AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1995

REGISTRATION NOS. 33-55689 AND 54243
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

POST-EFFECTIVE AMENDMENT NO. 4

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

DELAWARE 4512 86-0418245
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

4000 EAST SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034
(602) 693-0800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

MARTIN J. WHALEN
SENIOR VICE PRESIDENT
AMERICA WEST AIRLINES, INC.
4000 EAST SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034
(602) 693-0800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------

With Copies to:

DAVID J. GRAHAM
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
(713) 220-4200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective, which time is to be
determined by the Selling Securityholders. All of the Securities offered hereby
are offered for the account of the Selling Securityholders.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

------------------------

The Prospectus included in this Registration Statement is a combined
prospectus pursuant to Rule 429 that also relates to the Company's Registration
Statement on Form S-1 (No. 33-54243) filed previously with the Commission.

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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AMERICA WEST AIRLINES, INC.

CROSS-REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K

ITEM NUMBER AND CAPTION IN FORM S-1 LOCATION OR CAPTION IN PROSPECTUS
- ------------------------------------------- -----------------------------------------

1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus......................... Forepart of Registration Statement and
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed
Charges............................ Prospectus Summary; Risk Factors
4. Use of Proceeds...................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price...... Plan of Distribution
6. Selling Securityholders.............. Principal Stockholders; Selling
Securityholders
7. Plan of Distribution................. Outside Front Cover Page of Prospectus;
Plan of Distribution
8. Description of Securities to be
Registered......................... Outside Front Cover Page of Prospectus;
Description of Capital Stock; Description
of the Senior Notes; Description of
Warrants; Shares Eligible for Future Sale
9. Interests of Named Experts and
Counsel............................ Legal Matters; Experts
10. Information with Respect to the
Registrant......................... Outside Front Cover Page of Prospectus;
Prospectus Summary; Risk Factors; The
Company; Use of Proceeds; Dividend
Policy; Capitalization; Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Description of Capital Stock;
Description of the Senior Notes;
Description of Warrants; Shares Eligible
for Future Sale; Financial Statements
11. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ Not Applicable

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION DATED JUNE 15, 1995

AMERICA WEST AIRLINES, INC.

1,200,000 SHARES CLASS A COMMON STOCK
18,698,704 SHARES CLASS B COMMON STOCK
$123,000,000 11 1/4% SENIOR UNSECURED NOTES DUE 2001
5,850,016 CLASS B COMMON STOCK WARRANTS

------------------------

This Prospectus relates to (i) 1,200,000 shares of Class A Common Stock,
par value $.01 per share ("Class A Common Stock") of America West Airlines, Inc.
("America West" or the "Company"), (ii) 18,698,704 shares of Class B Common
Stock, par value $.01 per share of the Company, ("Class B Common Stock", and
together with the Class A Common Stock, the "Common Stock"), (iii) $123 million
principal amount of 11 1/4% Senior Unsecured Notes due 2001 of the Company (the
"Senior Notes"), and (iv) 5,850,016 warrants, each entitling the holder thereof
to purchase one share of Class B Common Stock for $12.74 at any time prior to
August 25, 1999 (the "Warrants," and together with the Common Stock and the
Senior Notes, the "Securities"). The Securities may be offered by the Selling
Securityholders (as defined herein) from time to time in transactions in the
over-the-counter market, on a national securities exchange or otherwise at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Securities to or
through underwriters, brokers, dealers or agents who may receive compensation in
the form of discounts, concessions or commissions from the Selling
Securityholders or the purchasers of the Securities for whom such underwriters,
brokers, dealers or agents may act. The Company will not receive any of the
proceeds from the sale of any of the Securities by the Selling Securityholders.

Holders of Class B Common Stock are entitled to one vote per share, and
holders of Class A Common Stock are entitled to 50 votes per share on all
matters submitted to a vote of common stockholders, except that voting rights of
holders who are not United States citizens are limited as described herein. The
Senior Notes bear interest payable semiannually in arrears. The Senior Notes may
be redeemed at the option of the Company (i) prior to September 1, 1997, at any
time, at a redemption price equal to 105% of the principal amount or from time
to time in part from the net proceeds from a public offering of its capital
stock at a redemption price equal to 105% of the principal amount, in each case
plus accrued and unpaid interest, if any, to the redemption date; and (ii) on or
after September 1, 1997 at any time in whole or from time to time in part, at
redemption prices described herein. In addition, Senior Notes may be subject to
mandatory redemption, at a redemption price of 104% of the aggregate principal
amount of Senior Notes so redeemed, plus accrued and unpaid interest thereon,
under certain circumstances following the consummation of a public offering of
the Company's capital stock. At March 31, 1995, the Senior Notes were
effectively subordinated to $355.8 million of secured indebtedness incurred by
the Company to acquire aircraft and other assets (the "Secured Debt"). Holders
of the Secured Debt will be senior to the holders of the Senior Notes with
respect to the collateral securing such indebtedness. See "Description of the
Senior Notes." The Class B Common Stock and the Warrants are listed on The New
York Stock Exchange. The Company does not intend to file an application to have
either the Class A Common Stock or the Senior Notes listed on a national
exchange and does not expect an active trading market to develop for either the
Class A Common Stock or the Senior Notes.

The Selling Securityholders and any underwriters, brokers, dealers or
agents participating in the distribution of the Securities may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 as amended (the
"Securities Act"), and any profit on the sale of the Securities by the Selling
Securityholders and any commissions received by any such underwriters, brokers,
dealers or agents may be deemed to be underwriting commissions or discounts
under the Securities Act. Pursuant to the terms of the Registration Rights
Agreement (as hereinafter defined) the Company has agreed to indemnify the
Selling Securityholders against certain liabilities, including liabilities under
the Securities Act.

Underwriters, brokers, dealers or agents effecting transactions in the
Securities should confirm the registration thereof under the securities laws of
the state in which such transactions will occur, or the existence of any
exemption from registration.

SEE "RISK FACTORS" ON PAGE 10 FOR CERTAIN INFORMATION THAT SHOULD BE

CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

------------------------

The date of this Prospectus is , 1995
4

AVAILABLE INFORMATION

America West Airlines, Inc. ("America West" or the "Company") is subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports and
other information with the Securities and Exchange Commission (the
"Commission"). Reports and other information concerning America West can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549; The Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Room of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.

America West has filed with the Commission Registration Statements No.
33-54243 and No. 33-55689 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statements and the exhibits and schedules thereto. For further information with
respect to America West and the Securities offered hereby, reference is made to
the Registration Statements, including the exhibits and schedules thereto. The
Registration Statements can be inspected at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company is a Delaware corporation. Its executive offices are located at
4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, and its telephone number
is (602) 693-0800.

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5

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by the
detailed information and financial statements (including the notes thereto)
appearing elsewhere in this Prospectus, which should be read in its entirety.
Prospective investors should carefully consider matters discussed under the
caption "Risk Factors."

THE COMPANY

America West Airlines, Inc. ("America West" or the "Company") is a major
United States air carrier providing passenger, cargo and mail service, with its
primary markets in the western and southwestern regions of the United States.
The Company operates its route system through two principal hubs, Phoenix,
Arizona and Las Vegas, Nevada, and a mini-hub in Columbus, Ohio, and serves 47
destinations with a fleet of 88 jet aircraft. The Company currently has
connecting service to an additional 20 destinations through alliances with Mesa
Air Group, Inc. ("Mesa") and to an additional 23 destinations through an
alliance with Continental Airlines, Inc. ("Continental").

The Company emerged from bankruptcy under Chapter 11 of the United States
Bankruptcy Code ("Bankruptcy Code") on August 25, 1994 (the "Effective Date").
In connection with its reorganization in bankruptcy and related operational
restructuring (the "Reorganization"), the Company took significant steps to
improve its operations, including (i) reducing its fleet size from 123 aircraft
to 85, to better match capacity to demand through elimination of nonproductive
routes; (ii) reducing the aircraft types operated from five to three to reduce
operating costs; (iii) implementing certain enhancements to its revenue
management system to optimize the level of passenger revenues generated on each
flight; (iv) eliminating Company operated commuter service and introducing
code-sharing agreements to expand the scope of service and attract a broader
passenger base; and (v) implementing numerous cost reduction programs, including
a Company-wide pay reduction in August 1991 and the reduction of aircraft lease
rentals to fair market rates in the fall of 1992. America West was one of only
two major United States airlines to report a profit in each quarter of 1993 and
1994.

America West currently operates with one of the lowest cost structures
among the major U.S. airlines, based on reported 1994 results. The Company's
operating cost per available seat mile ("ASM") for 1994 was 6.99 cents, which
was approximately 22% less than the average operating cost per ASM of the nine
largest other domestic airlines and was comparable to the cost structure of
Southwest Airlines, Inc. ("Southwest Airlines") on a non-stage length adjusted
basis, which operates in the Company's principal market areas. Management
believes that the Company can continue to offer fares that are competitive with
those offered by low cost carriers in the Company's markets, while providing a
differentiated level of service. Passenger services provided by America West
include assigned seating, participation in computerized reservation systems,
interline ticketing, first class cabins on certain flights, baggage transfer and
various other services. The Company believes that these features distinguish
America West from certain low cost carriers in the Company's markets, including
Southwest Airlines, and enable the Company to attract passengers without
competing solely on the basis of fares.

Pursuant to the Reorganization, pre-existing equity interests of the
Company were cancelled, the Company's obligations to other prepetition creditors
were restructured and general unsecured nonpriority prepetition creditors (the
"Prepetition Creditors") have received or will receive, in full satisfaction of
their claims, their pro rata share of approximately 26,053,185 shares of Class B
Common Stock and $6,416,214 in cash. As of April 30, 1995, approximately 22.6
million of these shares have been distributed to creditors and approximately 3.4
million remain held in reserve for distribution in the settlement of remaining
claims. Holders of the Company's pre-existing common equity interests received,
on a pro rata basis, 2,250,000 shares of Class B Common Stock and Warrants to
purchase 6,230,769 shares of Class B Common Stock. In addition, pursuant to the
exercise of subscription rights, holders of pre-existing equity interests
received 1,615,179 shares of Class B Common Stock for an aggregate purchase
price of $14,357,326 ($8.889 per share), including holders of pre-existing
preferred equity interests who received 125,000 shares of Class B Common Stock
for an aggregate purchase price of $1,111,125.

3
6

As part of the Reorganization and pursuant to an investment agreement (the
"Investment Agreement"), the Company received approximately $205.3 million in
cash upon the issuance to the partners of AmWest Partners, L.P. ("AmWest"), and
to certain assignees of AmWest (as described below), of rights to acquire (i)
1,200,000 shares of Class A Common Stock, (ii) 12,981,636 shares of Class B
Common Stock, (iii) Warrants to purchase 2,769,231 shares of Class B Common
Stock and (iv) $100 million principal amount of 11 1/4% Senior Unsecured Notes
(the "Senior Notes"). Certain funds managed or advised by Fidelity Management
Trust Company and its affiliates (collectively, "Fidelity") and Lehman Brothers
Inc. ("Lehman") purchased a portion of the securities that otherwise would have
been issued to AmWest pursuant to assignments by AmWest to those parties.
Pursuant to these assignments, Lehman acquired 1,333,587 shares of Class B
Common Stock and Fidelity acquired 3,270,311 shares of Class B Common Stock,
Warrants to purchase 133,488 additional shares of Class B Common Stock and $100
million of Senior Notes. On October 14, 1994 in exchange for certain
pre-existing claims, Fidelity received an additional $13 million of Senior Notes
and Lehman received $10 million of Senior Notes. AmWest, which dissolved upon
the Effective Date, was a Texas limited partnership including as investors Mesa,
Continental and TPG Partners, L.P. and certain of its affiliates (collectively,
with its affiliates TPG Parallel I, L.P. and Air Partners II, L.P., "TPG"). TPG
Partners, L.P. is a Delaware limited partnership which acquired aggregate
beneficial ownership of securities representing 43.1% of the combined voting
power of America West securities (including shares acquired for pre-existing
equity interests held by TPG). See "Risk Factors -- Concentration of Voting
Power; Influence of Principal Stockholders" and "Principal Stockholders." AmWest
assigned its rights to acquire securities pursuant to the Investment Agreement
to its partners and certain of their respective affiliates. Pursuant to the
Reorganization, Lehman, Fidelity and TPG received additional shares of Class B
Common Stock for their existing claims and interests. These shares have also
been registered pursuant to the Securities Act of 1933.

4
7

THE OFFERING

The principal terms of the Common Stock, Senior Notes and Warrants are
summarized below. For a more complete description, see "Description of Capital
Stock," "Description of the Senior Notes" and "Description of Warrants,"
respectively. The Selling Securityholders will receive all of the proceeds from
the sale of the Securities offered hereby, and the Company will not receive any
proceeds from the Offering.

Common Stock:

Securities Offered............... 1,200,000 shares of Class A Common Stock
18,698,704 shares of Class B Common Stock

Common Stock outstanding(1)...... 1,200,000 shares of Class A Common Stock
43,966,645 shares of Class B Common Stock
Total.................. 45,166,645 shares of Common Stock

Voting Rights.................... Class A and Class B Common Stock have
identical economic rights and privileges
and rank equally, share ratably, and are
identical in all respects as to all matters
other than voting rights. The Class A
Common Stock votes together with the Class
B Common Stock on all matters except as
otherwise required by law. Each share of
Class B Common Stock has one vote; each
share of Class A Common Stock has 50 votes.

Listing.......................... The Class B Common Stock is listed on The
New York Stock Exchange. The Company does
not intend to apply for listing of the
Class A Common Stock on any securities
exchange or authorization quotation on the
NASDAQ System. The Company does not expect
that an active trading market for the Class
A Common Stock will develop.

Trading Symbol................... "AWA"
- ---------------
(1) Excluding 10,384,304 shares of Class B Common Stock reserved for issuance
upon exercise of outstanding Warrants as of March 31, 1995.

Senior Notes:

Securities Offered............... $123,000,000 aggregate principal amount of
Senior Notes

Maturity......................... September 1, 2001

Interest Rate.................... The Senior Notes bear interest at a rate of
11 1/4% per annum. Interest accrues from
the date of issuance thereof and is payable
semi-annually in arrears on each March 1
and September 1, commencing March 1, 1995.

Ranking.......................... The Senior Notes rank senior in right of
payment to all existing and future
subordinated Indebtedness (as defined in
the Indenture) of the Company and rank pari
passu in right of payment with all other
Indebtedness of the Company. Certain
Indebtedness, however, including secured
debt, is effectively senior in right of
payment to the Senior Notes with respect to
assets that constitute collateral securing
such other Indebtedness.

Optional Redemption.............. The Senior Notes offered hereby may be
redeemed at the option of the Company (i)
prior to September 1, 1997, (A) at any
time, in whole but not in part, at a
redemption price of 105% of the principal
amount of the Senior Notes

5
8

plus accrued and unpaid interest, if any,
to the redemption date or (B) from time to
time in part from the net proceeds of a
public offering of its capital stock at a
redemption price equal to 105% of the
principal amount, plus accrued and unpaid
interest, if any, to the redemption date
except for amounts mandatorily redeemed;
and (ii) on or after September 1, 1997 at
any time in whole or from time to time in
part, at a redemption price equal to the
following percentage of the principal
amount redeemed, plus accrued and unpaid
interest to the date of redemption, if
redeemed during the 12-month period
beginning:

SEPTEMBER 1, PERCENTAGE
----------- ----------
1997.... 105.0%
1998.... 103.3%
1999.... 101.7%
2000.... 100.0%

Mandatory Redemption............. In the event that prior to September 1,
1997 the Company consummates a Public
Offering Sale, (as defined in the
Indenture), and immediately prior to such
consummation the Company has cash and cash
equivalents, not subject to any restriction
on disposition of at least $100,000,000,
then the Company shall redeem Senior Notes
at a redemption price equal to 104% of the
aggregate principal amount of the Senior
Notes so redeemed, plus accrued and unpaid
interest to the redemption date. The
aggregate redemption price and accrued and
unpaid interest of the Senior Notes to be
so redeemed shall equal the lesser of (a)
50% of the net offering proceeds of such
Public Offering Sale and (b) the excess, if
any, of (i) $20,000,000 over (ii) the
amount of any net offering proceeds of any
prior Public Offering Sale received prior
to September 1, 1997 and applied to so
redeem Senior Notes.

Principal Covenants.............. The Indenture contains numerous covenants
including covenants governing the
disposition of the proceeds of certain
underwritten public offerings of Common
Stock of the Company, limiting certain
Restricted Payments, limiting certain
transactions with Affiliates, limiting
certain sales of assets, limiting certain
investments and allowing a holder
repurchase rights upon a change of control.

Listing.......................... The Company does not intend to apply for
listing of the Senior Notes on any
securities exchange or authorization for
quotation on the NASDAQ system. The Company
does not expect that an active trading
market will develop for the Senior Notes.
Warrants:

Securities Offered............... 5,850,016 Warrants, each entitling the
holder to purchase one share of Class B
Common Stock at a price (the "Exercise
Price") of $12.74 per share.

Warrants to be Outstanding after
the Offering..................... 10,384,304 Warrants

6
9

Expiration....................... The Warrants are exercisable by the holders
at any time prior to August 25, 1999.

Redemption....................... The Warrants are not redeemable.

Anti-Dilution.................... The number of shares of Class B Common
Stock purchasable upon exercise of each
Warrant will be adjusted upon, among other
things, (i) issuance of a dividend in or
other distribution of Common Stock to
holders of Common Stock; (ii) a
combination, subdivision or
reclassification of the Class B Common
Stock; and (iii) rights issuances.

Voting Rights.................... Warrant holders have no voting rights.

Listing.......................... The Warrants are listed on the New York
Stock Exchange.

Trading Symbol................... "AWAws"

7
10

SUMMARY FINANCIAL DATA

The summary financial data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" for, and as of (i) the period August
26, 1994 to December 31, 1994, the period January 1, 1994 to August 25, 1994,
and each of the years in the four-year period ended December 31, 1993, are
derived from the financial statements of the Company, which financial statements
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants and (ii) the periods ended March 31, 1995 and 1994 are derived from
the unaudited condensed financial statements of the Company. The summary data
should be read in conjunction with the financial statements, the related notes
and the independent auditors' report included elsewhere herein. The independent
auditors' report for the period August 26, 1994 to December 31, 1994, the period
January 1, 1994 to August 25, 1994, and as of December 31, 1994 contains an
explanatory paragraph that states the financial statements of the Reorganized
Company reflect the impact of adjustments to reflect the fair value of assets
and liabilities under fresh start reporting. As a result, the financial
statements of the Reorganized Company are presented on a different basis than
those of the Predecessor Company and, therefore, are not comparable in all
respects. As a result of the Company filing a voluntary petition to reorganize
under Chapter 11 of the Bankruptcy Code on June 27, 1991 and operating as a
debtor-in-possession until August 25, 1994, the summary financial data for
periods prior to June 27, 1991 are not comparable to periods subsequent to such
date.

| PREDECESSOR COMPANY
| ----------------------------------------------------------------------------
REORGANIZED COMPANY | PERIOD
-------------------------- | FROM
THREE MONTHS PERIOD FROM | THREE MONTHS JANUARY 1
ENDED AUGUST 26 TO | ENDED TO YEARS ENDED DECEMBER 31,
MARCH 31, DECEMBER 31, | MARCH 31, AUGUST 25, -------------------------------------------------
1995 1994 | 1994 1994 1993 1992 1991 1990
------------ ------------ | ------------ ---------- ---------- ---------- ---------- ----------
| (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
STATEMENTS OF |
OPERATIONS DATA: |
Operating |
revenues.......... $ 345,790 $ 469,766 | $ 345,264 $ 939,028 $1,325,364 $1,294,140 $1,413,925 $1,315,804
Operating |
expenses.......... 320,895 430,895 | 307,514 831,522 1,204,310 1,368,952 1,518,582 1,347,435
Operating income |
(loss)............ 24,895 38,871 | 37,750 107,506 121,054 (74,812) (104,657) (31,631)
Income (loss) before |
income taxes and |
extraordinary |
items............. 10,968 19,736 | 15,807 (201,209) 37,924 (131,761) (222,016) (76,695)
Income taxes........ 5,758 11,890 | 632 2,059 759 -- -- --
Income (loss) before |
extraordinary |
items............. -- 7,846 | -- (203,268) 37,165 (131,761) (222,016) (76,695)
Extraordinary items |
(a)............... -- -- | -- 257,660 -- -- -- 2,024
Net Income (loss)... 5,210 7,846 | 15,175 54,392 37,165 (131,761) (222,016) (74,671)
Earnings (loss) per |
share: (b) |
Primary: |
Before |
extraordinary |
items......... .12 .17 | .56 (7.03) 1.50 (5.58) (10.39) (4.26)
Extraordinary |
items (a)..... -- -- | -- 9.02 -- -- -- 0.11
Net income |
(loss)........ .12 .17 | .56 1.99 1.50 (5.58) (10.39) (4.15)
Fully diluted: |
Before |
extraordinary |
items........... .12 .17 | .40 (4.96) 1.04 (5.58) (10.39) (4.26)
Extraordinary |
items (a)..... -- -- | -- 6.37 -- -- -- 0.11
Net income |
(loss)........ .12 .17 | .40 1.41 1.04 (5.58) (10.39) (4.15)
Shares used for |
computation |
Primary........... 45,166 45,127 | 29,153 28,550 27,525 23,914 21,534 18,396
Fully diluted..... 45,166 45,127 | 41,055 40,452 41,509 23,914 21,534 18,396
Ratio of earnings to |
fixed charges |
(c)............... 1.28 1.38 | 1.48 -- 1.28 -- -- --

8
11

(b) Historical per share data for the Predecessor Company is not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.

(c) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income (loss) before taxes plus fixed charges less capitalized
interest. "Fixed charges" consist of interest expense including amortization
of debt issuance costs, capitalized interest and a portion of rent expense
which is deemed to be representative of an interest factor. For the years
ended December 31, 1992 and 1991 and 1990, earnings were insufficient to
cover fixed charges by $131.8 million, $228.7 million and $83.1 million,
respectively. For the period ended August 25, 1994, earnings were
insufficient to cover fixed charges by $201.2 million.

9
12

RISK FACTORS

HISTORY OF LOSSES

The Company experienced significant operating losses in each year of the
three year period ended December 31, 1992, and the Company operated as a
debtor-in-possession under the Bankruptcy Code from June 27, 1991 to the
Effective Date. Although the Company's results of operations improved in 1993
and 1994, the airline industry is extremely competitive and has been generally
unprofitable in recent years. In the long term, the Company's viability is
dependent upon its ability to sustain profitable results of operations, and
there can be no assurance that such results can be sustained.

ADVERSE INDUSTRY CONDITIONS AND COMPETITION

The airline industry is highly competitive. Overall industry profit margins
have traditionally been low and were substantially negative in each year of the
three-year period ended December 31, 1992. Airlines compete in the areas of
pricing, scheduling (frequency and flight times), on-time performance, frequent
flyer programs and other services. Many of America West's competitors are
carriers with substantially greater financial resources.

The airline industry is susceptible to price discounting, which involves
the offering of discount or promotional fares to passengers. Any such fares
offered by one airline are normally matched by competing airlines, which results
in lower industry yields. In 1992, American Airlines introduced a new fare
structure followed by a deeply discounted summer sale. These steps were
generally matched by other U.S. airlines, including America West, and resulted
in substantially depressed industry yields and significant 1992 losses for most
of the major U.S. airlines. American Airlines and the rest of the domestic
airline industry subsequently abandoned that pricing structure, and fare levels
increased in 1993 from 1992 levels. Nonetheless, significant industry-wide
discounts could be re-implemented at any time, and the introduction of broadly
available, deeply discounted fares by a major U.S. airline would likely result
in lower yields for the entire industry and could have a material adverse effect
on the Company's operating results. In this regard, certain competing carriers
have recently announced seasonal fare reductions that have been selectively
matched by the Company. The Company expects this action to result in a reduction
of yields with little or no increase in traffic levels.

Several of the Company's markets, including those in New York City, Texas,
Southern California, Washington, D.C., Chicago and Las Vegas, are served by
larger carriers and are highly competitive. On many routes, and in particular
those routes between Phoenix and California, fare competition has made it
difficult for the Company to raise fares except on a selective basis. Intense
fare competition with respect to certain markets has adversely affected
passenger yield and, as a result, profitability.

In recent years several new carriers have entered the industry, typically
with low cost structures. Aircraft, skilled labor and gates at most airports
continue to be available to start-up carriers. In some cases, new entrants have
initiated or triggered further price discounting. The entry of additional new
carriers on many of the Company's routes, as well as increased competition from
or the introduction of new services by established carriers, could negatively
impact America West's results of operations.

INCREASES IN FUEL PRICES

Fuel costs constituted approximately 13% of America West's total operating
expenses during 1994. A one cent per gallon change in fuel price would affect
the Company's annual operating results by approximately $3 million at present
consumption levels. Accordingly, either a substantial increase in fuel prices or
the lack of adequate fuel supplies in the future would likely have a material
adverse effect on the operations of the Company. Moreover, fuel price increases
or supply shortages, such as those that occurred during the Persian Gulf war,
can occur at any time as a result of, among other things, geopolitical
developments.

