur additional debt may be impaired."

OTHER INFORMATION

LABOR RELATIONS

The Company is in the process of negotiating with the Air Line Pilot's
Association ("ALPA") on a new contract for AWA's pilots. The parties are
currently in mediation under the auspices of the National Mediation Board
("NMB"). The existing contract with ALPA became amendable in May 2000. In
addition, the Company is in negotiations with the International Brotherhood of
Teamsters ("IBT") on a first contract covering the Company's stock clerks, a
work group of approximately 60 employees. The parties are currently in mediation
under the auspices of the NMB. The Company cannot predict the form of these
future collective bargaining agreements and therefore the effect, if any, on
AWA's operations or financial performance.

On January 22, 2001, the Transportation Workers Union ("TWU") filed an
Application for Investigation of Representation Dispute with the NMB, seeking to
represent approximately 4,000 passenger service representatives and reservations
agents. On March 20, 2001, that application was dismissed by the NMB due to an
insufficient showing of interest. A one-year prohibition established by the NMB
on any new Application for Investigation of Representation Dispute expired on
March 20, 2002.

CRITICAL ACCOUNTING POLICIES

The preparation of the Company's consolidated financial statements in
accordance with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amount of assets and liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities at the date of our financial statements. We
believe our estimates and assumptions are reasonable; however, actual results
could differ from those estimates. We have identified the following critical
accounting policies that require the use of significant judgments and estimates
relating to matters that are inherently uncertain and may result in materially
different results under different assumptions and conditions.

- - Passenger Revenue - Passenger revenue is recognized when transportation is
provided. Ticket sales for transportation that has not yet been provided
are recorded as air traffic liability. Passenger traffic commissions and
related fees are expensed when the related revenue is recognized. Passenger
traffic commissions and related fees not yet recognized are included as a
prepaid expense. Due to complex pricing structures, refund and exchange
policies, and interline agreements with other airlines, certain amounts are
recognized in revenue using estimates regarding both the timing of the
revenue recognition and the amount of revenue to be recognized. These
estimates are generally based on the statistical analysis of the Company's

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

historical data. Any adjustments resulting from periodic evaluations
of the estimated air traffic liability are included in results of
operations during the period in which the evaluations are completed.

- Accounting For Long-Lived Assets - Property and equipment are recorded
at cost. Interest capitalized on advance payments for aircraft
acquisitions and on expenditures for aircraft improvements are part of
these costs. Property and equipment is depreciated and amortized to
residual values over the estimated useful lives or the lease term,
whichever is less, using the straight-line method. The estimated
useful lives for the Company's ground property and equipment range
from three to 12 years for owned property and equipment and up to 22
years for the technical support facility. The estimated useful lives
of the Company's owned aircraft, jet engines, flight equipment and
rotatable parts range from five to 30 years. Leasehold improvements
relating to flight equipment and other property on operating leases
are amortized over the life of the lease, or the life of the asset,
whichever is shorter. The Company records impairment losses on
long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired as defined by SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."

- Frequent Flyer Accounting - The Company maintains a frequent travel
award program known as "FlightFund" that provides a variety of awards
to program members based on accumulated mileage. The estimated cost of
providing the free travel, using the incremental cost method as
adjusted for estimated redemption rates, is recognized as a liability
and charged to operations as program members accumulate mileage. The
Company also sells mileage credits to companies participating in its
FlightFund program, such as hotels, car rental agencies and credit
card companies. Revenue from the sale of mileage credits is deferred
and recognized when transportation is provided. A change to the
estimated cost per mile, minimum award level, percentage of revenue to
be deferred or deferred recognition period could have a significant
impact on the Company's revenues or mileage liability accrual in the
year of the change as well as future years.

- Long-Term Maintenance Reserve - The Company records an accrual for the
estimated cost of scheduled airframe and engine overhauls required to
be performed on leased aircraft prior to their return to the lessors.
These estimates are based on historical costs and management's
assumptions regarding the renewal of aircraft leases. A significant
change to the Airline's fleet plan could have a material impact on the
Company's maintenance reserve requirements.