The Company purchases fuel on standard trade terms under master agreements
and has been able to obtain fuel sufficient to meet its requirements at
competitive prices. The Company does not currently hedge its

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13

fuel costs. In August 1993, the United States government increased taxes on
fuel, including aircraft fuel, by 4.3 cents per gallon. Airlines are exempt from
this tax increase until October 1, 1995. When implemented, this new tax will
increase the Company's annual operating expenses by approximately $13 million
based upon its 1994 fuel consumption levels. There can be no assurance that the
U.S. government will not impose additional taxes on fuel in the future or that
such taxes will not materially affect the Company's results of operations.

LEVERAGE

Although the Reorganization improved the Company's financial position, the
Company remains highly leveraged. This high degree of leverage will pose
substantial risks to holders of the Securities and could have a material adverse
effect on the marketability, price and future value of such Securities. This
high degree of leverage will increase the reorganized Company's vulnerability to
adverse general economic and airline industry conditions and to increased
competitive pressures. In addition, as described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," at March 31, 1995, the Company had on order a total of 24
Airbus A320-200 aircraft, with an aggregate net cost estimated at $1.1 billion.
The Company has arranged for financing for up to one-half of the commitment
relating to such aircraft and will require substantial capital from external
sources to meet its remaining financial commitment. The acquisition and
financing of these aircraft will likely result in a substantially greater degree
of leverage than currently exists.

CONCENTRATION OF VOTING POWER; INFLUENCE OF CERTAIN PRINCIPAL STOCKHOLDERS

At March 31, 1995, TPG, Continental and Mesa, the former partners of
AmWest, owned approximately 19.8% of the shares of Class B Common Stock and 100%
of the Class A Common Stock, and thereby control approximately 66.1% of the
voting power of America West (68.4% assuming the exercise of Warrants held by
such holders). As a result, TPG, Continental and Mesa, whose shares are subject
to the terms of a Stockholders' Agreement (as described below), are able to
elect a majority of their designees to the Board of Directors and otherwise to
control the Company by, among other things, taking or approving actions to (i)
amend the America West charter or effect a merger, sale of assets or other major
corporate transaction; (ii) defeat any takeover attempt; (iii) determine the
amount of dividends, if any, paid to itself and the other holders of Common
Stock; and (iv) otherwise control the outcome of virtually all matters submitted
for a vote of the stockholders of the Company, subject, however to certain
restrictions under the Stockholders' Agreement, as described below. Mesa and
Continental, are engaged in the airline industry and are parties to certain
agreements with the Company. The general partner of TPG is a limited partnership
whose general partner is TPG Advisors, Inc., a Delaware corporation. The
executive officers and directors of TPG Advisors, Inc. are David Bonderman,
James G. Coulter, William Price, James O'Brien, Richard P. Schifter and Richard
Ekleberry. Mr. Bonderman, Mr. Coulter and Mr. Price, through their positions in
Air Partners, L.P., a partnership formed to participate in the funding of the
reorganization of Continental and a significant shareholder of Continental, may
be deemed to own beneficially a significant percentage of the equity securities
of Continental. Mr. Bonderman is also a director and chairman of the board of
directors of Continental and Mr. Price is a director of Continental. Mr. Larry
L. Risley, a director of the Company, is the chairman and chief executive
officer of Mesa. See "Principal Stockholders." As a result, there can be no
assurance that the interests of Continental, Mesa or TPG will not differ from
the interests of the Company or that either party will not seek to influence the
Company in a manner that serves its interests.

Pursuant to the terms of the Stockholders' Agreement, AmWest agreed to
certain limitations on its ability to control the Company, including, that for a
three-year period beginning with the Effective Date, the Company shall have a
15-member Board of Directors, six members of which may be designated by parties
other than AmWest or its partners (including three Creditors' Committee
Directors, one Equity Committee Director, one Independent Company Director and
one GPA Director, as such terms are defined in the Stockholders' Agreement). In
addition, the Stockholders' Agreement provides that until the annual meeting
after the third anniversary of the Effective Date, approval of transactions in
which AmWest or its affiliates may participate will require the affirmative vote
of the holders of a majority of the voting power of the outstanding shares of
each class of common stock of the Company entitled to vote, voting as a single
class and

11
14

excluding any shares owned by AmWest or any of its affiliates. Transactions to
which such restriction applies include any merger or consolidation of the
Company with or into AmWest or its affiliates, any sale or other disposition of
all or a substantial part of the assets of the Company to AmWest or its
affiliates and certain other transactions in which AmWest or its affiliates
would acquire an increased ownership of equity securities in the Company. The
Company does not believe these restrictions will have any adverse effects on the
stockholders of the Company. Upon the dissolution of AmWest on the Effective
Date, the provisions of the Stockholders' Agreement with respect to AmWest
became binding upon TPG, Continental and Mesa. See "Principal
Stockholders -- Stockholders' Agreements."

SHARES ELIGIBLE FOR FUTURE SALE

Substantially all of the 43,966,645 outstanding shares of Class B Common
Stock (assuming no further exercise of the outstanding Warrants) are freely
tradeable, subject to certain restrictions with respect to shares held by the
former partners and assignees of AmWest and certain other individuals. These
shares include 13,881,636 shares of Class B Common Stock issued to the Selling
Securityholders pursuant to the Investment Agreement and arrangements with GPA,
(all of which have been registered under the Securities Act), 26,053,185 shares
of Class B Common Stock distributed to the Prepetition Creditors and 2,250,000
shares of Class B Common Stock issued to pre-existing common equity holders. In
addition, there are currently outstanding Warrants to purchase 10,384,304 shares
of Class B Common Stock. The Warrants are immediately exercisable, and the
Company believes that substantially all of the shares of Class B Common Stock
issuable upon such exercise will be freely tradeable.

LIMITATION ON VOTING BY FOREIGN OWNERS

The Company's Restated Certificate of Incorporation provides that no more
than 25% of the voting interest of the Company may be owned or controlled by
persons who are not U.S. citizens and that the voting rights of such persons are
subject to automatic suspension to the extent required to ensure that the
Company is in compliance with applicable laws relating to ownership or control
of a U.S. carrier. United States law currently requires that no more than 25% of
the voting stock of the Company (or any other domestic airline) may be owned
directly or indirectly by persons who are not citizens of the United States. See
"Description of Capital Stock -- Limitation on Voting by Foreign Owners."

LABOR NEGOTIATIONS

The Company historically has operated without collective bargaining
agreements covering any of its employees. In October 1993, however, the Air
Lines Pilots Association ("ALPA") was certified by the National Mediation Board
as the bargaining representative of the Company's flight deck crew members.
Formal negotiations commenced in April 1994 and in April 1995, the Company and
its pilots, represented by ALPA, reached a five year agreement which was
ratified by the pilots. Among the material provisions of the agreement are the
following:

- Pilot productivity improvements of up to 10%;
- A single pay scale for all aircraft types;
- Pay increases averaging 6.9% annually or approximately $35.0 million over
the term;
- Flexible work rules;
- Management's right to staff the airline and to enter into strategic
alliances is preserved; and
- Sympathy work stoppages or job actions by the pilots are precluded.

The contract took effect beginning May 1, 1995.

In June 1994, the National Mediation Board accepted the Association of
Flight Attendants' ("AFA") petition to represent the Company's CSRs and in
September 1994, the Company's inflight CSRs voted in favor of AFA representation
and contract negotiations have commenced. In April 1994, the Transportation
Workers Union ("TWU") filed a petition to represent the Company's fleet service
personnel which petition was rejected in December 1994. The International
Brotherhood of Teamsters ("IBT") filed applications to represent the Company's
mechanics including related personnel and the Company's flight simulator techni-

12
15

cians in August and September 1994, respectively. Both of these applications
were rejected in December 1994, and the IBT thereafter withdrew the pending
application with respect to stock clerks. The Company cannot predict the effect,
if any, that a future collective bargaining agreement with the AFA, would have
on the Company's operations or financial performance.

GOVERNMENT REGULATION

The Company is subject to the Federal Aviation Act of 1958, as amended (the
"Aviation Act"), under which the Department of Transportation (the "DOT") and
the Federal Aviation Administration (the "FAA") exercise regulatory authority.
This regulatory authority includes (i) the determination and periodic review of
the fitness (including financial fitness) of air carriers; (ii) the
certification and regulation of the flight equipment; (iii) the approval of
personnel who may engage in flight, maintenance and operations activities; and
(iv) the approval of flight training activities and the enforcement of minimum
air safety standards set forth in FAA regulations. In accordance with the
Airline Deregulation Act of 1978, domestic airline fares and routes are no
longer subject to significant regulation. The DOT maintains authority over
international aviation, subject to review by the President of the United States,
and has jurisdiction over consumer protection policies, computer reservation
system issues and unfair trade practices.

In the last several years, the FAA has issued a number of maintenance
directives and other regulations relating to, among other things, retirement of
older aircraft, collision avoidance system, airborne windshear avoidance
systems, noise abatement and increased inspections and maintenance procedures to
be conducted on older aircraft. Additional laws and regulations have been
proposed from time to time which could significantly increase the cost of
airline operations by imposing additional requirements or restrictions on
operations. Laws and regulations have been considered from time to time that
would prohibit or restrict the ownership and transfer of airline routes or
slots. There is no assurance that laws and regulations currently enacted or
enacted in the future will not adversely affect the Company's ability to
maintain its current level of operating results. See "Business -- Government
Regulations."

FUTURE CAPITAL REQUIREMENTS

At March 31, 1995, America West had $518.4 million of long-term
indebtedness (including current maturities) and $600.9 million of stockholders'
equity. At such date, the Company had $213.4 million of cash and cash
equivalents. America West does not have available lines of credit or significant
unencumbered assets. America West is more leveraged and has significantly less
liquidity than certain of its competitors, several of whom have available lines
of credit or significant unencumbered assets. Accordingly, the Company may be
less able than certain of its competitors to withstand a prolonged economic
recession.

As of March 31, 1995, the Company had significant capital commitments,
including commitments for a substantial number of new aircraft with a net cost
aggregating approximately $1.1 billion. The Company will require substantial
capital from external sources to meet these financial commitments. The Company
has no current financing arrangements for most of its aircraft purchase
commitments and intends to seek additional financing (which may include public
debt financing or private financing) in the future when and as appropriate.
There can be no assurance that sufficient financing will be obtained for all
aircraft and other capital requirements. A default by the Company under any such
commitment could have a material adverse effect on the Company. See
"Business -- Aircraft."

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THE COMPANY

GENERAL

America West is a major United States air carrier providing passenger,
cargo and mail service, with its primary markets in the western and southwestern
regions of the United States. Currently the Company operates its route system
through two principal hubs, Phoenix, Arizona and Las Vegas, Nevada, and a mini-
hub in Columbus, Ohio and serves 47 destinations with a fleet of 88 jet
aircraft. The Company currently has connecting service to an additional 20
destinations through an alliance with Mesa and to an additional 23 destinations
through an alliance with Continental.

America West currently operates with one of the lowest cost structures
among the major U.S. airlines, based on reported 1994 results. The Company's
operating cost per ASM for 1994 was 6.99 cents, which was approximately 22% less
than the average operating cost per ASM of the nine largest other domestic
airlines and was comparable to the cost structure of Southwest Airlines, on a
non-stage length adjusted basis, which operates in the Company's principal
market areas. Management believes that the Company can continue to offer fares
that are competitive with those offered by low cost carriers in the Company's
markets, while providing a differentiated level of service. Passenger services
provided by America West include assigned seating, participation in computerized
reservation systems, interline ticketing, first class cabins on certain flights,
baggage transfer and various other services. The Company believes that these
features distinguish America West from certain low cost carriers in the
Company's markets, including Southwest Airlines, and enable the Company to
attract passengers without competing solely on the basis of fares.

The Company's principal offices are located at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034. The Company's telephone number is (602)
693-0800.

BACKGROUND

America West commenced operations in 1983 with three aircraft serving four
destinations from Phoenix, Arizona. America West's original route structure
consisted primarily of shorter-haul routes in the southwestern market, which
brought it into direct competition with certain low fare airlines, particularly
Southwest Airlines. Throughout the 1980s, America West financed rapid expansion
of its fleet with correspondingly significant increases in debt and lease
obligations. In addition, in the late 1980s, the Company entered the long-haul
and, on a very limited basis, international markets. The Company introduced
several aircraft types into its fleet in order to pursue this strategy. By July
1991, the Company operated a fleet of 123 aircraft serving 54 destinations in
the continental United States, Hawaii, Canada and Japan.

The Company experienced a significant net loss for the last six months of
1990, as revenues were lower than anticipated and fuel costs were higher than
anticipated. The Persian Gulf conflict, which began in August of 1990, the fear
of terrorism and the deepening national recession produced depressed traffic
levels, higher fuel prices and fierce price competition in the airline industry.
Beginning in February 1991, the Company undertook a series of actions designed
to improve its cash position and reduce costs, including significant fare
promotions and pay reductions. In June 1991, however, the Company faced a severe
liquidity crisis and filed for protection under Chapter 11 of the Bankruptcy
Code in the U.S. Bankruptcy Court for the District of Arizona (the "Bankruptcy
Court").

During the bankruptcy case, the Company operated as a debtor-in-possession
and implemented an operational restructuring pursuant to which it:

- Reduced its fleet size from 123 aircraft in July 1991 to 85 in April
1993, facilitating a better matching of capacity to demand through
elimination of nonproductive routes.

- Reduced the aircraft types operated from five to three, resulting in
reduced operating costs, including those related to maintenance, training
and parts inventories.

- Implemented certain enhancements to its revenue management system to
optimize the level of passenger revenues generated on each flight.

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17

- Eliminated Company operated commuter service and introduced code-sharing
agreements to expand the Company's scope of service and attract a broader
passenger base.

- Implemented numerous cost reduction programs, including a Company-wide
pay reduction in August 1991 and reduction of aircraft lease rentals to
fair market rates in the summer of 1992.

These programs, combined with a gradually improving economic climate and a
more stable environment relative to fare competition within the airline
industry, enabled the Company to realize combined operating income of $146.4
million in 1994, compared to operating income of $121.1 million in 1993 and
operating losses of $74.8 million and $104.7 million for 1992 and 1991,
respectively.

THE PLAN OF REORGANIZATION

On August 10, 1994, the order of the Bankruptcy Court confirming the Plan
of Reorganization (the "Plan") became final. The Plan was consummated on the
Effective Date.

Pursuant to the Plan, and after giving effect to various elections made by
general unsecured creditors and the exercise of certain subscription rights by
certain holders of pre-existing equity interests, the following occurred upon
the Effective Date:

- The partners of AmWest Partners, L.P. ("AmWest"), a limited partnership
which included TPG, Continental and Mesa, together with Lehman and
Fidelity, as assignees of AmWest, invested $205.3 million in
consideration for the issuance of securities by the Company, consisting
of (i) 1,200,000 shares of Class A Common Stock at a price of $7.467 per
share; (ii) 12,981,636 shares of Class B Common Stock, including
12,259,821 shares at a price of $7.467 per share and 721,815 shares at
$8.889 per share (representing shares acquired as a result of cash
elections made by unsecured creditors as described below); (iii)
2,769,231 Warrants to purchase shares of Class B Common Stock at $12.74
per share; and (iv) $100 million principal amount of Senior Notes.
- The general unsecured creditors of the Company received an aggregate of
26,053,185 shares of Class B Common Stock and cash aggregating $6,416,214
(such cash representing $8.889 per share paid to unsecured creditors
electing to receive cash in lieu of shares of Class B Common Stock). As
of April 30, 1995, approximately 22.6 million of these shares have been
distributed to creditors and approximately 3.4 million remain held in
reserve for distribution in the settlement of remaining claims.
- TPG and Fidelity, as the holders of preferred equity interests of the
Company each received $250,000 and TPG purchased 125,000 shares of Class
B Common Stock (representing shares acquired pursuant to certain
subscription rights at a price of $8.889 per share).

- Holders of common equity interests of the Company prior to the
Reorganization received 3,740,179 shares of Class B Common Stock
(1,490,179 of which shares were issued in exchange for cash, aggregating
$13,246,201, provided by such equity holders upon the exercise of rights
to subscribe for such shares at a price of $8.889 per share), and
6,230,769 Warrants to purchase shares of Class B Common Stock at $12.74
per share. The shares of Class B Common Stock and Warrants were
distributed to the equity holders by the distribution agent in September
1994.

- In exchange for certain concessions principally arising from cancellation
of the right of GPA Group plc and/or its affiliates ("GPA") to lease to
America West 10 Airbus A320 aircraft at specified rates, GPA, received
(i) 900,000 shares of Class B Common Stock; (ii) 1,384,615 Warrants to
purchase Class B Common Stock at $12.74 per share; (iii) a cash payment
of approximately $30.5 million; (iv) the right to require the Company to
lease up to eight aircraft of types operated by the Company on terms that
the Company believes to be more favorable than those previously
applicable to the 10 aircraft, which right must be exercised prior to
June 30, 1999; and (v) the right to designate one director of the Company
for so long as they owned 2% of the Company.

- Approximately $77.6 million of debtor-in-possession ("D.I.P") financing
and a $62.7 million priority term loan were repaid in full in cash.

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18

- Continental, Mesa and America West entered into certain Alliance
Agreements relating to code-sharing, schedule coordination and certain
other relationships and arrangements.

- The Company's Board of Directors was reconstituted to include 15 members,
of which nine were designated by the partners of AmWest, three were
designated by the Official Committee of Unsecured Creditors and one was
designated by each of the Official Committee of Equity Security Holders,
GPA and the pre-Reorganization Board of Directors.

- The Plan also provided for many other matters, including the satisfaction
of certain other prepetition claims in accordance with negotiated
settlement agreements, the disposition of the various types of claims
asserted against the Company, the adherence to the Company's aircraft
lease agreements, the amendment of the Company's aircraft purchase
agreements and release of the Company's employees from all obligations
arising under the Company's stock purchase plan in consideration for the
cancellation of the shares of Company stock securing such obligations.

- The Company executed letter agreements with Fidelity and Lehman
reflecting the principal terms relating to the settlement of certain
prepetition claims held by Fidelity and by Lehman. Pursuant to these
letters, on October 14, 1994, the Company issued an additional $23
million of Senior Notes to Fidelity and Lehman in exchange for full
satisfaction of approximately $25.0 million of prepetition secured claims
and pre-payment of a $1.3 million lease obligation. Additionally, cash
aggregating $2.1 million and $1.2 million was paid to Fidelity and
Lehman, respectively. Such Senior Notes were issued under the Senior Note
Indenture with interest accruing from the Effective Date.

In connection with the Company's emergence from Chapter 11, reorganization
success bonuses approximating $12.0 million were paid to management and other
employees including the issuance of 125,000 shares of Class B Common Stock to
the Company's Chief Executive Officer and Chairman of the Board of Directors.

The foregoing is a summary of the material aspects of the Plan. A complete
copy of the Plan has been filed as an exhibit to the Registration Statements.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Securities
by the Selling Securityholders.

DIVIDEND POLICY

The Company does not anticipate paying cash dividends in the foreseeable
future. The Company expects that it will retain all available earnings generated
by the Company's operations for the development and growth of its business. Any
future determination as to the payment of dividends will be made in the
discretion of the Board of Directors of the Company and will depend upon the
Company's operating results, financial condition, capital requirements, general
business conditions and such other factors as the Board of Directors deems
relevant. Certain loan agreements, including the Indenture covering the Senior
Notes, restrict the Company's ability to pay cash dividends on the Common Stock
and make certain other restricted payments (as defined therein). Currently, such
dividends and other restricted payments may not exceed $25 million plus 50% of
the Company's net income. Under these restrictions, as of March 31, 1995, the
Company's ability to pay dividends, together with any other restricted payments,
would be limited to an aggregate of $31.5 million. In addition, the Company is a
party to certain agreements with a vendor containing covenants which would
currently preclude the payment of dividends. The Company is in the process of
negotiating a transaction with such vendor and intends to negotiate amendments
to the existing agreements such that the dividend restrictions contained therein
will be consistent with those included in the Indenture. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1995. The table should be read in conjunction with the Company's financial
statements and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.

REORGANIZED
COMPANY
--------------
MARCH 31, 1995
--------------
(IN THOUSANDS)

Long-term debt, including current maturities.................. $ 518,429

Stockholders' equity(1):
Class A Common Stock........................................ 12
Class B Common Stock........................................ 440
Additional paid in capital.................................. 587,384
Retained earnings........................................... 13,056
--------------
Total stockholders' equity.......................... 600,892
--------------
Total capitalization.......................................... $1,119,321
===========

- ---------------
(1) Does not include 10,384,304 shares of Class B Common Stock reserved for
issuance upon exercise of the Warrants at March 31, 1995.

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20
SELECTED FINANCIAL DATA
The selected data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" for, and as of, (i) the period August
26, 1994 to December 31, 1994, the period January 1, 1994 to August 25, 1994,
and each of the years in the four-year period ended December 31, 1993, are
derived from the financial statements of the Company, which financial statements
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants and (ii) the periods ended March 31, 1995 and 1994 which are derived
from the unaudited condensed financial statements of the Company. The selected
data should be read in conjunction with the financial statements as of December
31, 1994 and 1993 and for each of the years in the three-year period ended
December 31, 1994, and the report thereon, included elsewhere in this
Prospectus. The independent auditors' report for the period August 26, 1994 to
December 31, 1994, the period January 1, 1994 to August 25, 1994, and as of
December 31, 1994 contains an explanatory paragraph that states the financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis than those of the Predecessor Company and, therefore, are not
comparable in all respects.
As a result of the Company filing a voluntary petition to reorganize under
Chapter 11 of the Bankruptcy Code on June 27, 1991 and operating as a
debtor-in-possession until August 25, 1994, the selected financial data for
periods prior to June 27, 1991 are not comparable to periods subsequent to such
date.

PREDECESSOR COMPANY
REORGANIZED COMPANY | ---------------------------------------------------------------------------
------------------------- | PERIOD
THREE | THREE FROM
MONTHS PERIOD FROM | MONTHS JANUARY 1
ENDED AUGUST 26 TO | ENDED TO YEARS ENDED DECEMBER 31,
MARCH 31, DECEMBER 31, | MARCH 31, AUGUST 25, -------------------------------------------------
1995 1994 | 1994 1994 1993 1992 1991 1990
---------- ------------ | ---------- ---------- ---------- ---------- ---------- ----------
| (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
STATEMENTS OF OPERATIONS |
DATA: |
Operating revenues...... $ 345,790 $ 469,766 | $ 345,264 $ 939,028 $1,325,364 $1,294,140 $1,413,925 $1,315,804
Operating expenses...... 320,895 430,895 | 307,514 831,522 1,204,310 1,368,952 1,518,582 1,347,435
Operating income |
(loss)................ 24,895 38,871 | 37,750 107,506 121,054 (74,812) (104,657) (31,631)
Income (loss) before |
income taxes and |
extraordinary items... 10,968 19,736 | 15,807 (201,209) 37,924 (131,761) (222,016) (76,695)
Income taxes............ 5,758 11,890 | 632 2,059 759 -- -- --
Income (loss) before |
extraordinary items... -- 7,846 | -- (203,268) 37,165 (131,761) (222,016) (76,695)
Extraordinary items |
(a)................... -- -- | -- 257,660 -- -- -- 2,024
Net Income (loss)....... 5,210 7,846 | 15,175 54,392 37,165 (131,761) (222,016) (74,671)
Earnings (loss) per |
share: (b) |
Primary: |
Before extraordinary |
items............. .12 .17 | .56 (7.03) 1.50 (5.58) (10.39) (4.26)
Extraordinary items |
(a)............... -- -- | -- 9.02 -- -- -- 0.11
---------- ------------ | ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)... .12 .17 | .56 1.99 1.50 (5.58) (10.39) (4.15)
Fully diluted: |
Before extraordinary |
items............... .12 .17 | .40 (4.96) 1.04 (5.58) (10.39) (4.26)
Extraordinary items |
(a)............... -- -- | -- 6.37 -- -- -- 0.11
---------- ------------ | ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)... .12 .17 | .40 1.41 1.04 (5.58) (10.39) (4.15)
Shares used for |
computation |
Primary............... 45,166 45,127 | 29,153 28,550 27,525 23,914 21,534 18,396
Fully diluted......... 45,166 45,127 | 41,055 40,452 41,509 23,914 21,534 18,396
Ratio of earnings to |
fixed charges(c)...... 1.28 1.38 | 1.48 -- 1.28 -- -- --
BALANCE SHEET DATA: |
Working capital |
deficiency............ $ (67,827) $ (47,927) | $ (102,345) $ (124,375) $ (201,567) $ (51,158) $ (94,671)
Total assets............ 1,624,032 1,545,092 | 1,083,161 1,016,743 1,036,441 1,111,144 1,165,256
Long-term debt, less |
current |
maturities(d)......... 453,452 465,598 | 390,358 620,992 647,015 726,514 620,701
Total stockholders' |
equity (deficiency)... 600,892 595,446 | (238,835) (254,262) (294,613) (166,510) 21,141

- ---------------
(a) Includes extraordinary items of $257.7 million in 1994 resulting from the
discharge of indebtedness pursuant to the consummation of the Plan of
Reorganization and, $2.0 million in 1990, resulting from the purchase and
retirement of convertible subordinated debentures.
(b) Historical per share data for the Predecessor Company is not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.
(c) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income (loss) before taxes plus fixed charges less capitalized
interest. "Fixed charges" consist of interest expense including amortization
of debt issuance costs, capitalized interest and a portion of rent expense
which is deemed to be representative of an interest factor. For the years
ended December 31, 1992, 1991 and 1990, earnings were insufficient to cover
fixed charges by $131.8 million, $228.7 million and $83.1 million,
respectively. For the period ended August 25, 1994, earnings were
insufficient to cover fixed charges by $201.2 million.
(d) Includes certain balances reported as "Estimated Liabilities Subject to
Chapter 11 Proceedings" for the Predecessor Company.

18
21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

America West Airlines, Inc. (the "Predecessor Company") filed a voluntary
petition to reorganize under Chapter 11 of the Bankruptcy Code on June 27, 1991.
On August 10, 1994, the Plan filed by the Predecessor Company was confirmed by
the Bankruptcy Court and became effective August 25, 1994. On August 26, 1994,
America West Airlines, Inc. (the "Reorganized Company" or the "Company") emerged
from bankruptcy and adopted fresh start reporting. For further information
regarding the Plan, see Note 1 of Notes to Financial Statements.

IMPACT OF FRESH START REPORTING ON RESULTS OF OPERATIONS

In connection with its emergence from bankruptcy, the Company adopted fresh
start reporting in accordance with Statement 90-7. Under fresh start reporting,
the reorganization value of the Company has been allocated to its assets and
liabilities on a basis substantially consistent with purchase accounting. The
portion of reorganization value not attributable to specific tangible assets has
been recorded as "Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets." Certain fresh start reporting adjustments, primarily
related to the adjustment of the Company's assets and liabilities to fair market
values, will have a significant effect on the Company's future statements of
operations. The more significant adjustments relate to reduced depreciation
expense on property and equipment, increased amortization expense relating to
reorganization value in excess of amounts allocable to identifiable assets,
increased interest expense and reduced aircraft rent expense.

INDUSTRY CONDITIONS AND COMPETITION

The competitive landscape is changing for America West in 1995 as its major
competitors have announced operational changes which are consistent with steps
that the Company has taken over the past two years. Recent announcements by
virtually all of the major carriers have focused on two central themes:

- Route rationalization and capacity restraint; and

- Significant efforts to reduce operating costs.

Both of these matters reflect an increasing emphasis within the industry to
return to profitability.

With respect to capacity issues, the airlines are focusing on their areas
of relative strength, which tend to be their hub operations, and have eliminated
service to many under-performing markets. To this end, Continental has announced
that it will cease its "Calite" operations by July 1995, Delta is reallocating
capacity to certain longer haul routes emanating from certain of its hubs and
USAir has announced a significant reduction in capacity throughout its system.
These steps are consistent with the route rationalization which the Company
undertook during its bankruptcy when it reduced or eliminated service to a
number of cities and reduced the fleet size to 85 from 123 aircraft. The Company
continually evaluates the performance of the markets which it serves and has
undertaken a study of the strategic deployment of its aircraft to optimize
operating performance.

The introduction and expansion of electronic ticketing services combined
with the move to cap domestic commissions at certain levels are two examples of
initiatives taken by competitors to endeavor to reduce operating costs.
Initiatives have been announced by competitors with respect to labor cost
concessions being sought from unionized employees, aircraft lease rates, future
equipment delivery commitments, fuel costs and other matters.

To the extent that other carriers are successful in reducing their
operating costs, the advantage which the Company enjoys as a result of its low
cost structure is diminished. For this reason, maintaining a low cost structure
is one of the strategic imperatives which the Company has set for itself as it
moves forward in the 1990s.

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22

The Company continues to evaluate all elements of its operating costs to
sustain the momentum which commenced in bankruptcy to reduce costs where
practicable. On April 27, 1995, the Company announced that a five-year agreement
had been approved by the Board of Directors and ratified by a majority of the
Company's pilots represented by the Air Line Pilots Association. Included
amongst the material provisions of the agreement are the following:

- Pilot productivity improvements of up to 10%;

- A single pay scale for all aircraft types;

- Pay increases averaging 6.9% annually or approximately $35.0 million over
the term;

- Flexible work rules;

- Management's right to staff the airline and to enter into strategic
alliances is preserved and sympathy work stoppages or job actions by the
pilots are precluded.

The contract took effect beginning May 1, 1995.

The Company began testing electronic or paperless ticketing on May 15,
1995, which the Company believes will reduce distribution costs.

In the fourth quarter of 1994, certain competitive pricing initiatives were
commenced by other carriers which exerted pressure on both the Company's yield
and load factor. Such initiatives have carried over to the first quarter of
1995. To address these conditions, the Company has announced certain fare
initiatives of its own and has selectively matched fare increases initiated by
other carriers, where appropriate. As a result of these initiatives, the Company
experienced low levels of both traffic and yield in January 1995 which began to
improve in February. While traffic continued to improve such that the Company
reported the highest domestic load factor amongst the major carriers for both
the months of March and April 1995, the yield for the first quarter decreased
1.6% from the fourth quarter of 1994.

RESULTS OF OPERATIONS

Three Months Ended March 31, 1995 and 1994

The Company's results of operations for the quarter ended March 31, 1995
have not been prepared on a basis of accounting consistent with its results of
operations for the quarter ended March 31, 1994 due to the implementation of
fresh start reporting upon the Company's emergence from bankruptcy.

The Company realized net income of $5.2 million for the first quarter of
1995 compared to $15.2 million for the first quarter of 1994. Operating income
for the quarters ended March 31, 1995 and 1994 was $24.9 million and $37.8
million, respectively. The 1994 net income included reorganization expense of
$8.4 million.

Total operating revenues were $345.8 million for the first quarter of 1995
compared to $345.3 million for the 1994 first quarter. Passenger revenue
decreased slightly for the 1995 first quarter to $323.5 million compared to
$324.4 million for the 1994 period. Cargo and other revenues increased to $22.3
million in 1995

20
23

compared to $20.8 million for the 1994 first quarter. Summarized below are
certain capacity and traffic statistics for the three months ended March 31,
1995 and 1994.

FIRST QUARTER
---------------------------
PERCENT
1995 1994 CHANGE
----- ----- -------

Number of aircraft (end of period).................. 88 85 3.5
Available seat miles (millions)..................... 4,635 4,302 7.7
Revenue passenger miles (millions).................. 2,960 2,917 1.5
Load factor (percent)............................... 63.9 67.8 (5.8)
Passenger enplanements (thousands).................. 3,820 3,742 2.1
Average passenger journey miles..................... 957 979 (2.3)
Average stage length................................ 687 659 4.2
Yield per revenue passenger mile (cents)............ 10.93 11.12 (1.7)
Revenue per available seat mile:
Passenger (cents)................................. 6.98 7.54 (7.4)
Total (cents)..................................... 7.46 8.03 (7.1)
Average daily aircraft utilization (hours).......... 11.20 10.94 2.4

Capacity offered, as measured by available seat miles, increased 7.7% for
the first quarter of 1995 compared to the first quarter of 1994. This increase
was the result of the addition of three aircraft to the fleet, a 2.4% increase
in the average daily utilization of the fleet and a 4.2% increase in the average
stage length flown. Although traffic, as measured by revenue passenger miles,
increased 1.5% for the three months ended March 31, 1995 compared to the 1994
first quarter, this increase was less than the additional capacity offered and,
as a result, load factor decreased to 63.9% for the 1995 quarter compared to
67.8% for the 1994 quarter. The additional capacity offered in 1995 was deployed
to commence service to Mazatlan and Los Cabos, Mexico in December 1994 and to
increase frequency over certain existing routes.
Passenger revenues for the first quarter of 1995 decreased because the 1.7%
decline in average passenger yield was greater than the 1.5% increase in revenue
passenger miles flown. As a result of the decrease in passenger revenues and the
7.7% increase in available seat miles, passenger revenue per available seat mile
decreased 7.4% for the 1995 first quarter compared to the first quarter of 1994.
Looking ahead to the second quarter of 1995, certain competitors have announced
changes to their route schedules which have sharply limited or entirely
eliminated service which had competed with that provided by the Company. Most
significantly affected were certain Midwestern cities connecting to Phoenix and
Las Vegas and the Los Angeles area airports connecting to Phoenix.
Operating expense per available seat mile decreased 3.2% to 6.92 cents for
the first quarter of 1995 compared to the same period of the prior year. The
table below sets forth the major categories of operating expense per available
seat mile for the first quarter of 1995 and 1994.

FIRST QUARTER
-------------------------
PERCENT
1995 1994 CHANGE
---- ---- -------
(IN CENTS)

Salaries and related costs............................ 1.92 1.85 3.8
Rentals and landing fees.............................. 1.47 1.54 (4.5)
Aircraft fuel......................................... .86 .88 (2.3)
Agency commissions.................................... .62 .68 (8.8)
Aircraft maintenance materials & repairs.............. .28 .18 55.6
Depreciation and amortization......................... .43 .49 (12.2)
Other................................................. 1.34 1.53 (12.4)
---- ---- -------
6.92 7.15 (3.2)
==== ==== =====

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24

The changes in the components of operating expense per available seat mile
are explained as follows:
- The increase in salaries and related costs is the result of salary
increases ranging from two to eight percent of base pay which were
awarded effective April 1, 1994 under the Moving Forward Program. In
addition, the Company implemented the Total Pay Program effective January
1, 1995 which provides employees with a pay and benefits package which is
competitive with other low cost airlines and local employers. The Total
Pay Program is anticipated to increase non-executive pay by approximately
$25 million annually. In addition, an accrual of $1.4 million was made
during the 1995 first quarter to begin to provide for performance awards
under the AWArd Pay element of the Total Pay Program. Partially
offsetting these increases were reductions in force arising from a
strategic restructuring program. In January 1995, the Company closed its
reservations center in Colorado Springs, Colorado which reduced the
employee census by approximately 100 positions and in March 1995, further
reductions in force of approximately 700 positions were realized. When
fully implemented, the strategic restructuring programs are anticipated
to result in the elimination of approximately 1,300 positions with
associated annual cost savings of approximately $40 million.

- The decrease in rentals and landing fees is the result of a 3% increase
in the nominal expense level, which is largely due to the rental expense
associated with three aircraft added to the fleet, which was more than
offset by the 7.7% increase in available seat miles flown.

- Aircraft fuel decreased due to the decline in the average cost per gallon
to 53.96 cents for the first quarter of 1995 compared to 54.71 cents for
the 1994 first quarter.

- Agency commissions decreased as a result of the decrease in passenger
revenues, as discussed above.

- Aircraft maintenance materials and repairs increased largely as the
result of a change in the classification of the amortization expense
associated with capitalized heavy engine and airframe overhauls. In 1994,
for the Predecessor Company, such amortization totaling $8.4 million is
included in depreciation and amortization. In 1995, as part of fresh
start reporting, such amortization totaling $900,000 is included in
aircraft maintenance materials and repairs. In addition, aircraft
maintenance materials and repairs expense increased as a result of the
increase in block hours flown and a flight hour agreement involving
certain auxiliary power units.

- Depreciation and amortization expense decreased due to the implementation
of fresh start reporting upon bankruptcy emergence and as a result of the
change in classification discussed above with respect to aircraft
maintenance materials and repairs. Amortization of the excess
reorganization value amounted to $8.2 million for the quarter ended March
31, 1995.

- Other operating expenses decreased due to reductions in advertising
expense, telecommunications charges, booking fees and interrupted trip
expense.

Nonoperating expenses (net of nonoperating income) amounted to $13.9
million for the three months ended March 31, 1995 compared to $21.9 million for
the first quarter of 1994. Net interest expense for the first quarter of 1995
was $15.9 million compared to $13.2 million for the 1994 period. In conformity
with SOP 90-7, the Company ceased accruing and paying interest on unsecured
prepetition long-term debt. Interest expense for the first quarter of 1994 would
have been $16.4 million, if the Company had accrued interest expense on such
debt. The 1994 first quarter includes reorganization expense of $8.4 million.

Period August 26, 1994 to December 31, 1994, January 1, 1994 to August 25,
1994 and the years ended December 31, 1993 and 1992

The following discussion provides an analysis of the Company's results of
operations and reasons for material changes therein for the periods August 26,
1994 to December 31, 1994, January 1, 1994 to August 25, 1994 and the two-years
ended December 31, 1993. The Company's results of operations for the periods
subsequent to August 25, 1994 have not been prepared on a basis of accounting
consistent with its results of operations for periods prior to August 26, 1994
due to the implementation of fresh start reporting upon the Company's emergence
from bankruptcy.

22
25

The Company realized net income of $62.2 million on a combined basis for
1994 compared to net income of $37.2 million for 1993 and a net loss of $131.8
million for 1992. The 1994 results include an extraordinary gain of $257.7
million from the discharge of certain prepetition indebtedness and $273.7
million of reorganization expenses. The results for 1993 include reorganization
expenses of $25 million and losses aggregating $4.6 million primarily resulting
from the disposition of surplus spare aircraft parts and equipment. During 1992,
the Company recorded restructuring charges of $31.3 million, reorganization
expenses of $16.2 million and a gain of $15 million from the sale of its
Honolulu to Nagoya, Japan route.

Total operating revenues were $1.409 billion on a combined basis for 1994,
an increase of 6.3 percent compared to the prior year and 8.9 percent greater
than 1992. Passenger revenues for 1994, 1993 and 1992 were $1.320 billion on a
combined basis, $1.247 billion and $1.215 billion, respectively. Summarized
below are certain capacity and traffic statistics for the years ended December
31, 1994, 1993 and 1992.

1994
PERCENT
CHANGE TO
-----------
1994 1993 1992 1993 1992
------ ------ ------ ---- ----

Aircraft (end of period).................................. 87 85 87 2.4 --
Available seat miles (in millions)........................ 18,060 17,190 19,271 5.1 (6.3)
Revenue passenger miles (in millions)..................... 12,233 11,221 11,781 9.0 3.8
Load factor (percent)..................................... 67.7 65.3 61.1 3.7 10.8
Passenger enplanements (in thousands)..................... 15,669 14,740 15,173 6.3 3.3
Average passenger journey miles........................... 979 970 990 .9 (1.1)
Average stage length...................................... 676 645 631 4.8 7.1
Yield per revenue passenger mile (cents).................. 10.79 11.11 10.31 (2.9) 4.7
Revenue per available seat mile:
Passenger (cents)....................................... 7.31 7.25 6.30 .8 16.0
Total (cents)........................................... 7.80 7.71 6.72 1.2 16.1
Average daily aircraft utilization (hours)................ 11.19 10.69 10.47 4.7 6.9

Passenger revenue per available seat mile increased slightly in 1994
compared to 1993 as the increase in load factor period over period was largely
offset by a decline in average passenger yields. The increase in passenger
revenue per available seat mile in 1994 compared to 1992, was due to
improvements in both load factor and yield. The passenger revenue increases
realized in 1994 reflect a continuation of trends which commenced in 1993
relative to:

- An improved economic climate;

- Elimination of "fare simplification" and a non-recurrence of
industry-wide 50 percent-off sales which occurred in the second and
third quarters of 1992; and

- A stable fleet size for virtually all of 1994. The Company added two
aircraft in mid-December 1994 which increased the fleet size to 87
aircraft.

With the exception of the two aircraft deliveries late in 1994, the Company
operated an 85 aircraft fleet and realized increases in capacity over 1993 as
measured by available seat miles by increasing the average stage length flown by
4.8 percent and by increasing the average daily utilization of the aircraft by
4.7 percent.

In the fourth quarter of 1994, certain competitive pricing initiatives were
commenced by other carriers which exerted pressure on both the Company's yield
and the load factor. The result of these initiatives, which have carried over to
the first quarter of 1995, has been softer traffic than was experienced in the
prior year and generally lower yield levels. To address these conditions, the
Company has announced certain fare initiatives of its own, and has selectively
matched fare increases initiated by other carriers, where appropriate.

23
26

Revenues from sources other than passenger fares increased to $88.9 million
on a combined basis for 1994 compared to $78.8 million and $79.3 million for
1993 and 1992, respectively. Cargo revenues comprised 49.8 percent, or $44.3
million of other revenues on a combined basis for 1994. For the years 1994, 1993
and 1992, the Company carried 129.6 million, 110.7 million and 116.4 million
pounds of freight and mail, respectively. The balance of other revenues includes
revenues generated from: pilot training; contract services provided to other
airlines for maintenance and ground handling; reduced rate fares; alcoholic
beverage sales and headset rentals and service charges assessed for refunds,
reissues and prepaid ticket advices.

In spite of significant reductions in capacity which have occurred since
1991, operating expense per available seat mile declined to 6.99 cents for 1994
from 7.01 cents for 1993 and 7.10 cents for 1992. The table below sets forth the
major categories of operating expense per available seat mile for 1994, 1993 and
1992.

1994 PERCENT
(IN CENTS) CHANGE TO
----------------------- --------------
1994 1993 1992 1993 1992
----- ----- ----- ---- -----

Salaries and related costs........................... 1.83 1.78 1.68 2.8 8.9
Rentals and landing fees............................. 1.47 1.60 1.76 (8.1) (16.5)
Aircraft fuel........................................ .88 .97 .97 (9.3) (9.3)
Agency commissions................................... .64 .62 .55 3.2 16.4
Aircraft maintenance materials and repairs........... .25 .18 .20 38.9 25.0
Depreciation and amortization........................ .47 .48 .45 (2.1) 4.4
Restructuring charges................................ -- -- .16 -- --
Other................................................ 1.45 1.38 1.33 5.1 9.0
----- ----- ----- ---- -----
6.99 7.01 7.10 (.3) (1.5)
==== ==== ==== ==== =====

The changes in the components of operating expense per available seat mile
are explained as follows:

- The increase in 1994 salaries and related costs compared to 1993 is a
result of an increase in capacity as well as the implementation of the
Moving Forward Pay Program in the second quarter of 1994. Effective April
1, 1994, employee base wages were increased between two percent to eight
percent, depending on the employee's length of service with the Company.
Each employee whose anniversary date occurred between April and December
also received an additional increase of four percent on such anniversary
date, with certain exceptions. Also effective April 1, 1994, the Company
increased its matching contribution to 50 percent of the first six
percent contributed by employees under the Company's 401(k) plan. The
effect of these changes was to increase Salaries and Related Costs in
1994 by approximately $18 million. The Moving Forward Pay Program
replaced the Transition Pay Program which commenced in the second quarter
of 1993 and terminated at the end of the first quarter of 1994. Under the
Transition Pay Program, performance award distributions totaling $6.5
million, including applicable payroll taxes, were made in 1993 upon the
Company meeting or exceeding certain operating income targets. In
addition, commencing in the third quarter of 1993, employee award
distributions based on the greater of .5 percent of an employee's annual
base wage or $125 were made on a quarterly basis. Such payments totaled
$2.6 million, including applicable payroll taxes. In the first quarter of
1994, approximately $3.3 million in distributions were made prior to the
termination of the Transition Pay Program.

- Rentals and landing fees decreased in 1994 compared to 1993 and 1992 for
the following reasons:

- The Company generated more ASMs in 1994 with essentially the same
sized aircraft fleet as in 1993 which, in turn, caused the rate per
ASM to decrease;

- Rent reductions were obtained at New York's JFK and Phoenix's Sky
Harbor International Airports;

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27

- Rent expense for aircraft leases were reduced to reflect fair market
rates in August 1994 under fresh start reporting; and

- Certain administrative office space was vacated as part of the
Company's facilities consolidation program.

- Aircraft fuel expense decreased year over year due to the decline in the
average price per gallon to 54.89 cents from 61.05 cents for 1993 and
62.70 cents for 1992.

- Agency commission expense increased in 1994 in comparison to 1993 and
1992 as a result of the increase in passenger revenue per available seat
mile. In addition, the 1994 commission expense increased because a higher
percentage of passenger revenues was generated by America West Vacations
which pays a higher average commission rate on its sales.

- Aircraft maintenance materials and repair expense increased in 1994 as
the result of an increase in average daily utilization of the fleet to
11.19 hours per day in 1994 from 10.69 hours and 10.47 hours for 1993 and
1992, respectively. This higher level of utilization resulted in
increases in line maintenance materials usage, engine repairs and
component repairs.

- Depreciation and amortization expense decreased slightly in 1994 compared
to 1993 as the result of a decrease in depreciation expense arising from
the re-valuation of property and equipment under fresh start reporting
which was partially offset by an increase in amortization expense arising
from the amortization of the reorganization value in excess of amounts
allocable to identifiable assets under fresh start reporting.
Depreciation and amortization expense was higher in 1993 than in 1992
largely as the result of increased heavy engine overhauls.

- Restructuring charges incurred in 1992 consisted of the following:

(IN MILLIONS)
-------------

Write-off for certain assets related to station closures or
route restructuring........................................ $ 9.5
Provision for spare parts for aircraft types no longer in
service.................................................... 12.7
Provision for employee severance............................. 2.3
Loss on return of aircraft................................... 6.8
-----
$31.3
=====

The restructuring charges were necessitated by aircraft fleet reductions
and other operational changes. The Company reduced its fleet to 87
aircraft at the end of 1992 as well as eliminated two of five aircraft
types it operated. Additionally, the number of employees was reduced by
approximately 1,500 employees and service was terminated to ten cities
through the end of 1992.

- The increase in other operating expense for 1994 compared to 1993 and
1992 is due to increased advertising costs and other expenses related to
increased passenger traffic such as credit card discount fees, booking
fees, catering expenses and supplies.

Nonoperating expenses (net of nonoperating income) for 1994, 1993 and 1992
were $327.9 million on a combined basis, $83.1 million and $56.9 million,
respectively. Interest expense increased to $56.6 million in 1994 compared to
$54.2 million in 1993 and $55.8 million in 1992. The increase in interest
expense is primarily the result of the issuance of $123 million of 11 1/4%
Senior Unsecured Notes in connection with the Company's emergence from
bankruptcy protection. In conformity with Statement 90-7, the Company ceased
accruing and paying interest on certain prepetition long-term debt so long as
the Company remained a debtor-in-possession. Had the Company continued to accrue
interest on such debt, interest expense for 1994, 1993 and 1992 would have been
$67.3 million, $73.0 million and $73.9 million, respectively. The Company

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28

incurred expenses of $273.7 million in 1994, $25 million in 1993 and $16.2
million in connection with its efforts to reorganize under Chapter 11. See Note
1 of Notes to Financial Statements for further discussion with respect to
reorganization.

In connection with its emergence from bankruptcy, the Company entered into
an Alliance Agreement with Continental which became effective October 1, 1994.
On that date, the two airlines began joint marketing of certain flights, known
as code-sharing, which increased the number of destinations that each carrier
serves. Supporting the code-share agreement are programs to coordinate
scheduling and to facilitate customer service through expedited interline
baggage transfers. The agreement offers members of the airlines' frequent flyer
plans new opportunities for mileage accrual as well as shared use of select
membership airport lounges. In addition, the airlines are exploring
opportunities to provide ground support to one another on a select basis in
different cities in which operating efficiencies may be realized.

In September 1994, the Company announced that its flight attendants voted
in favor of collective bargaining representation by the AFA. Negotiations are
underway with the AFA. The Company is unable to estimate at this time the
impact, if any, that such initial collective bargaining agreements may have on
its operating expenses. During 1994, efforts to unionize the Company's
technicians and fleet services and commissary employees were rejected by those
employee groups. At December 31, 1994, no other employee work group had
scheduled or requested elections seeking to unionize.

LIQUIDITY AND CAPITAL RESOURCES

The Company has a working capital deficiency which has increased to $67.8
million at March 31, 1995 from $47.9 million at December 31, 1994. This increase
reflects an increase in accounts payable arising from the higher level of heavy
engine maintenance and an increase in the air traffic liability arising from
higher levels of advance ticket bookings. The effect of these two liability
increases more than offset the increase in cash and cash equivalents discussed
above. Despite the working capital deficiency, the Company expects to meet all
of its obligations as they become due. Cash and cash equivalents increased to
$213.4 million at March 31, 1995 from $182.6 million at December 31, 1994. Cash
generated from operating activities for the three months ended March 31, 1995
and 1994 amounted to $73.4 million and $79.6 million, respectively. During the
first quarter of 1995, the Company incurred capital expenditures of $29.0
million compared to $13.7 million in 1994. The capital expenditures incurred for
both the 1995 and 1994 quarters consisted largely of aircraft spare parts and
heavy engine overhauls.