RELATED PARTY TRANSACTIONS

As part of the Company's reorganization in 1994, Continental Airlines and AWA
entered into an alliance agreement related to code sharing arrangements and
ground handling operations. AWA paid Continental approximately $6.6 million and
also received approximately $3.9 million in the first quarter of 2002 from
Continental pursuant to these agreements. In the first quarter of 2001, the
amount paid to and received from Continental pursuant to these agreements was
$9.3 million and $5.8 million, respectively. In March 2002, AWA received notice
from Continental of its intention to terminate the code sharing and related
agreements between the two airlines, effective April 26, 2002. See Note 13,
"Termination of Code Share Agreement with Continental Airlines" in Notes to
Condensed Consolidated Financial Statements.

FORWARD LOOKING INFORMATION

This report contains various forward-looking statements and information that
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this document, the words
"anticipate," "estimate," "project," "expect" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, projected
or expected. Among the key factors that may have a direct bearing on the
Company's results are:

- the aftermath of the September 11 terrorist attacks;

- the resulting negative impacts on revenues due to airport closures and
reduced demand for air travel;

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

- increased costs due to enhanced security measures and related
government directives;

- the ability of the Company to obtain sufficient additional financing
if necessary to survive the adverse economic effects following the
September 11 attacks;

- limitations on financing flexibility due to high levels of debt,
financial and other covenants in debt instruments and cross default
provisions and the potential dilutive impact of the warrants and
convertible notes issued in connection with the term loan and related
transactions;

- the cyclical nature of the airline industry;

- competitive practices in the industry;

- the impact of changes in fuel prices;

- relations with unionized employees generally and the impact of the
process of negotiation of labor contracts on our operations; and

- the outcome of negotiations of collective bargaining.

For additional discussion of such risks see "Risk Factors Related to America
West and Industry Related Risks" below. Any forward-looking statements speak
only as of the date of this report.

RISK FACTORS RELATING TO AMERICA WEST AND INDUSTRY RELATED RISKS

THE NEGATIVE IMPACT OF THE SEPTEMBER 11, 2001 TERRORIST ATTACKS AND THE
RESULTING GOVERNMENT RESPONSES COULD BE MATERIAL TO OUR FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND PROSPECTS.

The terrorist attacks of September 11, 2001 were highly publicized. The
impacts that these events will continue to have on the airline industry in
general, and AWA in particular, are not known at this time, but are expected to
include a substantial negative impact on the Company's ability to return to
profitable operations due to:

- A reduction in the demand for travel in the near and mid-term until
public confidence in the air transportation system is restored;

- An increase in costs due to enhanced security measures and government
directives in response to the terrorist attacks;

- An increase in the cost of aviation insurance in general, and the cost
and availability of coverage for acts of war, terrorism, hijacking,
sabotage and similar acts of peril in particular; and

- An increase in airport rents and landing fees.

In addition, we expect that the general increase in hostilities relating to
reprisals against terrorist organizations and the continued threat of further
terrorist attacks will continue to negatively impact our revenues and costs in
the near and mid-term. The extent of the impact that the terrorist attacks and
their aftermath will have on our operations, and the sufficiency of our
financial resources to absorb this impact, will depend on a number of factors,
including:

- The adverse impact that terrorist attacks, and the resulting
government responses, will have on the travel industry and the economy
in general;

- The potential increase in fuel costs and decrease in availability of
fuel if oil-producing countries are affected by the aftermath of the
terrorist attacks, including the government's responses, and the
ability of our fuel-hedging program to manage this risk;

- Our ability to reduce our operating costs, conserve financial
resources and to continue implementing our restructuring plan, taking
into account the cost increases (including significant increases in
the cost of aviation insurance) expected to result from the aftermath
of the terrorist attacks and the government's responses;

- Any resulting decline in the value of the aircraft in our fleet;

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

- Our ability to raise additional financing, if necessary, taking into
account our current leverage and the limitations imposed by the terms
of our existing indebtedness;

- The number of crew members who may be called for duty in the reserve
forces of the armed services and the resulting impact on our ability
to operate as planned; and

- The scope and nature of any future terrorist attacks.

Partly as a result of the terrorist attacks, both Moody's and Standard &
Poor's downgraded our credit rating. Further downgrades resulting from the
aftermath of the terrorist attacks, including the government's responses, could
negatively impact our ability to obtain further financing. See "Because our
credit rating has been downgraded, our borrowing costs may increase and our
ability to incur additional debt may be impaired."