On January 1, 1995, the Total Pay Program became effective. The program is
designed to provide employees with a pay and benefits package which is
competitive with other low-cost airlines and local employers. The Total Pay
Program is anticipated to increase non-executive pay by approximately $25
million annually. In addition, an accrual of $1.4 million was made during the
1995 first quarter to begin to provide for performance awards under the Award
Pay element of the Total Pay Program. Partially offsetting these increases were
reductions in force arising from a strategic restructuring program. In January
1995, the Company closed its reservations center in Colorado Springs, Colorado
which reduced the employee census by approximately 100 positions and in March
1995, further reductions in force of approximately 700 positions were realized.
When fully implemented, the strategic restructuring programs are anticipated to
result in the elimination of approximately 1,300 positions with associated
annual cost savings of approximately $40 million.

At March 31, 1995, the Company had net operating loss ("NOL") and general
business tax credit carryforwards of approximately $557.4 million and $12.7
million, respectively. Under Section 382 of the Internal Revenue Code of 1986,
as amended, if a loss corporation has an "ownership change" within a designated
testing period, its ability to use its NOL and credit carryforwards is subject
to certain limitations. The Company is a loss corporation within the meaning of
Section 382. The issuance of certain common stock by the Company pursuant to the
Plan of Reorganization resulted in an ownership change within the meaning of
Section 382. This ownership change entails an annual limitation (the "Section
382 Limitation") upon the Company's ability to offset any post-change taxable
income with pre-change NOL. Should the Company

26
29

generate insufficient taxable income in any post-change taxable year to fully
utilize the Section 382 Limitation of that year, any excess limitation will be
carried forward to use in subsequent tax years, provided the pre-change NOL has
not been exhausted nor has the carryforward period expired.

The Company's reorganization and the associated implementation of fresh
start reporting gave rise to significant items of expense for financial
reporting purposes that are not deductible for income tax purposes. In large
measure, it is these nondeductible expenses that result in an effective tax rate
(for financial reporting purposes) significantly greater than the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes. This difference in
financial expense compared to actual income tax liability is in part
attributable to tax attributes (including NOL carryforwards, subject to certain
limitations) of the Predecessor Company that serve to reduce the Company's
actual income tax liability. To the extent the tax attributes of the Predecessor
Company reduce the Company's actual income tax liability below the amount of
expense reflected in the financial statements, that difference is applied to
reduce the carrying balance of the Company's Reorganization Value in Excess of
Amounts Allocable to Identifiable Assets.

At March 31, 1995, the Company had on order a total of 24 Airbus A320-200
aircraft, with an aggregate net cost estimated at $1.1 billion. Delivery dates
of the aircraft will fall in the years 1998 through 2000 with an option to defer
the 1998 deliveries. If new A320 aircraft are delivered as a result of a
renegotiated put agreement (described below), the Company will have the right to
cancel on a one-for-one basis, up to a maximum of eight non-consecutive aircraft
deliveries hereunder, subject to certain conditions. Additionally, the Company
has the option to cancel, without cause, up to an additional four aircraft with
thirty months prior notice, and the Company has the right, with Continental's
concurrence, to assign all or some of these delivery positions to Continental.

In December 1994, the Company entered into a support contract with
International Aero Engines ("IAE") which provides for the purchase by the
Company of six new V2500-A5 spare engines scheduled for delivery beginning in
1998 through 2000 for use on the A320 fleet. Such engines have an estimated
aggregate cost of $42.3 million for which the Company has provided a $1.5
million security deposit in the form of a letter of credit. Pursuant to a side
letter to an earlier contract with IAE, the Company agreed to purchase from IAE
prior to December 31, 1995, a new or used V2500-A1 engine. During the first
quarter of 1995, such agreement was modified to include the following terms:

- The Company will acquire a new V2500-A5 engine instead of a V2500-A1. The
cost of such engine will approximate $7.1 million.

- IAE will reduce the letter of credit requirement under the agreement to
acquire six spare V2500-A5 engine to $600,000 from $1.5 million.

- Previously restricted cash of $900,000 which collateralized the letter of
credit requirement will be released and paid to IAE as a down payment on
the $7.1 million A5 engine discussed above with IAE carrying the balance
at no interest until January 1996 at which time the Company will be
required to secure alternative financing.

The following table reflects estimated cash payments under the aircraft and
engine purchase contracts as of March 31, 1995. Actual payments may vary due to
inflation factor adjustments and changes in the delivery

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30

schedule of the equipment. The estimated cash payments include the progress
payments that will be made in cash, as opposed to being financed under an
existing progress payment financing facility.

(IN THOUSANDS)

1995............................................... $ 3,223
1996............................................... 32,608
1997............................................... 58,230
1998............................................... 379,309
1999............................................... 355,540
2000............................................... 350,863
--------------
$1,179,773
===========

At March 31, 1995, the Company has significant capital commitments for a
number of new aircraft, as discussed above. Although the Company has arranged
for financing for up to one-half of the commitment to AVSA, the Company will
require substantial capital from external sources to meet its remaining
financial commitments. The Company intends to seek additional financing (which
may include public debt financing or private financing) in the future when and
as appropriate. There can be no assurance that sufficient financing will be
obtained for all aircraft and other capital requirements. A default by the
Company under any such commitment could have a material adverse effect on the
Company.

At March 31, 1995, the Company had a put agreement for seven aircraft with
deliveries to start no earlier than June 30, 1995 and end on June 30, 1999.
Under the agreement, new or used B737-300, B757-200, or new or "like new"
A320-200 aircraft may be put to the Company at a rate of no more than two
aircraft in 1995, and with respect to each ensuing year during the put period,
of no more than three aircraft. In addition, no more than five used aircraft may
be put to the Company, and for every new A320 aircraft put to the Company, the
Company has the right to reduce deliveries under the AVSA A320 purchase contract
on a one-for-one basis. During each January of the put period, the Company will
negotiate the type and delivery dates for terms ranging from three to eighteen
years, depending on the type and condition of the aircraft.

Within the period of January 1, 1995 to December 31, 2000, the Company has
23 aircraft whose lease arrangements are due to expire, 11 of which may be
extended at the option of the lessor. Given this situation and the other
aircraft commitments discussed above, the Company has the flexibility to expand
or contract its fleet as business conditions warrant.

In February 1995, the Company entered into an agreement under the 1994 Put
Agreement to lease one Boeing 737-300 aircraft for five years at a rental rate
subject to reset every six months based on LIBOR. Payments for the aircraft are
due monthly.

In April 1995, the Company entered into an agreement to lease one Boeing
757 aircraft and two A320 aircraft. Under the arrangements, the Boeing 757
aircraft has a term of two years with payments due monthly and the two A320
aircraft have a term of eight years with payments due monthly. The two A320
aircraft were received under the 1994 Put Agreement, reducing the number of put
aircraft from seven at March 31, 1995 to five.

Under the AVSA A320 purchase contract, the Company has the right to reduce
deliveries on a one for one basis for the two A320 put aircraft received in
April but such election has not been made. The Company has a letter agreement
that preserves such cancellation right but the cancellation right must be
exercised no earlier than April 15, 1996 and no later than April 17, 1997 and
the cancellation right is limited to any future A320 delivery with a scheduled
delivery date at least thirty months from the date such cancellation right is
exercised.

Certain of the Company's long-term debt agreements contain minimum cash
balance requirements, leverage ratios, coverage ratios and other financial
covenants with which the Company was in compliance at March 31, 1995.

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BUSINESS

America West is a major United States air carrier providing passenger,
cargo and mail service, with its primary markets in the western and southwestern
regions of the United States. The Company currently operates its route system
through two principal hubs, Phoenix, Arizona and Las Vegas, Nevada, and a mini-
hub in Columbus, Ohio, and serves 47 destinations with a fleet of 88 jet
aircraft. The Company currently has connecting service to an additional 20
destinations through alliances with Mesa and to an additional 23 destinations
through an alliance with Continental.

The Company emerged from bankruptcy under Chapter 11 of the Bankruptcy Code
on August 25, 1994. In connection with the Reorganization, the Company took
significant steps to improve its operations, including (i) reducing its fleet
size from 123 aircraft in July 1991 to 85 as of April 1993, facilitating a
better matching of capacity to demand through elimination of nonproductive
routes; (ii) reducing the aircraft types operated from five to three to reduce
operating costs; (iii) implementing certain enhancements to its revenue
management system to optimize the level of passenger revenues generated on each
flight; (iv) eliminating Company operated commuter service and introducing
code-sharing agreements to expand the scope of service and attract a broader
passenger base; and (v) implementing numerous cost reduction programs, including
a Company-wide pay reduction in August 1991 and the reduction of aircraft lease
rentals to fair market rates in the fall of 1992. America West was one of only
two major United States airlines to report a profit in each quarter of 1993 and
1994.

BUSINESS STRATEGY

The Company's business strategy is to offer competitive fares while
providing an incrementally higher level of service relative to low cost
carriers. The principal features of the Company's business strategy are as
follows.

Maintain Competitive Pricing While Providing Differentiated
Service. America West currently operates with one of the lowest cost structures
among the major U.S. airlines, based on reported 1994 results. The Company's
operating cost per ASM for 1994 was 6.99 cents, which was approximately 22% less
than the average operating cost per ASM of the nine largest other domestic
airlines and was comparable to the cost structure of Southwest Airlines on a
non-stage length adjusted basis, which operates in the Company's principal
market areas. Management believes that the Company can continue to offer fares
that are competitive with those offered by low cost carriers in the Company's
markets, while providing a differentiated level of service. Passenger services
provided by America West include assigned seating, participation in computerized
reservation systems, interline ticketing, first class cabins on certain flights,
baggage transfer and various other services. The Company believes that these
features distinguish America West from certain low cost carriers in the
Company's markets, including Southwest Airlines, and enable the Company to
attract passengers without competing solely on the basis of fares.

Achieve Growth in Revenue Passenger Miles. Management believes the
Company's pricing and service strategies, together with a gradual improvement of
general economic activity, will enable the Company to achieve growth in revenue
passenger miles in its existing markets and to expand into certain other North
American markets. Management believes that growth in existing markets will be
achieved in part due to the location of the Company's principal hubs. Both
Phoenix and Las Vegas are experiencing population growth in excess of national
averages, and these hubs are well situated to benefit from an expanding market
for leisure travel.

Expand Service through Alliances. The Company entered into certain
agreements (the "Alliance Agreements") with Continental and Mesa. Such
agreements provide for code-sharing arrangements and coordination of flight
schedules and include sharing ticket counter space, linking in part their
frequent flyer programs, and coordinating ground handling operations. Management
believes the Alliance Agreements will contribute significantly to the Company's
growth in revenue passenger miles and operating results.

Maintain a Cost Effective Fleet. In connection with its Reorganization,
the Company substantially reduced its aircraft fleet, reduced the aircraft types
from five to three and renegotiated lease rates for certain aircraft to fair
market rates. As of March 31, 1995, the Company's fleet consisted of 58 Boeing
737s,

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32

17 Airbus 320s and 13 Boeing 757s, with an average age of approximately 9.3
years. The fleet enables the Company to achieve low fuel costs compared to
industry averages and to enjoy operational efficiencies due to the limited
number of aircraft types. Current plans provide for increasing the Company's
fleet through the acquisition of additional aircraft of the types currently
operated by the Company.

OPERATIONS

Hub Operations. The Company operates primarily through hub airports in
Phoenix and Las Vegas and, to a lesser extent, through its mini-hub in Columbus,
Ohio. The Company schedules banks of flights timed to arrive at the hub from one
direction at approximately the same time and to depart toward the opposite
direction a short time later. The hub system allows the Company to transport
passengers between a large number of destinations with substantially more
frequent service than if each route were served directly.

The Company is the leading airline serving Phoenix Sky Harbor International
Airport with approximately 38% of all enplanements during 1994. In Las Vegas,
the Company is the second largest carrier with approximately 26% of all
enplanements during 1994. In both markets the Company's principal competitor is
Southwest Airlines, which handled approximately 31% and 30% of enplanements in
Phoenix and Las Vegas, respectively, in 1994. America West offers fares
comparable to or below those of its competitors on most routes. America West is
able to use pricing as a part of its strategy because of its ability to provide
service generally comparable to the full service airlines while maintaining a
lower cost structure than these competitors. In selected markets, America West
has chosen not to match Southwest Airlines' fares, but differentiates itself
from Southwest Airlines in these and other markets by providing assigned
seating, interline ticketing, baggage transfer and various other services not
offered by Southwest Airlines.

The Company established a mini-hub at Columbus, Ohio in December 1991. As
of March 31, 1995, the Company provided non-stop jet service to 11 destinations
from Columbus. During 1994, the Company enplaned approximately 24% of the
Columbus traffic compared to approximately 23% for USAir, the Company's
principal competitor at Columbus.

The success of the Company's hub system depends on its ability to attract
passengers traveling to and from its hubs, as well as passengers traveling
through the hubs to the Company's other destinations. The Company believes that
several factors have contributed to the success of its operations in Phoenix and
Las Vegas. First, the rate of population growth in these two cities has exceeded
the national average in recent periods. Second, Phoenix and Las Vegas are
popular vacation destinations and, therefore, benefit from the fact that a
growing percentage of airline travelers are leisure or non-business travelers.
Third, the Company believes that certain costs of operating in Phoenix and Las
Vegas are less than in certain other geographic regions. Finally, these hub
operations allow the Company to serve a number of relatively high density routes
that involve short- and medium-haul service without competing directly in the
more intensely competitive long-haul markets against larger carriers.

Hub operations involve certain inefficiencies that are primarily associated
with the need to maintain terminal resources adequate to deal with periods of
peak demand when numerous aircraft converge at the hub, even though this demand
occurs only a few times per day. As a result, certain carriers have emphasized
or announced intentions to initiate "point-to-point" flights not integrated with
hub operations that can potentially serve specific routes at lower cost than
comparable hub operations. Although the Company continually evaluates its
operating strategy in light of changing market conditions, the Company's current
strategy is to increase utilization of its existing hub facilities by increasing
frequency of service on existing routes served by its hub operations and
identifying selected markets into which the Company can expand utilizing its
existing hub operations. An important part of the Company's strategy involves
code-sharing arrangements with regional carriers that serve its hub airports and
alliances with major or foreign carriers that complement the Company's
operations.

Regional/Commuter Service. A number of passengers served by the Company
arrive at or depart from its hub airports via regional or commuter service
airlines that serve the surrounding areas. These airlines typically utilize
turboprop rather than jet aircraft and focus on flights less than 200 miles in
length and 90 minutes in duration. In order to maximize the number of
enplanements of passengers from these commuter

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33

airlines, America West has entered into two code-sharing agreements with Mesa
designed to establish Mesa as a feeder carrier for the Company at its hubs in
Phoenix and Columbus.

Alliance Agreements. The Company entered into certain Alliance Agreements
with Continental and Mesa. The Company and Continental agreed to implement
certain code-sharing arrangements, coordinate certain flight schedules, share
ticket counter space, link in part their frequent flyer programs, and coordinate
ground handling operations for mutual benefit. These arrangements are being
implemented in phases, which commenced in the fourth quarter of 1994. The
Company believes that it will realize substantial benefits from such agreements,
which are intended to increase the number of America West enplanements of
Continental passengers and vice versa. In addition, the Company will be able to
offer its existing customers connections to a greater number of destinations
served by Continental, which may permit the Company to further increase its
market share in its hub markets. With Mesa, America West has entered into two
code-sharing agreements that establish Mesa as a feeder carrier for the Company
at its hubs in Phoenix and Columbus. The code-sharing agreements provide for
coordinated flight schedules, passenger handling and computer reservations under
the America West flight designator code, thereby allowing passengers to purchase
one air fare for their entire trip. Mesa connects 12 cities to the Company's
Phoenix hub, operates under the name "America West Express" and has begun to
incorporate the color scheme and commercial logo of America West on certain
aircraft utilized on these routes. Mesa serves eight destinations from the
Company's Columbus mini-hub operation. In August 1994, the Company and Mesa
agreed to extend the terms of these code-sharing agreements until 2004.
Commencing in 1995, Mesa will also offer jet service, on a limited basis, under
its code share agreement with the Company, employing Fokker F70 aircraft.

Mexico and Canada. The Company began service from its Phoenix hub to
Mazatlan and Los Cabos, Mexico in December 1994. In addition, in May 1995, the
Company commenced service to Vancouver, British Columbia with two daily non-stop
flights from Phoenix.

COMPETITION AND MARKETING

The airline industry is highly competitive and susceptible to price
discounting, and America West must compete on certain routes with carriers that
may be larger and may have substantially greater resources. The entry of
additional carriers on many of the Company's routes (as well as increased
competition from or the introduction of new services by established carriers)
could negatively impact America West's results of operations. Generally, the
passenger carrier industry is segmented into markets based on the length of trip
and level of service, including long-haul domestic and international routes,
medium-haul (two to three hours) and short-haul (less than two hours) routes
serviced by jet aircraft, and commuter routes served by turboprop aircraft.
America West services primarily short-haul and medium-haul routes connected to
its hub operations, engages only to a limited extent in long-haul flights, which
are dominated by larger carriers, and does not engage in regional commuter
flights, which are primarily served by smaller non-jet carriers. America West
competes primarily with Southwest Airlines at its Phoenix and Las Vegas hub
operations and with USAir and Delta Airlines at its Columbus mini-hub.

As is the case with other carriers, most tickets for travel on America West
are sold by travel agents through computer reservation systems that have been
developed and are controlled by other airlines. Travel agents generally receive
commissions based on the price of tickets sold. Accordingly, airlines compete
not only with respect to the price of tickets sold but also with respect to the
amount of commissions paid. In early 1995, certain of the major domestic
airlines initiated a program to cap the amount of commissions paid to travel
agents at $50 for domestic round-trip tickets with fares of $500 or more. The
Company is in the process of evaluating this commission structure but has not
yet adopted such a program. Airlines often pay additional commissions in
connection with special revenue programs. Federal regulations have been
promulgated that are intended to diminish preferential schedule displays and
other practices with respect to the reservation systems that place the Company
and other similarly situated users at a competitive disadvantage to the airlines
controlling the systems.

The Company began testing electronic or paperless ticketing on May 15,
1995, which the Company believes would reduce distribution costs.

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The Company has implemented certain measures to increase leisure travel
utilizing America West flights. In 1987, the Company developed America West
Vacations, which is a tour packaging division that arranges vacation packages
that include hotel accommodations, air fare and ground transportation in certain
markets. During 1994, this division sold approximately 749,000 room nights, had
approximately 53,250 rental car days, handled approximately 501,400 passengers
and generated approximately $161 million in gross package sales. In 1993, the
Company became the preferred commercial air carrier of the MGM Grand Hotel
Casino and Theme Park ("MGM") in Las Vegas. Pursuant to an agreement with MGM,
America West will develop joint marketing programs that target travel agents and
consumers, which management believes will enhance America West's presence in the
Las Vegas market. America West also is an official airline of Knott's Berry Farm
in Buena Park, California, one of the country's best-known and best-attended
family entertainment parks. The Company sponsors the theme park's America West
Airlines Mystery Lodge, a popular attraction with guests who visit the park.

The Company also has an exclusive arrangement with the Phoenix Suns
professional basketball team pursuant to which the arena in which the team plays
is named "America West Arena," and the Company's name and logo appear throughout
the facility, including on the basketball court. As a result of this
association, the Company receives media exposure during national and local
telecasts of Phoenix Suns basketball games, as well as during other events at
the arena. America West is also the exclusive carrier of the Arizona Cardinals,
the Kansas City Chiefs and the football teams of the University of Southern
California, Arizona State University and The Ohio State University.

FLIGHTFUND

All major airlines have established frequent flyer programs to encourage
travel on that particular carrier. America West offers the FlightFund program
that allows members to earn mileage credits by flying America West and by using
the services of other program participants such as hotels, car rental firms and
other specialty services. FlightFund members are also allowed to earn mileage
credit by flying partner carriers. For example, in 1994, the Company entered
into an Alliance Agreement with Continental that allows FlightFund members to
earn mileage credit on code-share flights. In addition, the Company periodically
offers special short-term promotions that allow members to earn additional free
travel awards or mileage credits. When a FlightFund member accumulates mileage
credits of 20,000 miles, the Company issues mileage award certificates that can
be redeemed for various travel awards, including first class upgrades and
tickets on America West or other airlines participating in America West's
frequent flyer program. Most travel awards are subject to blackout dates and
capacity controlled seating. Mileage award certificates automatically expire
after two years if issued prior to April 1, 1993 and after three years for
certificates issued after that date. Travel is valid up to one year from the
date of ticketing. FlightFund awards may also be redeemed for flights to certain
international destinations and Hawaii. America West is required to purchase
space on other airlines to accommodate such award redemption.

The Company accounts for the FlightFund program under the incremental cost
method whereby travel awards are valued at the incremental cost of carrying one
additional passenger. Costs including passenger food, beverages, supplies, fuel,
liability insurance, purchased space on other airlines and denied boarding
compensation are accrued as frequent flyer program participants accumulate
mileage to their accounts. Such unit costs are based upon expenses expected to
be incurred on a per passenger basis. No profit or overhead margin is included
in the accrual for these incremental costs.

FlightFund's current membership is approximately 2.0 million participants.
At December 31, 1994, 1993 and 1992, the Company estimated that approximately
369,000, 238,000 and 238,000 travel awards were expected to be redeemed.
Correspondingly, the Company had an accrued liability of $9.8 million, $7.4
million and $7.3 million for 1994, 1993 and 1992, respectively. The accrual is
based upon the Company's estimates of mileage earned that will eventually be
redeemed for a travel award.

The number of FlightFund travel awards redeemed for round-trip travel for
the years ended December 31, 1994, 1993 and 1992, was approximately 109,000,
99,000 and 106,000, respectively, representing 2.6%, 2.8% and 3.0% of total
revenue passenger miles for each respective period. The Company does not believe
that

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the usage of free travel awards results in any significant displacement of
revenue passengers due to the Company's ability to manage frequent flyer travel
by use of blackout dates and limited seat availability.

AIRCRAFT

At March 31, 1995, the Company operated a fleet of 58 Boeing 737s, 17
Airbus A320s and 13 Boeing 757s as follows:

AVERAGE
REMAINING
NUMBER AVERAGE LEASE
AIRCRAFT TYPE STATUS(1) AIRCRAFT AGE (YRS.) TERM (YRS.)
------------- ------ -------- ---------- -----------

B737-100.................................. Owned 1 25.5 --
B737-200.................................. Owned 5 16.1 --
B737-200.................................. Leased 17 15.2 5.4
B737-300.................................. Leased 24 7.8 5.3
B737-300.................................. Owned 11 6.4 --
B757-200.................................. Leased 11 9.0 10.7
B757-200.................................. Owned 2 5.5 --
A320...................................... Leased 17 5.2 16.4
-- --- ----
88 9.3 8.9
== === ====

- ---------------
(1) Each of the aircraft that is designated as owned serves as collateral for a
loan pursuant to which the aircraft was acquired by the Company or serves as
collateral for a non-purchase money loan.

Beginning in April 1995 through September 1998, leases for 20 of the
Company's aircraft are scheduled to terminate (such aircraft are 12 Boeing
B737-300s, six Boeing B737-200s, one Boeing B757-200 and one Airbus A320-200).
At the option of the lessor, the lease for one of the B737-300 aircraft may be
extended for up to 48 months, and the leases for 10 of the B737-300 aircraft may
each be extended for up to 60 months. There are no contractual options to extend
any other of such leases.

In February 1995, the Company leased a B737-300 aircraft for a term of five
years. Additionally, the Company and the lessor have agreed, subject to final
documentation, to enter into lease agreements for two A320-200 aircraft
beginning in the spring of 1995. All of these aircraft will be leased to the
Company under the 1994 Put Agreement discussed below.

Certain of the Company's aircraft lessors have the option to call their
respective aircraft upon adequate notice to the Company (such notice periods
range from 60 to 180 days). Usually, if such call options are exercised, the
Company has the right of first refusal to retain the aircraft by matching the
terms of bona fide third party offers received by the lessors to lease or
purchase such aircraft. None of these options have been exercised. The last of
these call options expires in July 1997. In addition, certain other of the
Company's aircraft lessors have an option to reset their respective rentals to
the greater of the existing rentals being paid under the leases or the then
current fair market rates. The first round of these resets, involving 11
aircraft, occurred in August 1994. The rentals for seven of these aircraft may
be reset two more times over the remaining lease terms, with the next possible
reset not occurring before August 1996. The call and reset options were granted
to these lessors in exchange for rental reductions and payment deferrals in 1992
and 1991, respectively. The Company does not believe that the possible exercise
of any or all of these options will have a material effect on its operations.

As a part of the Reorganization, the Company amended a purchase agreement
with AVSA S.A.R.L. ("AVSA") for the acquisition of 24 Airbus A320-200 aircraft
with an aggregate net cost estimated at $1.1 billion. These amendments provide
to the Company reduced prices for and certain options regarding the number and
delivery dates of the aircraft to be acquired under the agreement. The aircraft
are scheduled to be delivered to the Company at the rate of eight per year in
1998, 1999 and 2000. Upon adequate notice to

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AVSA, the Company may: defer all or some of the 1998 deliveries to either 2001
or 2002; for every new A320 aircraft leased to the Company under the 1994 Put
Agreement (described below), cancel up to the number of such leased aircraft
(subject to certain conditions); cancel without cause up to an additional four
aircraft; and, with mutual consent, assign all or some of its delivery positions
to Continental. Additionally, AVSA and the manufacturer of the engines that will
power the subject aircraft have agreed to, if requested by the Company and on
its behalf, finance jointly up to one-half of the aircraft delivered under this
agreement, subject to certain conditions.

In June 1994, the Company entered into a put agreement with a certain
lessor providing the lessor with a right to lease up to eight aircraft to the
Company (the "1994 Put Agreement"). This agreement replaced a similar agreement
with this lessor involving 10 aircraft (none of which were ever leased to the
Company). These aircraft may be new or used B737-300 and B757-200 aircraft (of
which no more than five may be used aircraft) and new or "like new" A320
aircraft. Unless otherwise consented to by the Company, beginning in June 1995
and ending by June 1999, the lessor may, with adequate notice to the Company,
put to the Company up to two aircraft in 1995 and no more than three aircraft
per year thereafter. The rentals for such aircraft will be at the then current
market rates with lease terms ranging from three to 18 years depending on the
type and condition of the aircraft, which will be predetermined by the Company
and the lessor. In connection with the 1994 Put Agreement and for other
consideration, this lessor was paid approximately $30.5 million and issued
certain equity securities by the Company on the Effective Date.

In June 1994, the Company and another lessor cancelled a similar agreement
involving four aircraft. In consideration for such cancellation, the Company
paid the lessor $2.5 million in June 1994 and $2.0 million in August 1994.

In connection with the Plan, the Company rejected certain aircraft purchase
agreements with The Boeing Company ("Boeing"). As part of this settlement,
Boeing retained certain of the Company's cash purchase deposits that it held
under these agreements.

In December 1994, the Company entered into a support contract with IAE
which provides for the purchase by the Company of six new V2500-A5 spare engines
scheduled for delivery beginning in 1998 through 2000 for use on the A320 fleet.
Such engines have an estimated aggregate cost of $42.3 million for which the
Company has provided a $1.5 million security deposit in the form of a letter of
credit. Pursuant to a side letter to an earlier contract with IAE, the Company
agreed to purchase from IAE prior to December 31, 1995, a new or used V2500-A1
engine. However, the Company expects to, with IAE's consent, acquire an
additional "A5" engine in lieu of this "A1" engine.

FACILITIES

America West's principal facilities are associated with its hub operations
in Phoenix, Las Vegas and Columbus. The Company operates from Terminal 4 of
Phoenix Sky Harbor International Airport pursuant to a lease agreement that
includes 28 gates and approximately 258,200 square feet at December 31, 1994.
The Company also leases approximately 25,000 square feet of additional space at
the airport for administrative offices and pilot training. Since 1988, the
Company has owned a 660,000 square foot maintenance and technical support
facility that includes four hangar bays, hangar shops, two flight simulator
bays, and warehouse and commissary facilities.

In Las Vegas, the Company leases approximately 80,000 square feet of space
at McCarran International Airport, which includes seven gates and adjoining
holding room areas. At the Company's Columbus, Ohio mini-hub, the Company leases
30,000 square feet and two gates and has the ability to sublease additional
gates from other airlines as the need arises. Pursuant to the Company's Alliance
Agreement with Continental, certain of the station operations for both carriers
have been consolidated in an effort to reduce operating expenses.

Space for ticket counters, gates and back offices has also been obtained at
each of the other airports served by the Company, either by lease from the
airport operator or by sublease from another airline. Some of the Company's
airport sublease agreements include requirements that the Company purchase
various ground

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37

services at the airport from the lessor airline at rates in excess of what it
would cost the Company to provide those services itself.

The Company owns the 68,000 square foot America West Corporate Center at
222 South Mill Avenue in Tempe, Arizona. The Company currently leases
approximately 500,000 square feet of general office and other space in Phoenix
and Tempe, Arizona.

EMPLOYEES

Management believes that the Company's labor force has contributed
significantly to its successful Reorganization. At December 31, 1994, the
Company employed 8,421 full-time and 3,174 part-time employees, the equivalent
of 10,715 full-time employees. During 1994, the Company had 1,685,500 available
seat miles per full-time equivalent employee and 1,141,700 revenue passenger
miles per full-time equivalent employee, based on the number of full-time
equivalent employees at year end.

In January 1995, the Company announced its new compensation program, the
Total Pay Program. This program is designed to provide employees with a pay and
benefits package which is competitive with other low-cost airlines and local
employers. In addition, performance awards of up to 25% of base pay will be made
to employees provided certain annually established operating income targets are
attained. The Total Pay Program is expected to increase non-executive pay by
approximately $25 million annually. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." Concurrent with this new compensation program, the Company announced
that it is in the process of strategically overhauling its work processes which
is anticipated to reduce its workforce by approximately 1,300 employees. The
Company anticipates that the cost savings, including the reduction in workforce,
will be about $40 million in 1995 and $48 million annually thereafter. In
addition, in December 1994, the Board of Directors approved the America West
1994 Incentive Equity Plan which authorizes the grant of various stock,
stock-related and cash awards to employees and non-employee directors of the
Company. Such plan was approved by the Company stockholders at the 1995 Annual
Meeting of Stockholders in May 1995.

In October 1993, ALPA was certified by the National Mediation Board as the
bargaining representative of the Company's flight deck crew members. Formal
negotiations commenced in April 1994 and in April 1995, the Company and its
pilots, represented by ALPA, reached a five year agreement, which was later
ratified by the pilots. Among the material provisions of the agreement are the
following:

- Pilot productivity improvements of up to 10%;

- A single pay scale for all aircraft types;

- Pay increases averaging 6.9% annually or approximately $35.0 million over
the term;

- Flexible work rules;

- Management's right to staff the airline and to enter into strategic
alliances is preserved; and

- Sympathy work stoppages or job actions by the pilots are precluded.

The contract took effect beginning May 1, 1995.
In June 1994, the National Mediation Board accepted the AFA petition to
represent the Company's CSRs and in September 1994, the Company's inflight CSRs
voted in favor of AFA representation and contract negotiations have commenced.
In April 1994, the TWU filed a petition to represent the Company's fleet service
personnel which petition was rejected in December 1994. The IBT filed
applications to represent the Company's mechanics including related personnel
and the Company's flight simulator technicians in August and September 1994,
respectively. Both of these applications were rejected in December 1994, and the
IBT thereafter withdrew the pending application with respect to stock clerks.
The Company cannot predict the effect, if any, that a future collective
bargaining agreement with the AFA would have on the Company's operations or
financial performance.
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GOVERNMENT REGULATIONS

Noise Abatement and Other Restrictions. The Airport Noise and Capacity Act
of 1990 provides, with certain exceptions, that after December 31, 1999, no
person may operate certain large civilian turbo-jet aircraft in the United
States that do not comply with Stage 3 noise levels, which is the FAA
designation for the quietest commercial jets. These regulations will require
carriers to gradually phase out their noisier jets, either replacing them with
quieter Stage 3 jets or equipping them with hush kits to comply with noise
abatement regulations, over a five-year period commencing December 31, 1994. As
of December 31, 1994, approximately 74 percent of America West's fleet was in
compliance with the FAA noise abatement regulations, and the Company expects
that it will meet the thresholds imposed by such regulations through scheduled
retirement of its older aircraft.

Numerous airports, including those serving Boston, Denver, Los Angeles,
Minneapolis-St. Paul, New York City, San Diego, San Francisco, San Jose, Orange
County, Washington, D.C., Burbank and Long Beach have imposed restrictions such
as curfews, limits on aircraft noise levels, mandatory flight paths, runway
restrictions and limits on number of average daily departures, which limit the
ability of air carriers to provide service to or increase service at such
airports. In February 1995, the Company obtained approval to increase service at
Orange County's John Wayne Airport, which is a capacity controlled airport, by
five daily flights. The Port Authority of New York and New Jersey is considering
a phaseout of Stage 2 aircraft on a more accelerated basis than that of the FAA
requirement. The Company's Boeing 757-200s, 737-300s and Airbus A320s all comply
with the noise abatement requirements of the airports listed above.

Fuel Tax Increases. In August 1993, the federal government increased taxes
on fuel, including aircraft fuel, by 4.3 cents per gallon. Airlines are exempt
from this tax until October 1, 1995. When implemented, this tax will increase
the Company's annual operating expenses by approximately $13 million based upon
its 1994 fuel consumption levels.

PFC Charges. During 1990, Congress enacted legislation to permit airport
authorities, with prior approval from the DOT, to impose passenger facility
charges ("PFCs") as a means of funding local airport projects. These charges,
which are intended to be collected by the airlines from their passengers, are
limited to $3.00 per enplanement, and to no more than $12.00 per round trip. As
a result of competitive pressure, the Company and other airlines have been
limited in their abilities to pass on the cost of the PFCs to passengers through
fare increases.

Environmental Matters. The Company is subject to regulation under major
environmental laws administered by state and federal agencies, including the
Clean Air Act, Clean Water Act and Comprehensive Environmental Response
Compensation and Liability Act of 1980. In some locations there are also county
and sanitary sewer district agencies which regulate the Company. The Company
believes that it is in substantial compliance with applicable environmental
regulations.

Aging Aircraft Maintenance. The FAA issued several Airworthiness
Directives ("AD") in 1990 mandating changes to the older aircraft maintenance
programs. These ADs were issued to ensure that the oldest portion of the
nation's fleet remains airworthy. The FAA is requiring that these aircraft
undergo extensive structural modifications. These modifications are required
upon the accumulation of 20 years time in service, prior to the accumulation of
a designated number of flight cycles or prior to 1994 deadlines established by
the various ADs, whichever occurs later. Six of the Company's 88 aircraft are
currently affected by these aging aircraft ADs and are in compliance with such
ADs. The Company constantly monitors its fleet of aircraft to ensure safety
levels which meet or exceed those mandated by the FAA or the DOT.

Safety. America West is subject to the jurisdiction of the FAA with
respect to aircraft maintenance and operations, including equipment, dispatch,
communications, training, flight personnel and other matters affecting air
safety. The FAA has the authority to issue new or additional regulations. To
ensure compliance with its regulations, the FAA requires the Company to obtain
operating, airworthiness and other certificates which are subject to suspension
or revocation for cause. In addition, a combination of FAA and Occupational
Safety and Health Administration regulations on both federal and state levels
apply to all of America West's ground-based operations.

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Slot Restrictions. At New York City's JFK and LaGuardia Airports,
Chicago's O'Hare International Airport and Washington's National Airport, which
have been designated "High Density Airports" by the FAA, there are restrictions
on the number of aircraft that may land and take-off during peak hours. In the
future, these take-off and landing time slot restrictions and other restrictions
on the use of various airports and their facilities may result in further
curtailment of services by, and increased operating costs for, individual
airlines, including America West, particularly in light of the increase in the
number of airlines operating at such airports. In general, the FAA rules
relating to allocated slots at the High Density Airports contain provisions
requiring the relinquishment of slots for nonuse and permits carriers, under
certain circumstances, to sell, lease or trade their slots to other carriers.
All slots must be used on 80% of the dates during each two-month reporting
period. Failure to satisfy the 80% use rate will result in loss of the slot. The
slot would revert to the FAA and be reassigned through a lottery arrangement.

The Company currently utilizes two slots at New York City's JFK airport,
four slots at New York City's LaGuardia airport, four slots at Chicago's O'Hare
airport and six slots at Washington's National airport. Four of the slots at
Washington's National airport are temporary and the Company's right to utilize
such slots expires in December 1995. The average utilization rates by the
Company of all the foregoing slots range from 86% to 100%.

CRAF Program. In time of war or during a national emergency, United States
air carriers may be required to provide airlift services to the Military Airlift
Command under the Civil Reserve Air Fleet Program (the "CRAF Program").

INSURANCE

The Company has arranged a program of insurance of the types and in the
amounts it believes customary in the airline industry, including coverage for
public liability, passenger liability, property damage, aircraft loss or damage,
cargo liability and workers' compensation. The Company believes such insurance
is adequate as to both risks covered and coverage amounts.

LEGAL PROCEEDINGS

The Company emerged from bankruptcy on the Effective Date after operating
as a debtor-in-possession since June 27, 1991, when the Company filed a
voluntary petition to reorganize under Chapter 11 of the Bankruptcy Code. The
Bankruptcy Court confirmed the Company's Plan on August 10, 1994. Pursuant to
the Plan, the previously outstanding equity interests in the Company were
canceled as of the Effective Date and new stock was issued. In addition, the
Company's obligations to certain prepetition creditors were restructured and
general unsecured nonpriority prepetition creditors received, in full
satisfaction of their claims, shares of Class B Common Stock and cash. The Plan
also provided for the disposition of numerous other matters, including the
satisfaction of certain other prepetition claims in accordance with negotiated
settlement agreements, the disposition of various types of claims asserted
against the Company, the adherence to the Company's aircraft lease agreements,
the amendment of the Company's aircraft purchase agreements and the release of
the Company's employees from all obligations arising under the Company's stock
purchase plan in consideration for the cancellation of the shares of the stock
securing such obligations. As contemplated by the Plan, certain administrative
and priority tax claims remain pending against the Company, which, if ultimately
allowed by the Bankruptcy Court, would represent general obligations of the
Company. Such claims include claims of various state and local tax authorities,
most of which represent ordinary course pre-bankruptcy tax obligations not paid
during the pendency of the bankruptcy proceedings, certain indemnification
obligations under contractual obligations assumed by the Company pursuant to the
Plan, and various other matters.

In connection with the state and local tax claims, the Company has reserved
certain amounts believed by management to be adequate. With respect to ongoing
indemnity obligations, the Company has been informed by one of its aircraft
sublessors that it may assert an administrative claim, in an unspecified amount,
as a result of the Internal Revenue Service potentially disallowing certain tax
benefits claimed by the head lessor of certain aircraft which are subleased to
the Company. The Company is unable to predict whether the Internal Revenue
Service will prevail in matters asserted against the head lessor and whether the
Company will incur

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any liability in connection with such claims, or the amount of any such
liability, if incurred. The Company also assumed, pursuant to the Plan,
indemnification agreements with its former directors, certain of whom are named
as defendants in an Arizona state court action brought by Stephen D. Clark, on
behalf of himself and others similarly situated (the "Clark Action"). The Plan
provided that the Clark Action be permanently enjoined and dismissed in
consideration of the forgiveness by the Company of debt owed by employees
arising under the Company's stock purchase plan, and on March 8, 1995, the
Bankruptcy Court denied a motion filed by Clark to dissolve a preliminary
injunction entered by the Bankruptcy Court in May 1992. The Company is unable to
predict whether the Bankruptcy Court's ruling will be appealed, whether such
ruling will be upheld if appealed, or whether the Company may incur any
liability under its indemnification obligations as a result of the Clark Action.
Management cannot predict whether or to what extent any of the pending
administrative and priority tax claims will result in liabilities to the
Company. Should such liabilities be incurred, future operating results could be
adversely affected. Based on information currently available, however,
management believes that the disposition of these matters will not have a
material adverse effect on the Company's financial condition.

In August 1991, the Securities and Exchange Commission (the "Commission")
informally requested that the Company provide the Commission with certain
information and documentation underlying disclosures made by the Company in
annual and quarterly reports filed with the Commission by the Company in 1991.
The Company has cooperated with the Commission's informal inquiry. On March 29,
1994, the Company's Board of Directors approved the submission of an offer of
settlement for the purpose of resolving the inquiry through the entry of a
consent decree pursuant to which the Company would, while neither admitting nor
denying any violation of the securities laws, agree to comply with its future
reporting obligations under Section 13 of the Exchange Act. The Company was
advised on May 6, 1994 that the Commission agreed to accept the Company's offer
of settlement. In order to implement the settlement, on May 12, 1994 the
Commission issued an "Order Instituting Proceedings Pursuant to Section 21C of
the Exchange Act and Opinion and Order of the Commission" (the "Order") finding
the Company's Form 10-K for the year ending December 31, 1990, violated Section
13(a) of the Exchange Act and Rule 13a-1 thereunder, and that the Company's Form
10-Q for the first quarter of 1991 violated Section 13(a) of the Exchange Act
and Rule 13a-13 thereunder, and ordered that the Company cease and desist from
violating Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13
promulgated under the Exchange Act. The Order provides that the Company neither
admits nor denies any violation of the securities laws.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Information with respect to the executive officers and directors of the
Company as of December 31, 1994, is set forth below.

DIRECTORS OF THE COMPANY
WILLIAM A. FRANKE -- AGE 58. Chairman of the Board and Chief Executive
Officer -- (Executive Committee). Mr. Franke was named Chairman of the Board of
Directors in September 1992. On January 1, 1994, Mr. Franke was also elected to
serve as the Company's Chief Executive Officer. In addition to his
responsibilities at America West, Mr. Franke serves as president of Franke &
Company, Inc., a financial services company he has owned since May 1987. From
November 1989 until June 1990, Mr. Franke served as the Chairman of Circle K
Corporation's executive committee with the responsibility for Circle K
Corporation's restructuring. In May 1990, the Circle K Corporation filed a
voluntary petition to reorganize under Chapter 11 of the United States
Bankruptcy Code. From June 1990 until August 1993, Mr. Franke served as the
chairman of a special committee of directors overseeing the reorganization of
the Circle K Corporation. From 1990 until 1993, Mr. Franke also served in
various other capacities at Circle K Corporation. Mr. Franke was also involved
in the restructuring of the Valley National Bank of Arizona (now Bank One of
Arizona). Mr. Franke serves as a director of Phelps Dodge Corp., Central
Newspapers Inc. and the Air Transport Association of America.

A. MAURICE MYERS -- AGE 55. President and Chief Operating Officer. Mr.
Myers was named President and Chief Operating Officer on January 1, 1994 and was
named to the Board of Directors in 1994. Prior to joining America West, Mr.
Myers was the president and chief executive officer of Aloha Airgroup, an
aviation services corporation which owns and operates Aloha Airlines and Aloha
Island Air. Mr. Myers joined Aloha in 1983 as vice president of marketing and
became its president and chief executive officer in June 1985. Mr. Myers is a
member of the board of directors of Hawaiian Electric Industries.

JULIA CHANG BLOCH -- AGE 53. Ms. Bloch has been a member of America West's
Board of Directors since August 26, 1994. She is the group executive vice
president, corporate relations of Bank of America Corporation and has held that
position since June 1993. Ms. Bloch served as the U.S. Ambassador to Nepal from
September 1989 through May 1993. Ms. Bloch is a board member of the American
Refugee Committee and the Himalaya Foundation and serves as a trustee of the
Asian Art Museum and the Asia Society.

STEPHEN F. BOLLENBACH -- AGE 53. (Compensation Committee). Mr. Bollenbach
has been a member of America West's Board of Directors since August 26, 1994. He
became chief financial officer of The Walt Disney Company in May 1995. Prior to
May 1995, he was president and chief executive officer of Host Marriott Corp.
Mr. Bollenbach served as chief financial officer of the Promus Companies from
1986 to 1990 and served as chief financial officer for the Trump Organization
from 1990 to 1992. He served as executive vice president and chief financial
officer of The Marriott Corporation from 1992 until 1993. He serves as a
director of Host Marriott Corporation, Carr Realty Corporation and Mid-America
Apartment Communities, Inc.

FREDERICK W. BRADLEY, JR. -- AGE 68. (Compensation Committee, Executive
Committee). Mr. Bradley has been a member of America West's Board of Directors
since September 1992. Immediately prior to joining the Board of Directors, Mr.
Bradley was a senior advisor with Simat, Helliesen & Eichner, Inc. Mr. Bradley
formerly was a senior vice president of Citibank/Citicorp's Global Airline and
Aerospace business. Mr. Bradley joined Citibank/Citicorp in 1958. In addition,
Mr. Bradley is a member of the board of directors of Shuttle, Inc. (USAir
Shuttle) and the Institute of Air Transport, Paris, France. Mr. Bradley also is
chairman of the board of directors of Aircraft Lease Portfolio Securitization
94-1 Ltd.

JAMES G. COULTER -- AGE 35. (Executive Committee). Mr. Coulter has been a
member of America West's Board of Directors since August 26, 1994. Since 1992,
Mr. Coulter has been a managing director of Texas Pacific Group, an investment
firm. From 1986 to August 1992, Mr. Coulter was vice president of Keystone, Inc.
(formerly Robert M. Bass Group, Inc.), a private investment firm based in Fort

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Worth, Texas. From April 1993 until he became a member of the Company's Board,
Mr. Coulter was a member of the board of directors of Continental. Mr. Coulter
also serves as a director of American Savings Bank and Allied Waste Industries,
Inc.

JOHN F. FRASER -- AGE 64. Mr. Fraser has been a member of America West's
Board of Directors since August 26, 1994. He is vice chairman of Russel Metals,
Inc., a metals distribution and processing company that was formed when Federal
Industries, Ltd. and FedMet, Inc. was joined together in May 1995. Mr. Fraser
was chairman and chief executive officer of Federal Industries Ltd. from March
1991 to May 1995, and president and chief executive officer from May 1978 to
March 1991. Mr. Fraser was a member of the Board of Directors of Continental
from August 1993 through August 3, 1994. Mr. Fraser is a director of Air Canada,
Bank of Montreal, Coca-Cola Beverages Limited, Ford Motor Company of Canada,
Limited, Inter-City Products Corporation, Investors Group Inc., Shell Canada
Limited and The Thomson Corporation.

JOHN L. GOOLSBY -- AGE 53. (Audit Committee). Mr. Goolsby has been a
member of America West's Board of Directors since August 26, 1994. He has been
the president of The Hughes Corporation and The Howard Hughes Corporation
(formerly named the Summa Corporation), the principal operating companies of the
Howard Hughes Estate, since 1988, and has been the chief executive officer of
those companies since 1990. In addition, Mr. Goolsby serves as a director of
Nevada Power Company and Bank of America Nevada. He also serves as a trustee of
The Donald W. Reynolds Foundation and the UNLV Foundation.

RICHARD C. KRAEMER -- AGE 51. (Compensation Committee). Mr. Kraemer has
been a member of America West's Board of Directors since September 1992. He is a
director and serves as president, chief executive officer and chief operating
officer of UDC Homes, Inc., a Phoenix-based homebuilding company which he joined
in 1975.

JOHN R. POWER, JR. -- AGE 39. (Executive Committee). Mr. Power has been a
member of America West's Board of Directors since August 26, 1994. He is
president of The Patrician Corporation, an investment company. Prior to joining
The Patrician Corporation, Mr. Power served as vice president at Continental
Bank.

LARRY R. RISLEY -- AGE 50. (Audit Committee). Mr. Risley has been a member
of America West's Board of Directors since August 26, 1994. He has been the
chief executive officer and chairman of the board of directors of Mesa since the
founding of the company in 1983. From 1979 to 1982, Mr. Risley was president of
Mesa Aviation Services, Inc.

FRANK B. RYAN -- AGE 58. Dr. Ryan has been a member of America West's
Board of Directors since March 17, 1995. Since August 1990, Dr. Ryan has been a
professor of mathematics and of computational and applied mathematics and
formerly the vice president of external affairs of Rice University. From 1988 to
1990, Dr. Ryan served as president and chief executive officer of Contex
Electronics, Inc., an electronic component manufacturing company. Dr. Ryan
serves on the board of directors of Danielson Holding Company, Inc. and as a
governor advisor to Rice University.

RICHARD P. SCHIFTER -- AGE 42. (Compensation Committee). Mr. Schifter has
been a member of America West's Board of Directors since August 26, 1994. He has
been a managing director of Texas Pacific Group, an investment firm, since July
1994. Mr. Schifter serves of counsel to the Washington D.C. based law firm of
Arnold & Porter, where he was an associate from 1979 to 1986 and a partner from
1986 to July 1994.

JOHN F. TIERNEY -- AGE 50. Mr. Tierney has served as a member of the Board
of Directors since December 1993. Mr.Tierney is the assistant chief executive
and finance director of GPA Group plc, an Irish aircraft leasing concern, and
has served GPA in such capacity since 1993. From 1981 to 1993, he served as
chief financial officer of GPA.

RAYMOND S. TROUBH -- AGE 69. (Audit Committee). Mr. Troubh has been a
member of America West's Board of Directors since August 26, 1994. He is a
financial consultant and currently serves on the board of directors of ADT
Limited, American Maize Products Co., Applied Power Inc., ARIAD Pharmaceuticals,
Inc., Becton, Dickinson and Company, Benson Eyecare Corporation, Foundation
Health Corporation, General American Investors Company, Manville Corporation,
Olsten Corporation, Riverwood

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International Corporation, Time Warner Inc., Petrie Stores Corporation, Triarc
Companies, Inc. and WHX Corporation.

EXECUTIVE OFFICERS OF THE COMPANY

Set forth below is information respecting the names, ages, positions and
offices with the Company of the executive officers of the Company other than
Messrs. Franke and Myers who are described above.

THOMAS F. DERIEG -- AGE 55. Senior Vice President -- Operations. Mr.
Derieg joined the Company in July 1994. For the preceding seven years, Mr.
Derieg served as Senior Vice President -- Operations at Aloha Airgroup, Inc. in
Honolulu. Mr. Derieg served in the U.S. Air Force from 1963 to 1969, and from
1970 to 1987 held a variety of positions in areas of operations and maintenance
in the air transportation industry.