OUR HIGH LEVERAGE, FIXED COSTS AND THE FINANCIAL AND OTHER COVENANTS IN OUR
DEBT INSTRUMENTS MAY LIMIT OUR ABILITY TO FUND GENERAL CORPORATE REQUIREMENTS,
LIMIT OUR FLEXIBILITY IN RESPONDING TO COMPETITIVE DEVELOPMENTS AND INCREASE OUR
VULNERABILITY TO ADVERSE ECONOMIC AND INDUSTRY CONDITIONS.

As of March 31, 2002, we owed approximately $855.5 million of debt. On
January 18, 2002, AWA closed a $429 million loan supported by a $380 million
government loan guarantee and converted its existing credit facility into an
$89.9 million term loan maturing in 2007 and Holdings issued approximately
$104.5 million aggregate principal amount of its 7.5% convertible senior notes
due 2009. In addition, we have incurred significant capitalized and operating
lease obligations in connection with the financing of aircraft and the lease of
airport and other facilities. We also have fixed costs associated with our
regional alliances with Mesa Airlines and Chautauqua Airlines. As a result of
our high leverage:

- We have only a limited ability to obtain additional financing, if
needed. Our existing debt is secured by a substantial portion of our
assets, leaving us with limited assets to use to obtain additional
financing. In addition, the terms of both the government-guaranteed
loan and the credit facility restrict our ability to incur additional
indebtedness or issue equity unless we use the proceeds of those
transactions to prepay the government guaranteed loan and the credit
facility.

- Our ability to fund general corporate requirements, including capital
expenditures, may be impaired. We have substantial obligations to pay
principal and interest on our debt and other recurring fixed costs.
Further, we may be required to prepay portions of the government
guaranteed loan if our employee compensation costs exceed a certain
threshold. Accordingly, we may have to use our working capital to fund
such payments and costs instead of funding general corporate
requirements. In addition, because under the terms of certain of our
indebtedness, we must maintain a minimum cash balance of $100 million,
we cannot use all of our available cash to fund operations, capital
expenditures and cash obligations without violating this minimum cash
balance requirement.

- Our ability to respond to competitive developments and adverse
economic conditions may be limited. Without the ability to obtain
additional financing and with substantial fixed costs, we may not be
able to fund the capital expenditures, including the purchase of new
aircraft, required to keep us competitive or to withstand prolonged
adverse economic conditions.

Moreover, our flexibility is limited because many of the agreements governing
our indebtedness contain negative covenants that restrict our ability to take
certain actions as well as financial covenants that require us to meet certain
financial tests, including the minimum cash balance requirements discussed
above. A breach of these covenants or a failure to make any required payments
under our indebtedness or certain of our aircraft leases could result in the
acceleration of a substantial portion of our indebtedness. In the event of an
acceleration of our indebtedness, it is likely that credit card companies would
begin to withhold proceeds due to us from the sale of our tickets and our
lessors may attempt to exercise remedies under their respective leases. In such
a situation, it is unlikely we would be able to repay the accelerated
indebtedness or make required lease payments.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

FLUCTUATIONS IN FUEL COSTS COULD ADVERSELY AFFECT OUR OPERATING EXPENSES
AND RESULTS.

The price and supply of jet fuel are unpredictable and fluctuate based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Recent tensions in the Middle
East and turmoil in Venezuela has caused fuel prices to increase significantly.
Since fuel is the principal raw material used in our business, accounting for
14.4% of our total operating expenses in 2001, price escalations or reductions
in the supply of jet fuel will increase our operating expenses and cause our
operating results and net income to decline. For example, with our current level
of fuel consumption, a one-cent per gallon increase in jet fuel prices will
cause our annual operating expense to increase by $4.2 million.

We have implemented a fuel-hedging program to manage the risk and effect of
fluctuating jet fuel prices on our business. Our hedging program is intended to
offset increases in jet fuel costs by using derivative instruments keyed to the
future price of heating oil, which is highly correlated to the price of jet fuel
delivered on the East Coast. Our hedging program does not fully protect us
against increasing jet fuel costs because our hedging program does not cover all
of our projected fuel volumes for 2002. Furthermore, our ability to effectively
hedge fuel prices is limited because we purchase a substantially larger portion
of our jet fuel requirements on the West Coast than our large competitors and
West Coast fuel prices are less correlated to heating oil prices and other
viable petroleum derivatives than East Coast fuel prices and, therefore, more
difficult to hedge. The effectiveness of our fuel-hedging program may also be
negatively impacted by the events of September 11 if fuel-producing countries
are affected by the aftermath of the terrorist attacks, including the resulting
government responses. See "The negative impact of the September 11, 2001
terrorist attacks and the resulting government responses could be material to
our financial condition, results of operation and prospects."