JOHN R. GAREL -- AGE 36. Senior Vice President -- Marketing and Sales. Mr.
Garel joined the Company in April 1995. From 1993 until early 1995, Mr. Garel
was the Chief Executive Officer of Cadmus Journal Services, a division of Cadmus
Communications located in Baltimore. Prior to that, Mr. Garel was with Northwest
Airlines, serving from 1990 to 1992 as Vice President, Financial Planning and
Analysis and, thereafter, as Vice President, Market Development and Area
Marketing. From 1982 to 1990, Mr. Garel worked for American Airlines in several
management and senior capacities.

ROBERT S. NICHOLS, JR. -- AGE 49. Senior Vice President -- Customer
Service. Mr. Nichols joined the Company in April 1995. Before joining the
Company, Mr. Nichols spent 27 years with Marriott Hotels, Resorts & Suites. From
1991 until 1994 Mr. Nichols held the position of Senior Vice President, Total
Quality Management. From 1984 to 1991 Mr. Nichols served as Regional Vice
President from 1982 to 1984 as Vice President, Human Resources Development and
before that in a number of other positions with Marriott.

W. DOUGLAS PARKER -- AGE 33. Senior Vice President and Chief Financial
Officer. Mr. Parker will join the Company in June 1995. Previously, he served
for four years at Northwest Airlines, most recently as Vice President and
Assistant Treasurer and previously as Vice President of Financial Planning and
Analysis. Prior to his position at Northwest, Mr. Parker served in various
positions at American Airlines.

MICHAEL A. VESCUSO -- AGE 50. Senior Vice President -- Human Resources.
Mr. Vescuso joined the Company in September 1994. Prior to such time, Mr.
Vescuso worked as an organizational and management development consultant. From
1990 to 1992 he was the Director, Organization and Development of Frito-Lay,
Inc. From 1978 to 1990, he held several senior management positions at HBJ,
Inc., including the position of human resources officer.

MARTIN J. WHALEN -- AGE 55. Senior Vice President -- Corporate Affairs.
Mr. Whalen joined the Company in July 1986 and served as Senior Vice
President -- Administration and General Counsel until February 1995. From 1980
until July 1986, Mr. Whalen was employed by McDonnell Douglas Helicopter Company
and its predecessors, most recently as Vice President of Administration. He also
held positions in labor relations, personnel and legal affairs at Hughes Airwest
and Eastern Airlines.

C.A. HOWLETT -- AGE 51. Vice President -- Public Affairs. Mr. Howlett
joined the Company in January 1995. Prior to such time, Mr. Howlett maintained a
government relations practice as a principal at the law firm of Lewis and Roca
in Phoenix. Mr. Howlett's prior work experience has included senior positions
with Salt River Project, the City of Phoenix and the White House where he served
as special assistant to President Ronald Reagan for intergovernmental affairs.

STEPHEN L. JOHNSON -- AGE 38. Vice President -- Legal Affairs. Mr. Johnson
joined the Company in February 1995. From 1993 to 1994, Mr. Johnson served as
Senior Vice President and General Counsel to GE Capital Aviation Services
Limited, in Shannon, Ireland. From 1989 to 1993 Mr. Johnson was employed by GPA
Group plc, also in Shannon, from 1989 to 1991 as Vice President and Senior
Counsel and from 1991

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to 1993 as Senior Vice President and General Counsel to GPA's Leasing Division.
From 1982 until 1989, Mr. Johnson was engaged in the private practice of law.

RAYMOND T. NAKANO -- AGE 50. Vice President and Controller. Mr. Nakano
joined the Company in June 1983 and has served as Vice President and Controller
since April 1985. Prior to such time, Mr. Nakano was employed by Continental for
eight years in various accounting positions, most recently as Senior Director,
General Accounting.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information for the years ended December 31,
1994, 1993 and 1992 with respect to compensation for services to America West
paid to (i) the chief executive officer, (ii) the four most highly compensated
executive officers of the Company during 1994, other than the chief executive
officer, and (iii) one former executive officer.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-----------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION($)(1) COMPENSATION($)(2)
- ------------------------------------- ---- --------- ------------------ ------------------

William A. Franke(3)................. 1994 450,000 5,625 1,224,375
Chairman of the Board and 1993 450,000 -- --
Chief Executive Officer 1992 131,250 -- --

A. Maurice Myers..................... 1994 376,442 104,688(4) 421,415
President and Chief
Operating Officer

Martin J. Whalen..................... 1994 142,464 2,406 190,883
Senior Vice President -- Corporate 1993 134,400 4,368 3,873
Affairs and Secretary 1992 134,400 -- 3,808

Raymond T. Nakano.................... 1994 132,447 2,237 190,103
Vice President and Controller 1993 124,950 4,061 1,973
1992 124,950 -- 975

Thomas P. Burns(5)................... 1994 130,592 2,205 105,058
Vice President -- Sales 1993 123,200 4,004 3,385
1992 123,200 -- 3,659

Alphonse E. Frei(6).................. 1994 129,249 2,807 98,479
Senior Vice President -- Finance 1993 156,800 5,096 4,798
and Chief Financial Officer 1992 156,800 -- 4,731

- ---------------
(1) For officers other than Mr. Myers, reflects amounts paid under the Company's
Transition Pay Program.

(2) Includes a Reorganization success bonus paid to Mr. Franke in the form of
125,000 shares of Class B Common Stock, valued at $9.795 per share.
Includes Reorganization success bonuses paid in cash to Messrs. Myers,
Whalen, Nakano and Burns of $400,000, $185,000, $185,000 and $100,000,
respectively. Includes matching contributions made by the Company under the
Company's 401(k) plan for Messrs. Whalen, Nakano, Burns and Frei (i) in
1994 of $4,091, $4,128, $4,135 and $1,913, respectively, (ii) in 1993 of
$2,081, $998, $1,908 and $2,249, respectively, and (iii) in 1992 of $2,016,
$0, $2,182 and $2,182, respectively. Also includes premiums paid by the
Company for life insurance for Messrs. Whalen, Nakano, Burns and Frei (i)
in 1994 of $1,792, $975, $923 and $2,443, respectively, (ii) in 1993 of
$1,792, $975, $1,477 and $2,549, respectively, and (iii) in 1992 of $1,792,
$975, $1,477 and $2,549, respectively. Includes a severance payment to Mr.
Frei of $94,123 in 1994. For Mr. Myers, includes $21,415 in life insurance
premiums paid by the Company in 1994.

(3) Mr. Franke's employment with the Company commenced on September 17, 1992.

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(4) Reflects payment of a $100,000 transition allowance in connection with
commencement of employment with the Company and $4,688 paid to Mr. Myers
under the Company's Transition Pay Program.

(5) Mr. Burns' employment with the Company ended in May 1995.

(6) Mr. Frei's employment with the Company ended on July 1, 1994.

OPTION GRANTS IN 1994

POTENTIAL MARKETABLE
VALUE AT ANNUAL RATE OF
INDIVIDUAL GRANTS STOCK PRICE
- ----------------------------------------------------------------------------------- APPRECIATION
NUMBER OF PERCENT OF EXERCISE FOR OPTION TERM
SECURITIES TOTAL OPTIONS PRICE EXPIRATION -----------------------
NAME UNDERLYING OPTIONS GRANTED IN 1994 ($/SHARE) DATE 5% 10%
- --------------------- ------------------ --------------- --------- --------- ---------- ----------

William A. Franke.... 355,000 100% $8.75 12/1/2005 $1,953,565 $4,950,475

EMPLOYMENT AGREEMENTS

Effective as of December 1, 1994, the Company entered into an employment
agreement with William A. Franke for service as the Chairman of the Board and
Chief Executive Officer of the Company for a term of one year with a possible
one-year extension at Mr. Franke's election with the approval of the Company's
Board of Directors. Under the agreement, Mr. Franke is to receive an annual cash
base salary of at least $300,000, which amount may be increased at the Board's
discretion. The agreement provides for restricted stock grants of 11,000, 30,334
and 25,000 shares of Class B Common Stock as soon as practicable after December
1, 1994, January 1, 1995 and January 1, 1996, respectively, subject to partial
or complete forfeiture upon termination of employment under certain
circumstances. In addition, upon execution of the agreement, Mr. Franke received
(i) a fully vested option to purchase 255,000 shares of Class B Common Stock at
an exercise price of $8.75 per share, the fair market value on the date of
grant, and (ii) options to purchase an additional 100,000 shares of Class B
Common Stock at an exercise price of $8.75 per share, vesting over a two-year
period beginning January 1, 1996. The agreement further provides for the
granting to Mr. Franke (a) on August 25, 1995 of options to purchase an
additional 150,000 shares of Class B Common Stock, vesting over a three-year
period and (b) on August 25, 1996 of options to purchase an additional 150,000
shares of Class B Common Stock, vesting over a three-year period. All of such
options become fully vested and exercisable upon a "change in control" (as
defined in the agreement) or in the event Mr. Franke's employment is terminated
by reason of death or disability. All of such restricted stock grants and stock
options were approved by the stockholders at the annual meeting in May 1995 as
part of the Incentive Plan. The agreement also provides that the Company will
maintain a term life insurance policy on the life of Mr. Franke in the amount of
$2 million, proceeds of which are to be paid to beneficiaries designated by Mr.
Franke. Mr. Franke is to receive an allowance for administrative expenses of
$50,000 per year. A majority of the Board of Directors may authorize termination
of Mr. Franke's employment for any reason which the Board deems sufficient. If
Mr. Franke terminates his employment for good reason or is terminated by the
Board of Directors for any reason other than misconduct or disability, he will
receive, among other things, a severance payment in the amount of $1.5 million
if the termination is prior to August 25, 1996 and $1 million if the termination
is after such date. Pursuant to the agreement, Mr. Franke has certain
registration rights with respect to shares of Class B Common Stock granted to
him or received pursuant to the exercise of stock options. On June 27, 1994, the
Company entered into a key employee protection agreement with Mr. Franke
providing for the payment to him of a severance payment of approximately 200% of
his base salary in the event of a termination of his employment following a
"change in control." That key employee protection agreement was superseded in
its entirety by Mr. Franke's employment agreement described above. In September
1994, the Company issued to Mr. Franke 125,000 fully-vested shares of Class B
Common Stock as a Reorganization success bonus. The Company also loaned $470,282
to Mr. Franke for the purpose of enabling him to pay the income taxes
attributable to such bonus. The loan (i) is payable in two equal installments on
September 26, 2000 and September 26, 2001, (ii) bears interest (payable
semi-annually) at the rate of 8% per annum (11% per annum after maturity) and
(iii) is secured by a pledge of 62,500 of the bonus shares, but is otherwise
non-recourse to Mr. Franke.

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46

Effective as of January 1, 1994, the Company entered into an employment
agreement with A. Maurice Myers for service as President and Chief Operating
Officer of the Company for a two-year term with automatic one-year extensions
unless prior written notice is given by either party. Pursuant to the agreement
(as amended), Mr. Myers is to receive an annual base salary of $375,000 for the
period ended December 31, 1994 and $400,000 for the period beginning January 1,
1995, which amount may be increased in the Board's discretion. Pursuant to the
agreement, the Company paid to Mr. Myers in 1994 a lump sum transition allowance
of $100,000 and a Reorganization success bonus of $400,000. In addition, the
Company made a non-recourse loan to Mr. Myers in 1994 in the amount of $200,000
to be used in connection with the purchase of a home, which loan is secured by a
lien on such property and has a stated maturity of December 31, 2003. In 1994,
the Company also loaned approximately $320,000 to Mr. Myers in connection with
the exercise of options to purchase Aloha Airgroup, Inc. ("Aloha") common stock
and related taxes. Such loan is secured by a pledge of the Aloha stock acquired
with the proceeds thereof, is non-recourse to Mr. Myers and is due 90 days after
the term of the agreement or earlier upon certain events. Both the house loan
and the stock loan bear interest at the applicable federal rate in accordance
with the Internal Revenue Code of 1986, as amended. The Company is entitled to
apply any incentive bonuses payable to Mr. Myers to the repayment of the house
loan and the stock loan. The agreement also provides for certain pension
benefits. The Company is required by the agreement to pay Mr. Myers a severance
payment in the amount of (i) 100% of his base salary if Mr. Myers terminates the
agreement due to the election of any person other than Mr. Myers or Mr. Franke
as Chief Executive Officer of the Company or (ii) 150% of his base salary if the
Company elects to discontinue automatic extensions of the agreement, if Mr.
Myers terminates the agreement for good reason or due to a change in control or
if the Company terminates the agreement for any reason other than misconduct or
disability. In 1995, the Company granted to Mr. Myers an option to purchase
200,000 shares of Class B Common Stock at an exercise price of $8.75 per share,
the fair market value on the date of grant. Such option was granted pursuant to
the Incentive Plan which was approved by the stockholders at the annual meeting
in May 1995.

DIRECTOR COMPENSATION

Each director who is not an officer or employee of the Company currently
receives an annual retainer of $15,000 and $1,000 for each Board or committee
meeting attended. Pre-Reorganization directors each received an annual retainer
of $25,000 and $1,000 for each Board or committee meeting attended. Directors
are also entitled to certain air travel benefits. Pursuant to the America West
Airlines, Inc. 1994 Incentive Equity Plan as approved by the stockholders at the
annual meeting in May 1995, (i) each non-employee director who served on the
Board of Directors on December 31, 1994 was awarded an option to purchase 3,000
shares of Class B Common Stock and (ii) each new non-employee director elected
after December 1, 1994 will automatically receive on the date of election an
option to purchase 3,000 shares of Class B Common Stock. In addition, each
non-employee director will be automatically granted an option to purchase 3,000
shares of Class B Common Stock on the day after each annual stockholders'
meeting (commencing with the 1995 Annual Meeting).

OTHER ARRANGEMENTS

Mr. Franke, Chairman of the Board of Directors, is also the president of
the financial services firm, Franke & Company Inc. In order to assist Mr. Franke
with certain costs associated with his service as Chairman and Chief Executive
Officer, the Company pays Franke & Company Inc. an office overhead allowance of
$4,167 per month in exchange for which Franke & Co. provides Mr. Franke's
secretarial and administrative support.

During 1993, the Company paid approximately $39,000 for consulting services
to Juan O'Callaghan, a former director of the Company.

MANAGEMENT RIGHTS AGREEMENT

On the Effective Date, the Company and TPG entered into a Management Rights
Agreement ("Management Rights Agreement") pursuant to which TPG is entitled,
subject to certain restrictions, (i) to

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make proposals, recommendations and suggestions to the Company relating to the
business and affairs of the Company, (ii) discuss the affairs of the Company
with officers, directors and accountants, and (iii) examine the Company's books
and records. Proposals and recommendations made pursuant the Management Rights
Agreement will not be binding on the Company and information provided to TPG
will be subject to confidentiality and various other restrictions.

COMPENSATION COMMITTEE INTERLOCKS

Two members of the pre-Reorganization Board and the pre-Reorganization
Compensation Committee, John F. Tierney and Declan Treacy, were elected to the
Board of Directors pursuant to a certain management letter agreement, as amended
and restated, between the Company and its debtor-in-possession lenders,
including GPA. Both Mr. Tierney and Mr. Treacy are executives of GPA. The
management letter agreement terminated in connection with the Reorganization and
Mr. Treacy's term expired on August 25, 1994. GPA's representation on the
Company's Board is now determined pursuant to the Stockholders' Agreement and a
voting agreement entered into between GPA and AmWest. Mr. Tierney continues to
be a member of the Board, but is no longer a member of the Compensation
Committee.

GPA is a major supplier of leased aircraft and engines to the Company and
provided financing to the Company prior to and during the bankruptcy
proceedings. In June 1994, in connection with the Reorganization, the Company
entered into the 1994 Put Agreement with GPA providing GPA with a right to lease
up to eight aircraft to the Company. This agreement replaced a similar agreement
with GPA involving 10 aircraft (none of which were ever leased to the Company).
These aircraft may be new or used B737-300 and B757-200 aircraft (of which no
more than five may be used aircraft) and new or "like new" A320 aircraft. Unless
otherwise consented to by the Company, beginning in June 1995 and ending by June
1999, GPA may, with adequate notice to the Company, put to the Company up to two
aircraft in 1995 and no more than three aircraft per year thereafter. The
rentals for such aircraft will be at the then current market rates with lease
terms ranging from three to 18 years depending on the type and condition of the
aircraft, which will be predetermined by the Company and GPA. In connection with
the 1994 Put Agreement and for other consideration, GPA was paid approximately
$30.5 million and issued certain equity securities by the Company as part of the
Reorganization.

In February 1995, the Company leased a B737-300 aircraft from GPA for a
term of five years. Additionally, the Company and GPA have agreed, subject to
final documentation, to enter into lease agreements for two A320-200 aircraft
beginning in the spring of 1995. All of these aircraft will be leased to the
Company under the 1994 Put Agreement.

Lease payments from America West to GPA under an agreement initially
entered into in September 1990 (the "Aircraft Finance Agreement") and under the
1991 Put Agreement totaled approximately $63 million in 1994. As of December 31,
1994, the Company was obligated to pay approximately $1.1 billion over the life
of the 16 aircraft leases under the Aircraft Finance Agreement. Payments by the
Company to GPA under a debtor-in-possession financing facility established in
September 1991 were approximately $61 million in 1994.

Richard P. Schifter, a member of the Company's Board of Directors, and of
the Compensation Committee is a vice president of TPG Advisors, which is the
general partner of TPG GenPar, the general partner of TPG. TPG received Class A
Common Stock and Class B Common Stock and warrants to purchase Class B Common
Stock in exchange for its investment in America West pursuant to the
Reorganization. Mr. Schifter serves of counsel to the law firm of Arnold &
Porter, where he was a partner until July 1994. America West from time to time
engages Arnold & Porter for certain legal services, not any of which are
performed by Mr. Schifter.

Each of the Company transactions described above was the result of
arms'-length negotiation among the parties thereto and was concluded on what the
Company believes to be terms no less favorable than would have been obtained had
the transactions been entered into with non-affiliated third parties.

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CERTAIN TRANSACTIONS

The Company has certain alliance agreements with Continental and Mesa. With
Continental, the Company agreed to implement certain code sharing arrangements,
coordinate certain flight schedules to maximize connections between the two
airlines, share ticket counter space, link in part their frequent flyer programs
and coordinate ground handling operations. With Mesa, America West has entered
into two code sharing agreements that establish Mesa as a feeder carrier for the
Company at its hubs in Phoenix and Columbus. The Alliance Agreements are
designed to enhance significantly the Company's growth in revenue passenger
miles and operating results. Continental and Mesa are principal stockholders of
the Company. See "Principal Stockholders."

Pursuant to a code sharing agreement with Mesa entered into in December
1992 (which was prior to Mesa becoming a significant stockholder), the Company
assesses a per passenger charge for facilities, reservations and other services
from Mesa for enplanements on the Mesa system. Such payments by Mesa to the
Company totalled approximately $2.5 million for 1994.

On October 14, 1994, the Company issued $13 million of its 11 1/4% Senior
Unsecured Notes due 2001 to Fidelity and $10 million of such notes to Lehman in
satisfaction of certain claims and other prepetition obligations totalling
approximately $25 million held by Fidelity and Lehman. In connection with the
issuance of such notes, Fidelity and Lehman also received cash payments of $2.1
million and $1.2 million, respectively, representing the portion of claims and
other prepetition obligations not satisfied by the issuance of the notes and
other payments made in connection with the settlement of such claims. Fidelity
and Lehman are principal stockholders of the Company. See "Principal
Stockholders."

In 1994, the Company made certain loans to William A. Franke and A. Maurice
Myers, both executive officers of the Company. For a description of such loans,
see "Management -- Employment Agreements."

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49

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of the outstanding
Common Stock of the Company by (i) each person who is known to the Company to
own beneficially more than 5% of the outstanding Common Stock of America West,
(ii) each director of America West, (iii) each of the executive officers of
America West named in the Summary Compensation Table and (iv) all executive
officers and directors of America West as a group, in each case as of March 31,
1995. The beneficial ownership information set forth below does not include any
shares that may be issued to the holders shown below upon the final adjudication
of certain claims pending in connection with proceedings relating to the
Company's Reorganization; however, the sale by such holders of any such shares
is registered pursuant to the Registration Statement of which this Prospectus is
a part.

CLASS A SHARES CLASS B SHARES CLASS A AND B
BENEFICIALLY OWNED BENEFICIALLY OWNED COMBINED
---------------------- ------------------------------ VOTING POWER
BENEFICIAL OWNER(1) NUMBER PERCENTAGE NUMBER PERCENTAGE PERCENTAGE
- --------------------------------- -------- ---------- ----------- ---------- -------------

TPG Partners, L.P.(2)............ 774,495 64.5% 6,924,818(3) 15.1% 43.1%
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Continental Airlines, Inc.(4).... 325,505 27.1% 2,311,094(5) 5.2% 17.7%
2929 Allen Parkway
Houston, Texas 77019
Mesa Air Group, Inc.(6).......... 100,000 8.3% 2,985,239(7) 6.7% 7.6%
2525 30th Street
Farmington, New Mexico 87401
Lehman Brothers Inc.............. -- -- 4,575,601(8) 10.3% 4.4%
200 Vesey Street
American Express Tower
World Financial Center
New York, NY 10285-1800
FMR Corp......................... -- -- 4,808,922(9) 10.8% 4.6%
82 Devonshire Street
Boston, MA 02109
William A. Franke................ -- -- 421,334(10) 1.0% *
A. Maurice Myers................. -- -- -- -- --
Martin J. Whalen................. -- -- 36(11) * *
Raymond T. Nakano................ -- -- 4(12) -- --
Thomas P. Burns.................. -- -- 101(13) * *
Alphonse E. Frei................. -- -- 187(14) * *
Julia Chang Bloch................ -- -- -- -- --
Stephen F. Bollenbach............ -- -- -- -- --
Frederick W. Bradley, Jr......... -- -- -- -- --
James G. Coulter(15)............. 774,495 64.5% 6,924,818(3) 15.1% 43.1%
John F. Fraser................... -- -- -- -- --
John L. Goolsby.................. -- -- 1,500 * *
Richard C. Kraemer............... -- -- -- -- --
John R. Power, Jr................ -- -- -- -- --
Larry L. Risley(16).............. 100,000 8.3% 2,985,239(7) 6.7% 7.6%
Frank B. Ryan(17)................ -- -- -- -- --
Richard P. Schifter(18).......... 774,495 64.5% 6,924,818(3) 15.1% 43.1%
John F. Tierney.................. -- -- -- -- --
Raymond S. Troubh................ -- -- 2,500 * *
All executive officers and
directors as a group (21
persons)....................... 874,495 72.8% 10,335,719(19)(14) 22.1% 50.7%

- ---------------
* Less than 1%.

(1) Information with respect to each beneficial owner of 5% of the Company's
Common Stock is based solely on Schedules 13G filed by such beneficial
owners with the Securities and Exchange Commission.

(2) TPG is a Delaware limited partnership whose general partner is TPG GenPar,
L.P., a Delaware limited partnership ("TPG GenPar"). The general partner of
TPG GenPar is TPG Advisors, Inc., a Delaware corporation ("TPG Advisors").
The executive officers and directors of TPG Advisors are: David

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50
Bonderman (director and president), James G. Coulter (director and vice
president), William Price (director and vice president), James O'Brien
(vice president, treasurer and secretary), Richard P. Schifter (vice
president) and Richard A. Ekleberry (vice president). Includes shares owned
by TPG Parallel I, L.P., a Delaware limited partnership ("TPG Parallel"),
and Air Partners II, L.P., a Texas limited partnership ("Air Partners II").
The general partner of each of TPG Parallel and Air Partners II is TPG
GenPar. No other persons control TPG, TPG GenPar, TPG Advisors, TPG
Parallel or Air Partners II.
(3) Includes 1,911,523 shares of Class B Common Stock that may be acquired upon
the exercise of warrants.
(4) Mr. Bonderman is also director and chairman of the board of Continental and
Mr. Price is a director of Continental. Mr. Bonderman, Mr. Coulter and Mr.
Price, through their control positions in Air Partners, L.P., a special
purpose partnership formed in 1992 to participate in the funding of the
reorganization of Continental and a significant shareholder in Continental,
may be deemed to own beneficially a significant percentage of Continental's
common stock.
(5) Includes 802,860 shares of Class B Common Stock that may be acquired upon
the exercise of warrants.
(6) Larry L. Risley, a director of the Company, is the chairman and chief
executive officer of Mesa.
(7) Includes 799,767 shares of Class B Common Stock that may be acquired upon
the exercise of warrants.
(8) Includes 293,242 shares of Class B Common Stock that may be acquired upon
the exercise of warrants. Does not include any shares which Lehman or its
affiliates may own in its or their capacity as a market maker on a
when-issued basis for the warrants and the Class B Common Stock.
(9) Includes 658,009 shares of Class B Common Stock that may be acquired upon
the exercise of warrants. All shares are owned directly by Fidelity
Copernicus Fund, L.P. ("Copernicus"), Belmont Capital Partners II, L.P.
("Belmont II") or Belmont Fund, L.P. ("Belmont I"), each of which is a
private investment limited partnership. Fidelity Management Trust Company
("FMTC") serves as investment adviser to Belmont I and Belmont II, and
Fidelity Management & Research Company ("FMRC") serves as investment
adviser to Copernicus. Each of FMTC and FMRC is a wholly owned subsidiary
of FMR Corp. ("FMR"). Through shared voting and dispositive power over the
shares held by Belmont I and Belmont II, FMTC may be deemed to own
beneficially the shares held by such entities. Through shared voting and
dispositive power over the shares held by Copernicus, FMRC may be deemed to
own beneficially the shares held by such entity. In addition, FMR, as
controlling person of FMTC, FMRC and certain general partners of Belmont I,
Belmont II and Copernicus, may be deemed to own beneficially the shares
held by each of Belmont I, Belmont II and Copernicus. FMR disclaims
beneficial ownership of such shares. Edward C. Johnson III, through his
interest in FMR, may be deemed to own beneficially the shares held by each
of Belmont I, Belmont II and Copernicus. Mr. Johnson disclaims beneficial
ownership of such shares.
(10) Includes 255,000 shares of Class B Common Stock that may be acquired upon
exercise of stock options.
(11) Includes 16 shares of Class B Common Stock that may be acquired upon
exercise of warrants.
(12) Includes 3 shares of Class B Common Stock that may be acquired upon
exercise of warrants.
(13) Includes 74 shares of Class B Common Stock that may be acquired upon
exercise of warrants.
(14) Includes 137 shares of Class B Common Stock that may be acquired upon
exercise of warrants.
(15) Represents shares of Class A Common Stock and Class B Common Stock held by
TPG. In connection with Mr. Coulter's positions described in footnote (2)
above, Mr. Coulter may be deemed to own beneficially such shares. Mr.
Coulter disclaims beneficial ownership of such shares.
(16) Represents shares held by Mesa. Through his position as chairman and chief
executive officer of Mesa, Mr. Risley may be deemed to own beneficially
such shares. Mr. Risley disclaims beneficial ownership of such shares.
(17) Dr. Frank B. Ryan became a member of the Board of Directors on March 17,
1995.
(18) Represents shares of Class A Common Stock and Class B Common Stock held by
TPG. In connection with Mr. Schifter's position described in footnote (2)
above, Mr. Schifter may be deemed to own beneficially such shares. Mr.
Schifter disclaims beneficial ownership of such shares.
(19) Includes 2,711,520 shares of Class B Common Stock that may be acquired upon
exercise of warrants.

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STOCKHOLDERS' AGREEMENTS

On the Effective Date, the Company, AmWest, GPA, and certain designated
stockholder representatives entered into an agreement (the "Stockholders'
Agreement") with respect to certain matters involving the Company. Upon the
dissolution of AmWest, which occurred immediately following the Effective Date,
the provisions of the Stockholders' Agreement with respect to AmWest became
binding upon TPG, Continental and Mesa. As used below, "AmWest" means TPG,
Continental and Mesa in their capacities as successors-in-interest to AmWest
under the Stockholders' Agreement.

The Stockholders' Agreement provides that, for a period lasting until the
first annual meeting after the third anniversary of the Effective Date (the
"Voting Period"), America West's Board of Directors will consist of 15 members
including (i) nine members designated by AmWest; (ii) one member designated by
GPA for as long as GPA retains at least 2% of the voting equity securities of
the Company; and (iii) five independent directors (the "Independent Directors")
initially including (a) three directors designated by the official committee of
the unsecured creditors, (b) one member designated by the official committee of
the equity security holders and (c) one director designated by the
pre-Reorganization Board of Directors from among the executive officers of the
Company. The Stockholders' Agreement provides that during the Voting Period,
AmWest and GPA will vote all shares of Common Stock owned by them in favor of
the reelection of the initially designated Independent Directors for as long as
such Independent Directors continue to serve.

In addition, AmWest and GPA agreed that (i) AmWest will vote in favor of
GPA's nominee to the Company's Board of Directors, and (ii) GPA will vote in
favor of AmWest's nine nominees to the Company's Board of Directors for so long
as (a) AmWest owns at least 5% of the voting equity securities of the Company
and (b) GPA owns at least 2% of the voting equity securities of the Company.

The Stockholders' Agreement also provides that no director nominated by
AmWest will be an employee or officer of Continental. All directors who are
selected by or who are directors of Continental or Mesa and all directors who
are employees or officers of Mesa are required by the Stockholders' Agreement to
recuse themselves from voting on or receiving information on any matters
involving negotiations or direct competition between their respective companies
and America West.

In addition, the Stockholder's Agreement provides that until the annual
meeting after the third anniversary of the Effective Date, approval of
transactions in which AmWest or its affiliates may participate will require the
affirmative vote of the holders of a majority of the voting power of the
outstanding shares of each class of common stock of the Company entitled to
vote, voting as a single class and excluding any shares owned by AmWest or any
of its affiliates. Transactions to which such restriction applies include any
merger or consolidation of the Company with or into AmWest or its affiliates,
any sale or other disposition of all or a substantial part of the assets of the
Company to AmWest or its affiliates and certain other transactions in which
AmWest or its affiliates would acquire an increased ownership of equity
securities in the Company. The Company does not believe these restrictions will
have any adverse effects on the stockholders of the Company.

Under the terms of the Stockholders' Agreement, neither AmWest nor any
affiliate of AmWest may sell or otherwise transfer any Common Stock (other than
to an affiliate of the transferor) if, after giving effect thereto or to any
related transaction, the total number of shares of Class B Common Stock
beneficially owned by the transferor is less than twice the number of shares of
Class A Common Stock beneficially owned by the transferor, except in certain
circumstances.

In addition, the Stockholders' Agreement provides that, for a period of
three years after the Effective Date, AmWest shall not sell, in a single
transaction or related series of transactions, shares of Common Stock
representing 51% or more of the combined voting power of shares of Common Stock
then outstanding other than (i) pursuant to or in connection with a tender or
exchange offer for all shares of Common Stock and for the benefit of all others
of Class B Common Stock on a pro rata basis at the same price per share and on
the same economic terms, (ii) to any affiliate of AmWest, (iii) to any affiliate
of AmWest's partners, (iv) pursuant to a bankruptcy or insolvency proceeding,
(v) pursuant to judicial order, legal process, execution or attachment or (vi)
in a public offering.

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52

SELLING SECURITYHOLDERS

The Selling Securityholders are TPG, Continental, Mesa, GPA, Fidelity and
Lehman. In addition, 125,000 shares of Class B Common Stock issued to Mr. Franke
in connection with a Reorganization success bonus are covered by the
Registration Statement of which this Prospectus is a part. Pursuant to partial
assignments of the Investment Agreement by AmWest, Fidelity and Lehman also
purchased Securities from the Company through subscription agreements between
AmWest and those parties. Pursuant to the Plan of Reorganization, the partners
of AmWest and such parties invested $205.3 million into the Company in exchange
for the rights to acquire Securities offered hereby.

The following table sets forth the name of each Selling Securityholder, and
the amount of the Securities (other than the Senior Notes) owned by each such
Selling Securityholder which are subject to being offered hereby. This
prospectus relates to the offers and sales of the Securities by the Selling
Securityholders. Except for William A. Franke, whose beneficial ownership
includes shares that may be acquired by him upon the exercise of certain
options, the securities subject to offering and sale by the Selling
Securityholders pursuant hereto constitute all of the holdings of such
securities by such Selling Securityholders. For the respective percentages of
the Company's securities beneficially owned by each Selling Securityholder
(including such ownership as may be attributed to such securityholders) prior to
the offering, see "Principal Stockholders." The shares and Warrants reflected in
the following table do not include shares or Warrants that may be issued to
Selling Securityholders upon the final adjudication of certain claims pending in
connection with proceedings relating to the Company's Reorganization. Any such
shares or Warrants issued to Selling Securityholders will also be subject to
being offered hereby.

SHARES OF SHARES OF
CLASS A CLASS B NUMBER OF
COMMON STOCK COMMON STOCK(1) WARRANTS
------------ --------------- ---------

TPG Partners, L.P................................. 642,078 5,741,150 1,584,915
TPG Parallel I, L.P. ............................. 64,699 578,338 159,580
Air Partners II, L.P. ............................ 67,718 605,330 167,028
Continental Airlines, Inc......................... 325,505 2,311,094 802,860
Mesa Air Group, Inc............................... 100,000 2,985,239 799,767
GPA Group plc..................................... -- 2,284,615 1,384,615
Fidelity Copernicus Fund, L.P..................... -- 2,601,040 100,116
Belmont Capital Partners II, L.P.................. -- 1,356,932 524,521
Belmont Fund, L.P................................. -- 850,950 33,372
Lehman Brothers Inc............................... -- 4,575,601 293,242
William A. Franke................................. -- 125,000 --
--------- ---------- ---------
TOTAL................................... 1,200,000 24,015,289 5,850,016
========= ========== =========

- ---------------
(1) Includes in each case a number of shares that may be acquired upon exercise
of Warrants equal to the number of Warrants held by such person and offered
pursuant to this Prospectus.

In addition, Fidelity Copernicus Fund, L.P. ("Copernicus") holds $75
million principal amount of Senior Notes, Belmont Fund, L.P. ("Belmont") holds
$27 million principal amount of Senior Notes, Belmont Capital Partners II, L.P.
("Belmont II") holds $11 million of Senior Notes and Lehman holds $10 million of
Senior Notes all of which may be offered and sold pursuant to this Prospectus.
The Senior Notes held by Copernicus are subject to a repurchase agreement and
pursuant to such agreement were resold shortly after their issuance to
Copernicus and Belmont. This Prospectus relates to offers and sales of the
Senior Notes by Copernicus, Belmont, Belmont II and Lehman as well as offers and
sales that may be subsequently made in accordance with the repurchase agreement
or other pledge arrangements. See "Plan of Distribution."

SHARES ELIGIBLE FOR FUTURE SALE

As of March 31, 1995, assuming no exercise of outstanding warrants to
purchase Common Stock, America West had 45,166,645 shares of Common Stock
outstanding, including 1,200,000 shares of Class A

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53

Common Stock and 43,966,645 shares of Class B Common Stock. The offer and sale
of 19,898,704 of such shares of Common Stock is registered under the Securities
Act pursuant to the Registration Statements of which this Combined Prospectus
forms a part. In addition, at the Effective Date, America West had 10,384,615
shares of Class B Common Stock reserved for issuance upon the exercise of
Warrants; the offer and sale of 5,872,108 of such shares is registered pursuant
to the Company's Registration Statement No. 33-54243.

As of March 31, 1995, substantially all of the outstanding shares of Common
Stock and shares of Common Stock issuable upon exercise of the Warrants (except
to the extent such shares may have been acquired by an underwriter) were freely
tradeable without restriction or further registration under the Securities Act,
either because such shares were issued or are issuable pursuant to the exemption
provided by Section 1145 of the Bankruptcy Code and such shares are not
"restricted securities" as defined in Rule 144 under the Securities Act or
because the offer and resale of such shares is registered pursuant to the
Company's Registration Statement No. 33-54243. To the extent shares of Common
Stock are owned or purchased by "affiliates" of the Company as such term is
defined in Rule 144 and are not registered pursuant to the Securities Act, such
restricted shares may generally be sold in compliance with Rule 144.

In general under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons deemed to be affiliates, whose
restricted securities have been fully paid for and held for at least two years
from the later of the date of acquisition from America West or an affiliate
thereof, may sell such securities in brokers' transactions or directly to market
makers, provided the number of shares sold in any three-month period does not
exceed the greater of 1% of the then outstanding shares of the Common Stock or
the average weekly trading volume in the public market during the four calendar
weeks immediately preceding the filing of the seller's Form 144. Sales under
Rule 144 are also subject to certain notice requirements and availability of
current public information concerning America West. Pursuant to Rule 144(k),
after three years have elapsed from the later of the acquisition of the
restricted securities from America West or an affiliate thereof, such shares may
be sold without limitation by persons who have not been affiliates of America
West for at least three months.

TPG, Continental, Mesa, Fidelity, Lehman, GPA and their respective
affiliates, have certain rights pursuant to agreements with the Company to have
the offering and sale of Securities held by them registered with the Commission
under the Securities Act. Under such agreements, the Company may be required to
effect such registration for a period of eight years from the Effective Date.

Prior to this offering, there has been no market for the Common Stock of
America West. Future sales of substantial amounts of Common Stock in the public
market could adversely affect prevailing market prices.

DESCRIPTION OF THE SENIOR NOTES

The Senior Notes were issued under an Indenture dated August 25, 1994 (the
"Indenture") between the Company and American Bank National Association, as
trustee (the "Trustee"). The material provisions of the Senior Notes and the
Indenture are summarized below. The statements under this caption relating to
the Senior Notes and the Indenture are summaries only, however, and do not
purport to be complete. Such summaries make use of terms defined in the
Indenture and are qualified in their entirety by express reference to the
Indenture, which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. All section references under this heading are
references to sections of the Indenture.

GENERAL

Each Senior Note will mature on September 1, 2001, and will bear interest
at the rate per annum stated on the cover page hereof from the date of issuance,
payable semiannually in arrears on March 1 and September 1 of each year,
commencing March 1, 1995, to the person in whose name the Senior Note is
registered at the close of business on the record date next preceding such
interest payment date. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. The Company will pay the principal on the Senior Notes
to each Holder who surrenders such Senior Notes to a Paying Agent on or after
September 1, 2001 or, in the event of a redemption of the Senior Notes, on or
after the Redemption Date, as

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described below. The Company will pay principal and interest in U.S. legal
tender by Federal funds bank wire transfer or (in the case of payment of
interest) by check to the persons who are registered Holders at the close of
business on the Record Date next preceding the applicable interest payment date.
The aggregate principal amount of the Senior Notes that may be issued will be
limited to $130,000,000.

The Senior Notes will be transferable and exchangeable at the office of the
Registrar and any co-registrar and will be issued in fully registered form,
without coupons, in denominations of $1,000 and any whole multiple thereof;
provided, however, that any Global Security representing all or a portion of the
Senior Notes may not be transferred except as a whole by the Depository in
certain circumstances unless and until it is exchanged in whole or in part for
Senior Notes in a non-global form. The Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection with certain transfers and exchanges.

RANKING

The Senior Notes will be senior unsecured obligations of the Company and
will rank pari passu in right of payment with the Company's existing and future
senior unsecured obligations.

OPTIONAL REDEMPTION

The Company, at its option on notice to the Holders, may redeem the Senior
Notes (i) prior to September 1, 1997 (A) at any time in whole but not in part,
at a Redemption Price equal to 105% of the aggregate principal amount of the
Senior Notes, plus accrued and unpaid interest thereon to the Redemption Date,
or (B) from time to time in part from the Net Offering Proceeds received by the
Company prior to September 1, 1997 from a Public Offering Sale at a Redemption
Price equal to 105% of the aggregate principal amount of the Senior Notes so
redeemed, plus accrued and unpaid interest thereon to the Redemption Date; and
(ii) on and after September 1, 1997 at any time in whole or from time to time in
part, at a Redemption Price equal to the applicable percentage of the aggregate
principal amount of the Senior Notes so to be redeemed, set forth below, plus
accrued and unpaid interest thereon to the Redemption Date if redeemed during
the 12 calendar months beginning on September 1 of the years indicated below:

1997: 105.0%
1998: 103.3%
1999: 101.7%
2000: 100.0%

MANDATORY REDEMPTION

If the Company shall consummate a Public Offering Sale at any time or from
time to time prior to September 1, 1997, it shall, promptly after each Public
Offering Sale so consummated at a time when, immediately prior to such
consummation, the Company shall have on hand cash and Cash Equivalents, not
subject to any restriction on disposition, of at least $100,000,000, then the
Company shall redeem Senior Notes at a redemption price equal to 104% of the
aggregate principal amount of the Senior Notes so redeemed, plus accrued and
unpaid interest to the redemption date. The aggregate redemption price and
accrued and unpaid interest of the Senior Notes to be redeemed shall equal the
lesser of (x) 50% of such Net Offering Proceeds or (y) the excess, if any, of
$20,000,000 over (ii) the amount of any Net Offering Proceeds of any prior
Public Offering Sale received prior to September 1, 1997, and applied to redeem
Senior Notes as described therein.

The Senior Notes will not be entitled to the benefit of any sinking fund or
other mandatory redemption provisions.

CERTAIN COVENANTS

Limitations on Restricted Payments. Under the terms of the Indenture,
neither the Company nor any subsidiary shall: (i) declare or pay any dividends
on or make any distributions in respect of Capital Stock of the Company (other
than dividends or distributions payable solely in shares of Capital Stock (other
than redeemable stock) or in options, warrants or other rights to purchase
Capital Stock (other than Redeemable Stock)) to holders of Capital Stock of the
Company, (ii) purchase, redeem or otherwise acquire or retire for

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value (other than through the issuance solely of Capital Stock (other than
Redeemable Stock)) or warrants, rights or options to acquire Capital Stock other
than Redeemable Stock; (iii) redeem, repurchase, defease (including, but not
limited to, in substance or legal defeasance), or otherwise acquire or retire
for value (other than through the issuance solely of Capital Stock (other than
Redeemable Stock) or warrants, rights or options to acquire Capital Stock (other
than Redeemable Stock)) (collectively, a "prepayment"), directly or indirectly
(including by way of amendment of the terms of any Indebtedness in connection
with any retirement or acquisition of such Indebtedness) other than at scheduled
maturity thereof or by any scheduled repayment or scheduled sinking fund
payment, any indebtedness of the Company which is subordinated in right of
payment to the Senior Notes or which matures after the maturity date of the
Senior Notes except out of the proceeds of Refinancing Indebtedness); if, at the
time of such transaction described in clause (i), (ii) or (iii) (such
transactions being hereinafter collectively referred to as "Restricted
Payments") and after giving effect thereto, either the aggregate amount expended
by the Company and its Subsidiaries for all Restricted Payments (the amount of
any Restricted Payment if other than cash to be the fair market value of the
property included in such payment as determined in good faith by the Board of
Directors as evidenced by a Board Resolution) from and after the Closing Date
shall exceed the sum of (A) 50% (or if the Senior Notes at the time of the
proposed Restricted Payment are rated Investment Grade by at least one rating
agency of recognized standing selected by the Company, 75%) of the aggregate
Adjusted Consolidated Net Income (or if such Adjusted Consolidated Net Income is
a loss, minus 100% of such loss) of the Company and its Subsidiaries for the
period from the Closing Date and through the day immediately prior to the day on
which the Restricted Payment occurs, calculated on a cumulative basis as if such
period were a single accounting period; (B) the aggregate net proceeds received
by the Company after the Closing Date (including the fair market value of
non-cash proceeds as determined in good faith by the Board of Directors as
evidenced by a Board Resolution) from any Person other than a Subsidiary, as a
result of the issuance of (or contribution to capital on) Capital Stock (other
than any Redeemable Stock) or warrants, rights or options to acquire Capital
Stock (other than any Redeemable Stock); (C) the aggregate net proceeds received
by the Company after the Closing Date from any Person other than a Subsidiary as
a result of the issuance of Capital Stock (other than Redeemable Stock) upon
conversion or exchange of Indebtedness or upon exercise of options, warrants or
other rights to acquire such Capital Stock and (D) $25,000,000. For purposes of
any calculation that is required to be made in respect of, or after the
declaration of a dividend by the Company, such dividend shall be deemed to be
paid at the date of declaration and shall be included in determining the
aggregate amount of Restricted Payments, and the subsequent payment of such
dividend shall not be treated as an additional payment.

For the purposes of the preceding covenant, the net proceeds from the
issuance of shares of Capital Stock of the Company upon conversion of debt
securities shall be deemed to be an amount equal to the net book value of such
debt securities (plus the additional amount required to be paid upon such
conversion, if any), less any cash payment on account of fractional shares; the
"net book value" of a security shall be the net amount received by the Company
on the issuance of such security, as adjusted on the books of the Company to the
date of conversion.

Notwithstanding the foregoing, if no Default or Event of Default shall have
occurred or be continuing at the time, the Indenture shall not prohibit (i) the
purchase, redemption or other acquisition or retirement for value of any shares
of the Company's Capital Stock or the prepayment of any indebtedness of the
Company which is subordinated in right of payment to the Senior Notes or which
matures after the maturity date of the Senior Notes by any exchange for, or out
of and to the extent the Company has received cash proceeds from the
substantially concurrent sale or issuance (other than to a Subsidiary) of,
shares of Capital Stock (other than any Redeemable Stock of the Company) or
warrants, rights or options to acquire Capital Stock (other than any Redeemable
Stock); or (ii) the purchase or redemption of shares of Capital Stock of the
Company (including options on any such shares or related stock appreciation
rights or similar securities) held by officers or employees of the Company or
its Subsidiaries (or their estates or beneficiaries under their estates) upon
death, disability, retirement, termination of employment or pursuant to the
terms of any Plan or any other agreement under which such shares of stock or
related rights were issued, provided that the aggregate amount of such purchases
or redemptions of such Capital Stock shall not exceed $3,000,000 in any one
fiscal year of the Company.

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Limitation on Transactions with Affiliates. Neither the Company nor any
Subsidiary of the Company shall, directly or indirectly (i) sell, lease,
transfer or otherwise dispose of any of its properties or assets, or issue
securities to, (ii) purchase any property, assets or securities from, (iii) make
any Investment in, or (iv) enter into or suffer to exist any contract or
agreement with or for the benefit of, an Affiliate or Holder of 5% or more of
any class of Capital Stock (and any Affiliate of such Holder) of the Company (an
"Affiliate Transaction"), other than (x) certain permitted Affiliate
Transactions and (y) Affiliate Transactions (including lease transactions) which
are on fair and reasonable terms no less favorable to the Company or such
Subsidiary, as the case may be, as those as might reasonably have been
obtainable at such time from an unaffiliated party; provided that if an
Affiliate Transaction or series of related Affiliate Transactions involves or
has a value in excess of $10 million, the Company or such Subsidiary, as the
case may be, shall not enter into such Affiliate Transaction or series of
related Affiliate Transactions unless a majority of the disinterested members of
the Board of Directors of the Company or such Subsidiary shall reasonably and in
good faith determine that such Affiliate Transaction is fair to the Company or
such Subsidiary, as the case may be, or is on terms no less favorable to the
Company or such Subsidiary, as the case may be, than those as might reasonably
have been obtainable at such time from an unaffiliated party.

(b) The preceding paragraph shall not apply to (i) any agreement as in
effect as of the Closing Date, or any amendment thereto (including pursuant to
any amendment thereto) so long as any such amendment is not disadvantageous to
the Holders in any material respect or any transaction contemplated thereby
(including pursuant to any amendment thereto); (ii) any transaction between the
Company and any Wholly Owned Subsidiary or between Wholly Owned Subsidiaries,
provided such transactions are not otherwise prohibited by this Indenture; (iii)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors, employees or consultants of the Company or
any Subsidiary, as determined by the Board of Directors of the Company or any
Subsidiary or the senior management thereof in good faith; (iv) any Restricted
Payments not prohibited in Section 4.13; (v) any payments or other transactions
pursuant to any tax sharing agreement between the Company and any other Person
with which the Company is required or permitted to file a consolidated tax
return or with which the Company is or could be part of a consolidated group for
tax purposes; and (vi) transactions with Continental, Mesa and their respective
Affiliates as contemplated by Alliance Agreements.

Limitation on Asset Sales. Subject to certain provisions of the Indenture,
in the event and to the extent that on any date the Company or any of its
Subsidiaries shall receive Net Cash Proceeds from one or more Asset Sales (other
than Asset Sales by the Company or any Subsidiary to the Company or another
Subsidiary) then the Company shall, or shall cause such Subsidiary to, within 12
months after such date apply an amount equal to such Net Cash Proceeds (A) and
to repay Indebtedness of the Company or Indebtedness of any Subsidiary, in each
case owing to a Person other than the Company or any of its Subsidiaries, and/or
(B) as an investment (or enter into a definitive agreement committing to so
invest within 12 months after the date of such agreement), in property or assets
of a nature or type or that are used in a business (or in a Person having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
the Company and its Subsidiaries existing on the date thereof (as determined in
good faith by the Board of Directors of the Company or such Subsidiary, as the
case may be, whose determination shall be conclusive and evidenced by a Board
Resolution). The amount of such Net Cash Proceeds required to be applied (or to
be committed to be applied) during such 12-month period as set forth in clause
(A) or (B) of the preceding sentence shall constitute "Excess Proceeds."

If on the first Business Day following any 12-month period referred to in
the preceding paragraph, the aggregate amount of Excess Proceeds from all Asset
Sales subject to application but not previously applied during such 12-month
period as provided in clause (A) or (B) of the preceding paragraph, exceeds
$15,000,000, the Company, within 10 Business Days thereafter, shall make an
offer to purchase on a pro rata basis from all Holders (an "Excess Proceeds
Offer"), and shall purchase from Holders accepting such Excess Proceeds Offer,
the maximum principal amount (expressed as an integral multiple of $1,000) of
Senior Notes that may be purchased from funds in an amount equal to all such
outstanding Excess Proceeds at a purchase price equal to 100% of the principal
amount of the Senior Notes so purchased plus accrued and unpaid interest thereon
to the date of purchase ("Excess Proceeds Payment"). Upon completion of an
Excess Proceeds Offer

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(or upon termination of such offer if no repurchases are required), the amount
of such Excess Proceeds relating thereto shall be equal to zero.