BECAUSE OUR CREDIT RATING HAS BEEN DOWNGRADED, OUR BORROWING COSTS MAY
INCREASE AND OUR ABILITY TO INCUR ADDITIONAL DEBT MAY BE IMPAIRED.

Both Moody's and Standard & Poor's have downgraded our credit ratings over
the past 12 months. In a series of downgrades, Moody's assessment of our senior
implied rating and senior unsecured debt rating went from B1 for both ratings
before April 19, 2001 to Caa3 and Ca, respectively, on November 21, 2001.
Standard & Poor's did a similar series of downgrades, taking our credit rating
from B+ before September 19, 2001 to the current ratings of CCC- for Holdings
and C for AWA.

As a result of these downgrades, our borrowing costs may increase, which
would increase our interest expense and could affect our net income. In
addition, these downgrades could affect our ability to obtain additional
financing. See "Our high leverage, fixed costs and the financial and other
covenants in our debt instruments may limit our ability to fund general
corporate requirements, limit our flexibility in responding to competitive
developments and increase our vulnerability to adverse economic and industry
conditions." The rating agencies base their ratings on our financial performance
and operations, our cash flow and liquidity, the level of our debt and industry
conditions in general. If our financial performance or industry conditions do
not improve, we may face future downgrades, which could further negatively
impact our borrowing costs and the prices of our equity or debt securities.

NEGOTIATIONS WITH LABOR UNIONS COULD DIVERT MANAGEMENT ATTENTION AND
DISRUPT OPERATIONS AND NEW COLLECTIVE BARGAINING AGREEMENTS OR AMENDMENTS TO
EXISTING COLLECTIVE BARGAINING AGREEMENTS COULD INCREASE OUR LABOR COSTS AND
OPERATING EXPENSES.

Some of our employees are represented by unions. We currently are negotiating
collective bargaining agreements with ALPA, which represents all of our
approximately 1,600 pilots, and the IBT, which represents all of our
approximately 60 stock clerks. On May 2, 2001, we filed for federal mediation
with the NMB to facilitate contract negotiation with ALPA and on August 8, 2001,
the IBT filed for mediation with the NMB in connection with the stock clerk
negotiations. We cannot predict the outcome of the federal mediation or
negotiations with ALPA or IBT. In addition, other groups of employees may seek
union representation. We cannot predict the outcome of any future negotiations
relating to union representation or collective bargaining agreements. Agreements
reached in collective bargaining may increase operating expenses and lower
operating results and net income. This is particularly significant because our
current employee costs contribute substantially to the low cost structure that
we believe is one of our competitive strengths and because the terms of the
government guaranteed loan restricts the amount we can

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

spend on employee compensation. In addition, negotiations with unions could
divert management attention and disrupt operations, which may result in
increased operating expenses and lower net income. If we are unable to negotiate
acceptable collective bargaining agreements, we might have to wait through
"cooling off" periods, which could be followed by union-initiated work actions,
including strikes. Depending on their type and duration, work actions could
disrupt our operations and, as a result, have a significant adverse affect on
our operating results.

FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR LIQUIDITY,
OPERATING EXPENSES AND RESULTS.

Our indebtedness under both the $429 million government-guaranteed loan and
our existing $89.9 million credit facility bears interest at fluctuating
interest rates based on the London interbank offered rate for deposits of U.S.
dollars, or LIBOR. LIBOR tends to fluctuate based on general economic
conditions, general interest rates, including the prime rate, and the supply of
and demand for credit in the London interbank market. We have not hedged our
interest rate exposure and, accordingly, our interest expense for any particular
period may fluctuate based on LIBOR. To the extent LIBOR increases, our interest
expense will increase, in which event, we may have difficulties making interest
payments and funding our other fixed costs and our available cash flow for
general corporate requirements may be adversely affected.

OUR OPERATING COSTS COULD INCREASE AS A RESULT OF PAST, CURRENT OR NEW
REGULATIONS THAT IMPOSE ADDITIONAL REQUIREMENTS AND RESTRICTIONS ON AIRLINE
OPERATIONS.

The airline industry is heavily regulated. Both federal and state governments
from time to time propose laws and regulations that impose additional
requirements and restrictions on airline operations. Implementing these
measures, such as aviation ticket taxes and passenger safety measures, has
increased operating costs for us and the airline industry as a whole. In
addition, new security measures imposed by the FAA as a result of the recent
terrorist attacks are expected to continue to increase costs for us and the
airline industry as a whole. Depending on the implementation of these and other
laws, our operating costs could increase significantly. In addition, certain
governmental agencies, such as the DOT and the FAA have the authority to impose
mandatory orders, such as Airworthiness Directives in connection with our
aircraft, and civil penalties for violations of applicable laws and regulations,
each of which can result in material costs and adverse publicity. We cannot
predict which laws and regulations will be adopted or what other action
regulators might take. Accordingly, we cannot guarantee that future legislative
and regulatory acts will not have a material impact on our operating results.

THE AIRLINE INDUSTRY AND THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE AND WE
MAY BE UNABLE TO COMPETE EFFECTIVELY AGAINST CARRIERS WITH SUBSTANTIALLY GREATER
RESOURCES OR LOWER COST STRUCTURES.

The airline industry and most of the markets we serve are highly competitive.
We compete with other airlines on the basis of pricing, scheduling (frequency
and flight times), on-time performance, frequent flyer programs and other
services. Our principal competitor is Southwest Airlines, which has a lower
operating cost structure than we do. We also compete against other existing
carriers, many of which offer more extensive routes, frequencies and customer
loyalty, marketing and advertising programs than we do. From time to time, we
also compete with new carriers that enter the airline industry, which typically
have low operating cost structures. We may be unable to compete effectively
against carriers with substantially greater resources or lower cost structures.
The entry of additional new carriers in our markets, the consolidation of
existing carriers or increased competition from existing carriers, could
adversely affect our operating results.

OUR BUSINESS IS SENSITIVE TO GENERAL ECONOMIC CONDITIONS, UNFORESEEN EVENTS
AND SEASONAL FLUCTUATIONS. AS A RESULT, OUR PRIOR PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF OUR FUTURE RESULTS.

The air travel business historically fluctuates on a seasonal basis and in
response to general economic conditions. Due to the greater demand for air and
leisure travel during the summer months, revenues in the airline industry in the
second and third quarters of the year tend to be greater than revenues in the
first and fourth quarters of the year. In addition, the airline industry is
highly susceptible to unforeseen events that result in declines in revenues or
increased costs, such as political instability, regional hostilities, terrorist
attacks, recession, fuel price escalation, inflation, adverse weather
conditions, consumer preferences, labor instability or regulatory oversight.
Also, our results of

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

operations for interim periods are not necessarily indicative of those for an
entire year and our prior results are not necessarily indicative of our future
results.

WE DEPEND ON THE EXPERTISE OF OUR MANAGEMENT TEAM. IF KEY INDIVIDUALS LEAVE
UNEXPECTEDLY, OUR BUSINESS AND OPERATIONS COULD SUFFER.

Many of our executive officers are key to the management of our business and
operations. Our future success depends on our ability to retain these officers
and other capable managers. Although we believe we could replace key personnel
given adequate prior notice, the unexpected departure of key executive officers
could cause substantial disruption to our business and operations. In addition,
we may not be able to retain and recruit talented personnel without incurring
substantial costs. Moreover, in connection with the government guaranteed loan,
we agreed to limit the amount of compensation we provide to our executives. As a
result, our ability to spend additional amounts to retain and recruit talented
personnel is limited.

THE STOCKHOLDERS WHO EFFECTIVELY CONTROL THE VOTING POWER OF HOLDINGS COULD
TAKE ACTIONS THAT WOULD FAVOR THEIR OWN PERSONAL INTERESTS TO THE DETRIMENT OF
OUR INTERESTS.

Currently, three stockholders collectively control more than 50% of the total
voting power of Holdings. These stockholders, TPG Partners, L.P., TPG Parallel
I, L.P. and Air Partners II, L.P. are all controlled by the same company, TPG
Advisors, Inc. Since TPG Advisors, Inc. is an investment firm, its strategic
objectives may be different than both the short-term or long-term objectives of
our board of directors and management. We cannot guarantee that the controlling
stockholders identified above will not try to influence Holdings' business in a
way that would favor their own personal interests to the detriment of our
interests.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK SENSITIVE INSTRUMENTS

(a) Commodity Price Risk

As of March 31, 2002, the Company had not entered into any fuel hedging
transactions.

In April 2002, the Company entered into costless collar transactions which
establish an upper and lower limit on heating oil futures prices. These
transactions are in place with respect to approximately 36% of remaining
projected 2002 fuel requirements, including 51% related to the second quarter of
2002, 48% related to the third quarter of 2002 and 25% related to the fourth
quarter of 2002.

The use of such transactions in the Company's fuel hedging program could
result in the Company not fully benefiting from certain declines in heating oil
futures prices. At April 19, 2002, the Company estimates that a 10% change in
heating oil futures prices would not change the fair value of the costless
collar transactions.

(b) Interest Rate Risk

The Company's exposure to interest rate risk relates primarily to its
variable rate long-term debt obligations. At March 31, 2002 the Company's
variable-rate long-term debt obligations of approximately $583.4 million
represented approximately 69% of its total long-term debt. If interest rates
increased 10% in 2002, the impact on the Company's results of operations would
not be material.

AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In connection with the government guaranteed financing, on January 18, 2002,
Holdings issued:

- A warrant to purchase up to 18.8 million shares of its Class B common
stock to the federal government and warrants to purchase up to 3.8
million shares of its Class B common stock to other loan participants.
These warrants have an exercise price of $3 per share and a term of
ten years. The warrant to the federal government was issued as
consideration for the government's $380 million loan guarantee. The
warrants to the other loan participants were issued as consideration
for their participation in the government guaranteed financing and for
certain lease concessions granted by some of the recipients.

- $104.5 million in 7.5% convertible senior notes due 2009 to certain
aircraft lessors as partial compensation for certain lease concessions
granted by such lessors. The notes are convertible after three years
into shares of Holdings' Class B common stock at $12 per share.

The warrant issued to the federal government was issued pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act") in
reliance upon, among other things, the fact the warrant contained a statement to
the effect that such warrant has not been registered under the Securities Act
and may not be sold, assigned, transferred or otherwise disposed of except in
compliance with the requirements of, or an exemption under, the Securities Act.
The other warrants and the convertible notes were issued pursuant to Regulation
D under the Securities Act, in reliance upon, among other things, a
representation from each recipient that such recipient was an "accredited
investor" as defined in Regulation D and the fact that the securities contained
statements to the effect that such securities had not been registered under the
Securities Act and may not be sold, assigned, transferred or otherwise disposed
of except in compliance with the requirements of, or an exemption under, the
Securities Act.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDER

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING

10.54 2002 Incentive Equity Plan*

---------------------
* Incorporated by reference from Holdings' Proxy
Statement on Schedule 14A filed on April 17, 2002.

b. Reports on Form 8-K

Holdings and AWA filed a report on Form 8-K, dated January 31, 2002,
describing under Item 5 the closing of a $429 million loan supported by
a $380 million government loan guarantee that resulted in a
restructuring of AWA's indebtedness and lease commitments and
summarizing the major components of this restructuring and its impacts
on the Company's balance sheet, cash flow and earnings.

AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 2002

Holdings and AWA filed a report on Form 8-K, dated March 20, 2002,
furnishing under Item 5 a press release, dated March 20, 2002, setting
forth certain data regarding special charges AWA expects to report with
its first quarter 2002 results, capacity and expense expectations for
the full year 2002.

AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AMERICA WEST HOLDINGS CORPORATION

By /s/ Bernard L. Han
--------------------
Bernard L. Han
Executive Vice President and Chief
Financial Officer

DATED: April 19, 2002

AMERICA WEST AIRLINES, INC.
MARCH 31, 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AMERICA WEST AIRLINES, INC.

By /s/ Bernard L. Han
--------------------
Bernard L. Han
Executive Vice President and Chief
Financial Officer

DATED: April 19, 2002