Change of Control. Upon a Change of Control, each Holder shall have the
right to require the Company to repurchase all or any part of such Holder's
Senior Notes at a repurchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase. Within 30
days following any Change of Control, the Company shall mail a notice to each
Holder stating: (i) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase all or any part of such
Holder's Senior Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase; (ii) the circumstances and relevant facts regarding such Change of
Control; (iii) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed; and (iv) the
instructions that the Company determines that a Holder must follow to have its
Senior Notes repurchased. Holders electing to have a Senior Note purchased will
be required to surrender the Senior Note, with an appropriate form duly
completed, to the Company at the address specified in the notice at least 10
business days prior to the purchase date. Holders will be entitled to withdraw
their election as specified in the notice.

Limitation on Investments. The Company shall not, and shall not permit any
Subsidiary to make any Investment other than (i) Investments consisting of
non-cash proceeds from Asset Sales as contemplated by the Indenture; (ii)
Investments consisting of Cash Equivalents; (iii) accounts receivable if
credited or acquired in the ordinary course of business; (iv) payroll advances
and advances for business and travel expenses in the ordinary course of
business; (v) Investments by the Company in its Subsidiaries in the ordinary
course of its business; (vi) Investments by any Subsidiary of the Company in the
Company or in any Subsidiary; (vii) Investments by the Company for the purpose
of acquiring businesses reasonably related to the business of the Company, in an
aggregate amount not exceeding $5 million in any fiscal year; (viii) Investments
made by way of endorsement of negotiable instruments received by the Company or
any Subsidiary in the ordinary course of business; (ix) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business owing to the Company or any Subsidiary; (x) Investments by the Company
for the purpose of receivables financing; and (xi) in addition to any other
permitted investments, any other Investments by the Company in an aggregate
amount not exceeding $1 million at any time.

LIMITATIONS ON MERGERS AND CONSOLIDATION

The Indenture provides that the Company will not consolidate with or merge
into any other corporation, or transfer, lease or convey its properties and
assets substantially as an entirety (the "Properties") to any Person, unless:
(i) the corporation formed by such consolidation or merger or the Person that
acquires by transfer, lease or conveyance the Properties (collectively, the
"Successor"), is a corporation organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia and
the Successor assumes by supplemental indenture in a form satisfactory to the
Trustee the Company's obligation for the due and punctual payment of the
principal of and interest on all the Senior Notes according to their tenor and
the performance of every covenant of the Indenture on the part of the Company to
be performed or observed; and (ii) immediately before and after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, lease or transfer and such Supplemental Indenture comply
with Article Six of the Indenture and that all conditions precedent set forth in
the Indenture relating to such transaction have been complied with.

CERTAIN DEFINITIONS

The following is a summary of certain defined terms to be used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms and for the definitions of other capitalized terms used herein and
not defined below.

"Adjusted Consolidated Net Income" means, for any Person for any period,
the aggregate net income (or loss) of such Person and its consolidated
Subsidiaries for such period determined in occurrence with GAAP;

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provided that the following items shall be excluded in computing Adjusted
Consolidated Net Income (without duplication): (i) the net income (or loss) of
any Person (other than a Subsidiary of such first Person) in which any other
Person (other than such first Person or any of its Subsidiaries) has a joint or
shared interest, except to the extent of the amount of dividends or other
distributions actually paid to and received by such first Person or any of its
Subsidiaries during such period out of funds legally available therefor, (ii)
the net income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of such first Person or any of its Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by such
first Person or any of its Subsidiaries, (iii) the net income (or loss) of any
Subsidiary of such Person that is subject to a Payment Restriction, except to
the extent of the amount of cash dividends or other distributions actually paid
to, and received by, such person or any of its Subsidiaries during such period
from such Subsidiary out of funds legally available therefor, (iv) any gains or
losses (on an after-tax basis) attributable to Asset Sales, and (v) all
extraordinary gains and extraordinary losses.

"Affiliates" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transactions) in one transaction
or a series of related transactions by the Company or any of its Subsidiaries to
any Person other than the Company or any of its Subsidiaries of (i) all or any
of the Capital Stock of any Subsidiary of the Company, (ii) all or substantially
all of the property and assets of an operating unit or business of the Company
or any of its Subsidiaries or (iii) any other property and assets of the Company
or any of its Subsidiaries outside the ordinary course of business of the
Company or such Subsidiary and, in each case, that is not governed by the
provisions of Article Six of the Indenture applicable to mergers, consolidations
and transfers of all or substantially all of the property and assets of the
Company; provided that none of (A) sales or other dispositions of inventory,
receivables and other current assets, (B) sale or other dispositions of surplus
equipment, spare parts, expandable inventories, furniture or fixtures in an
aggregate amount not to exceed $10,000,000 in any fiscal year of the Company,
(C) sale leasebacks of aircraft and engines passenger loading bridges or other
flight or ground equipment, flight simulators, or the Company's reservation
facility located at 222 South Mill Avenue, Tempe, Arizona; or (D) $20,000,000 of
other sales in any fiscal year of the Company shall be included within the
meaning of "Asset Sale".

"Change of Control" means (i) the acquisition at any time by any Person
(other than one or more Permitted Holders), of "beneficial ownership" (within
the meaning of Section 13(d) under the Exchange Act and the rules and
regulations promulgated thereunder) in excess of 50% of the total voting power
of the voting stock of the Company; (ii) the sale, lease, transfer or other
disposition, of all or substantially all of the assets of the Company to any
Person (other than one or more Permitted Holders) as an entirety or
substantially as an entirety in one transaction or a series of related
transactions; (iii) the merger or consolidation of the Company, with or into
another corporation, or the merger of another corporation into the Company, or
any other transaction, with the effect that a Person (other than one or more
Permitted Holders), has "beneficial ownership" (within the meaning of Section
13(d) under the Exchange Act and the rules and regulations promulgated
thereunder) in excess of 50% of the voting stock of the Company, or such other
corporation, as the case may be (including indirect ownership through another
Person other than one or more Permitted Holders); or (iv) the liquidation or
dissolution of the Company. For purposes of this definition, the term Person
includes a "person" within the meaning of Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder.

"Commodity Agreement" means any agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in the
prices of commodities used by the Company or any of its Subsidiaries in the
ordinary course of its business.

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"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values to or
under which the Company or any of its Subsidiaries is a party or a beneficiary
on the date of the Indenture or becomes a party or a beneficiary thereafter.

"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, Senior Notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto), (iv) all obligations
of such Person to pay the deferred and unpaid purchase price of property or
services, except trade payables, (v) all obligations of such Person to the
extent capitalized on the balance sheet of such Person as lessee under
Capitalized Leases, (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
stated principal amount of such Indebtedness, (vii) all Indebtedness of other
Persons guaranteed by such Person to the extent such Indebtedness is guaranteed
by such Person, (viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements, Interest Risk Agreement and Commodity
Agreements. The amount of Indebtedness of any Person of any date shall be the
outstanding balance on such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the full amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness of such
time as determined in conformity with GAAP.

"Investment" means, with respect to any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business consistent with past practices that are recorded as accounts receivable
on the balance sheet of such Person or its Subsidiaries) or other extension of
credit or capital contribution by such Person to any other Person (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others; provided, that any transfer of
aircraft to a limited partnership or other entity in connection with the
transaction in which the aircraft are leased to the Company shall not be an
Investment), or any purchase or acquisition by such person of Capital Stock,
bonds, notes, debentures or other similar instruments issued by any other
Person.

"Interest Rate Agreement" means any interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect the Company or any of
its Subsidiaries against fluctuations in interest rates to or under which the
Company or any of its Subsidiaries is a party or a beneficiary on the date of
the Indenture or becomes a party or a beneficiary thereafter.

"Investment Grade" means a rating of BBB- or higher by S&P or BaaB or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other rating agency, the equivalent of
such ratings by such rating agency shall be used.

"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof, any sale with
recourse against the seller or any Affiliate of the seller, or any agreement to
give any security interest); provided that in no event shall a true operating
lease be deemed to constitute a Lien hereunder.

"Material Subsidiary" means each Subsidiary that is either (a) a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act and the Exchange Act (as such regulation is in effect on the date
hereof) or (b) material to the financial condition or results of operations of
the Company and its Subsidiaries taken as a whole.

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations (to the extent

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corresponding to the principal, but not interest, component thereof) when
received in the form of cash or Cash Equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Subsidiary
of the Company) and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a
result of such Asset Sale without regard to the consolidated results of
operations of the Company and its Subsidiaries, taken as a whole, (iii) payments
made to repay Indebtedness or any other obligation outstanding at the time of
such Asset Sale that either (A) is secured by a Lien on the property or assets
sold or (B) is required to be paid as a result of such Asset Sale other than
pursuant to this Agreement, and (iv) appropriate amounts to be provided by the
Company or any Subsidiary of the Company as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP.

"Payment Restriction" means, with respect to a Subsidiary of any Person,
any encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (i) such Subsidiary
to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (b) make loans or Advances to such Person or
any other Subsidiary of such Person, or (c) transfer any of its property or
assets to such Person or any other Subsidiary of such Person, or (ii) such
Person or other Subsidiary of such Person to receive or retain any such (a)
dividends, distributions or payments, (b) loans or advances, or (c) property or
assets.

"Permitted Holders" means AmWest, TPG, Continental, Mesa, Fidelity and
their respective successors and affiliates.

"Public Offering Sale" means an underwritten public offering of Capital
Stock of the Company pursuant to which the Company agreed to issue and sell and
the Purchasers named in such agreement agreed to purchase, an aggregate of
$100,000,000 in principal amount of Securities.

"Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or otherwise (i) is required to be redeemed prior to the
Stated Maturity of the Securities, (ii) may be required to be redeemed at the
option of the holder of such class or series of Capital Stock at any time prior
to the Stated Maturity of the Securities or (iii) is convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above or
indebtedness having a scheduled maturity prior to the Stated Maturity of the
Securities; provided that any Capital Stock that would not constitute Redeemable
Stock but for provisions thereof offering holders thereof the right to require
the Company to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" occurring prior to the Stated Maturity of the Securities shall not
constitute Redeemable Stock if the asset sale provisions contained in such
Capital Stock specifically provide that in respect of any particular asset sale
proceeds, the Company will not repurchase or redeem any such Capital Stock
pursuant to such provisions prior to the Company's repurchase of such Securities
as are required to be repurchased from Holders accepting an Excess Proceeds
Offer pursuant to the provisions of Section 4.15.

"Refinancing Indebtedness" means any Indebtedness of the Company or any
Subsidiary issued in exchange for, or the net proceeds of which are applied
entirely to substantially concurrently repay, refinance, refund or replace,
outstanding Indebtedness of the Company or any of its Subsidiaries (the
"Refinanced Indebtedness"), to the extent such Indebtedness

(a) is issued in a principal amount (or if such Indebtedness is issued
at an original issue discount, is issued at an original issue price) not
exceeding the outstanding principal amount (or, if such Refinanced
Indebtedness was issued at an original issue discount, not exceeding the
outstanding accreted principal amount) of such Refinanced Indebtedness, and

(b) if the Refinanced Indebtedness is Indebtedness of the Company and
ranks by its terms junior in right of payment to the Securities, (i) does
not have a final scheduled maturity and is not subject to any

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principal payments, including but not limited to payments upon mandatory or
optional redemption, prior to the dates of analogous payments under the
Refinanced Indebtedness, and (ii) has subordination provisions effective to
subordinate such Indebtedness to the Securities at least to the extent that
such Refinanced Indebtedness is subordinated to the Securities, and

(c) if the Refinanced Indebtedness is Indebtedness of the Company and
ranks by its terms pari passu in right of payment with the Securities, (i)
is pari passu or subordinated in right of payment to the Securities, (ii)
does not have a final scheduled maturity and is not subject to any
principal payments, including but not limited to payments upon mandatory or
optional redemption, prior to the dates of analogous payments under the
Refinanced Indebtedness, and (iii) is not secured by any Lien on any
property of the Company or any Subsidiary in addition to Liens securing the
Refinanced Indebtedness.

EVENTS OF DEFAULT

An Event of Default, with respect to the Senior Notes, means any one of the
following events shall have occurred and be continuing: (i) default by the
Company for 30 days in payment of any interest on the Senior Notes; (ii) default
by the Company in any payment of principal of or premium, if any, on the Senior
Notes when such payment becomes due and payable; (iii) default by the Company in
performance of any other covenant or agreement in the Indenture or under the
Senior Notes, which shall not have been remedied within 30 days after receipt of
written notice from the Trustee or from the holders of at least 25% in principal
amount of the Senior Notes then outstanding; (iv) upon an event of default
resulting in the acceleration of the maturity of any issue or issues of
Indebtedness of the Company and/or one or more Subsidiaries of any principal
amount of $10 million or more in the aggregate, and such default shall be
continuing for a period of 30 days without the Company or such Subsidiary, as
the case may be, discharging the Indebtedness or effecting a cure of such
default; (v) a judgment or order not covered by insurance for the payment of
money in excess of $10 million having been rendered against the Company or any
Subsidiary and such judgment or order shall continue unsatisfied and unstayed
for a period of 60 days; or (vi) certain events involving bankruptcy, insolvency
or reorganization of the Company or any Material Subsidiary; (vii) failure by
the Company to make at the final (but not any interim) fixed maturity of one or
more issues of Indebtedness a principal payment or principal payments
aggregating $10 million or more, which failure shall not have been remedied
within 30 days of the payment default that causes the aggregate amount of such
indebtedness to exceed $10 million, or (viii) the cessation of the full force
and effect of the Indenture, except as permitted therein. The Trustee may
withhold notice to the holders of the Senior Notes of any default or Event of
Default (except in payment of principal of, or premium, if any, or interest on
the Notes) if the Trustee considers it in the interest of the holders of the
Senior Notes to do so.

If an Event of Default occurs and is continuing with respect to the
Indenture, the Trustee or the Holders of not less than 25% in principal amount
of the Senior Notes outstanding may, and at the request of the Holders, the
Trustee shall declare the principal of and premium, if any, and accrued but
unpaid interest on all the Senior Notes to be due and payable. Upon such a
declaration, such principal, premium, if any, and interest will be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company or any Material
Subsidiary occurs and is continuing, the principal of and premium, if any, and
interest on all the Senior Notes will become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders
of the Senior Notes. If an Event of Default relating to item (iv) in the
preceding paragraph occurs, such acceleration will be automatically rescinded if
the Event of Default is cured by the Company or waived by the holders of the
relevant Indebtedness within 30 days after the occurrence of the Event of
Default. Under certain circumstances, the holders of a majority in principal
amount of the outstanding Senior Notes may rescind any such acceleration with
respect to the Senior Notes and its consequences.

The Indenture provides that no Holder may pursue any remedy under the
Indenture unless (i) the Trustee shall have received written notice from the
Holder of a continuing Event of Default, (ii) the Trustee shall have received a
request from holders of at least 25% in principal amount of the Senior Notes to
pursue such remedy, (iii) the Trustee shall have been offered indemnity
reasonably satisfactory to it, (iv) the Trustee shall have failed to act for a
period of 60 days after receipt of such notice and offer of indemnity, and

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(v) during such 60-day period, a majority of the Holders do not give the Trustee
directions inconsistent with the initial request; however, such provision does
not affect the right of a holder of a Note to sue for enforcement of any overdue
payment thereon.

The holders of a majority in principal amount of the Senior Notes then
outstanding have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee under the
Indenture, subject to certain limitations specified in the Indenture. The
Indenture will require the annual filing by the Company with the Trustee of a
written statement as to compliance with the covenants contained in the
Indenture.

MODIFICATION AND WAIVER

The Indenture provides that supplements and amendments to the Indenture or
the Senior Notes may be made by the Company, and the Trustee with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Senior Notes then outstanding; provided that no such amendment or waiver
may, without the consent of each Holder affected, (i) reduce the principal
amount of Senior Notes whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any Senior
Note, or alter the provisions with respect to the redemption of the Senior Notes
in a manner adverse to the Holders, (iii) reduce the rate of or change the time
for payment of interest on any Senior Note, (iv) make any Senior Note payable in
money other than U.S. Legal Tender, (v) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of, or premium, if any, or interest on, the Senior
Notes, (vi) waive a redemption payment with respect to any Senior Notes, or
(vii) make any change in certain sections of the Indenture.

The Indenture provides that supplements and amendments to the Indenture may
be made by the Company and the Trustee without the consent of any Holder to: (i)
cure any ambiguity, correct or supplement any provision therein which may be
inconsistent with any other provision therein, or to make any other provisions
with respect to matters or questions arising under the Indenture which shall not
be inconsistent with the provisions of the Indenture, provided that such
amendment does not adversely affect the rights of the Holders, (ii) evidence the
succession of another corporation to the Company, and provide for the assumption
by such successor of the Company's obligations to the Holders under the
Indenture and the Senior Notes, (iii) to provide for uncertificated Senior Notes
in addition to or in place of certificated Senior Notes, (iv) make any change
that would provide additional rights or benefits to holders, or not adversely
affect the legal rights of the Holder under the Indenture or (v) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act of 1939.

The Indenture provides that the holders of a majority in aggregate
principal amount of the Senior Notes then outstanding may waive any existing
Default or Event of Default under the Indenture or the Senior Notes, except a
default or Event of Default in the payment of principal, or premium, if any, or
interest.

DISCHARGE AND TERMINATION

The Indenture provides that the Indenture shall cease to be of further
effect (subject to certain exceptions) when (i) all outstanding Senior Notes
theretofore authenticated and delivered (other than destroyed, lost or stolen
Senior Notes that have been replaced or paid) have been delivered to the Trustee
for cancellation or (ii) (A) the Senior Notes mature within one year or all of
them are to be called for redemption within one year under arrangements
satisfactory to the Trustee, (B) the Company irrevocably deposits in trust with
the Trustee during such one-year period, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust funds
solely for the benefit of the Holders, money or U.S. Government Obligations
sufficient to pay principal and interest on the Senior Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it under
the Indenture or the Senior Notes, (C) no Event of Default with respect to the
Senior Notes shall have occurred and be continuing on the date of such deposit,
(D) such deposit will not result in a breach or violation of, or constitute a
default under, the Indenture or any other agreement or instrument to which the
Company is a party or by which either

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is bound and (E) the Company has delivered to the Trustee any required Officers'
Certificate and Opinion of Counsel.

GOVERNING LAW

The Indenture and each Senior Note are governed by, and construed in
accordance with, the laws of the State of New York, except as may otherwise be
required by mandatory provisions at law, but without giving effect to principles
of conflicts of law.

THE TRUSTEE

American Bank National Association will be the Trustee under the Indenture.
Its address is 101 East 5th Street, St. Paul, MN 55101.

The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined in
the Trust Indenture Act of 1939), it must eliminate such conflict or resign.

The Indenture provides that in case an Event of Default shall occur (and be
continuing), the Trustee will be required to use the degree of care and skill of
a prudent man in the conduct of his own affairs. The Trustee will be under no
obligation to exercise any of its powers under the Indenture at the request of
any of the holders of the Senior Notes, unless such holders shall have offered
the Trustee indemnity reasonably satisfactory to it.

AUTHENTICATION

Two officers of the Company will sign each Senior Note on behalf of the
Company, in each case by manual or facsimile signature. The Company's seal will
be reproduced on each Senior Note and may be in facsimile form. A Senior Note
will not be valid until the Trustee or an Authenticating Agent manually signs
the certificate of authentication on the Senior Note. Each Senior Note will be
dated the date of its authentication.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 1,200,000 shares of
Class A Common Stock, $.01 par value, 100,000,000 shares of Class B Common
Stock, $.01 par value and 48,800,000 shares of preferred stock, $.01 par value
(the "Preferred Stock"). As of March 31, 1995, there were 1,200,000 outstanding
shares of Class A Common Stock and 43,966,645 outstanding shares of Class B
Common Stock.

The material terms of the Company's capital stock are summarized below. The
following description is a summary only, however, and is not intended to be
complete and is qualified by reference to the provisions of the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
bylaws and the agreements referred to in this summary description, copies of
each of which have been filed as exhibits to the Registration Statement of which
this Prospectus is a part. As used in this section, except as otherwise stated
or required by context, each reference to AmWest includes any successor by
merger, liquidation, consolidation or similar transaction and any wholly owned
subsidiary of such entity or such successor.

COMMON STOCK -- ALL CLASSES

Holders of Common Stock of all classes participate equally as to any
dividends or distributions on the Common Stock, except that dividends payable in
shares of Common Stock, or securities to acquire Common Stock, are paid in
Common Stock, or securities to acquire Common Stock, of the same class as that
held by the recipient of the dividend. Upon any liquidation, dissolution or
winding up of the Company, holders of Common Stock of all outstanding classes
are entitled, subject to the rights of preferred Stockholders, if any, to

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receive pro rata all of the assets of the Company available for distribution to
the stockholders. Holders of Common Stock have no preemptive, subscription,
conversion or redemption rights (other than conversion rights of AmWest and GPA
described below), and are not subject to further calls or assessments. Holders
of Common Stock have no right to cumulate their votes in the election of
directors. The Common Stock votes together as a single class, subject to the
right to a separate class vote in certain instances required by law.

CLASS B COMMON STOCK AND CLASS A COMMON STOCK

The holders of Class B Common Stock are entitled to one vote per share, and
the holders of Class A Common Stock are entitled to fifty votes per share, on
all matters submitted to a vote of common stockholders, except that voting
rights of non-U.S. citizens are limited as set forth below under "-- Limitation
on Voting by Foreign Owners."

As set forth under the heading "Principal Stockholders," the former
partners of AmWest currently own in the aggregate 100% of the outstanding Class
A Common Stock and 19.8% of the outstanding Class B Common Stock, which
collectively represent approximately 66.1% of the total voting power of the
outstanding Common Stock. In addition, those partners hold Warrants to acquire
an additional 3,514,150 shares of Class B Common Stock that, if exercised, would
increase their voting control to 68.4%. See "Principal Stockholders --
Stockholders' Agreement" below for a discussion of arrangements regarding the
composition of the Board of Directors of the Company.

Holders of Class A Common Stock may at any time elect to convert such
shares into an equal number of shares of Class B Common Stock. Class B Common
Stock is not convertible into Class A Common Stock.

PREFERRED STOCK

Pursuant to the Company's Certificate of Incorporation, the Company is
authorized to issue 48,800,000 shares of Preferred Stock. The Company's Board of
Directors by resolution may authorize the issuance of the Preferred Stock as a
class, in one or more series, having the number of shares, designations,
relative voting rights, dividend rights, liquidation and other rights
preferences, and limitations that the Board of Directors fixes without any
stockholder approval. No shares of Preferred Stock have been issued.

LIMITATION ON VOTING BY FOREIGN OWNERS

The Certificate of Incorporation defines "Foreign Ownership Restrictions"
as "applicable statutory, regulatory and interpretive restrictions regarding
foreign ownership or control of U.S. air carriers (as amended or modified from
time to time)." Such restrictions currently require that no more than 25% of the
voting stock of the Company be owned or controlled, directly or indirectly, by
persons who are not U.S. citizens ("Foreigners") for purposes of the Foreign
Ownership Restrictions, and that the Company's president and at least two-thirds
of its directors be U.S. citizens. The Certificate of Incorporation provides
that no shares of capital stock may be voted by or at the direction of
Foreigners, unless such shares are registered on a separate stock record (the
"Foreign Stock Record"). The Company's bylaws further provide that no shares
will be registered on the Foreign Stock Record if the amount so registered would
exceed the Foreign Ownership Restrictions. Registration on the Foreign Stock
Record is made in chronological order based on the date the Company receives a
written request for registration.

LIMITATION OF DIRECTOR LIABILITY AND INDEMNIFICATION

The Company's Certificate of Incorporation and Restated Bylaws
(collectively, the "Charter Documents") provide, to the fullest extent permitted
by Delaware law as it may from time to time be amended, that no director shall
be liable to the Company or any stockholder for monetary damages for breach of
fiduciary duty as a director. Delaware law currently provides that such waiver
may not apply to liability (i) for any breach of the director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law (governing
distributions to stockholders), or (iv) for any transaction from which the
director derived any improper personal benefit. The Charter Documents further
provide that

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the Company will indemnify each of its directors and officers to the full extent
permitted by Delaware law and may indemnify certain other persons as authorized
by law.

Additionally, America West has entered into written agreements with each
person who served as a director or executive officer of America West as of the
date of the Investment Agreement providing for similar indemnification of such
person and that no recourse or liability whatsoever with respect to the
Investment Agreement, the Plan or consummation of the transactions contemplated
thereby shall be had by or in the right of America West against such person.

DELAWARE BUSINESS COMBINATION STATUTE

Pursuant to the Plan, the Company has elected not to be governed by Section
203 of the Delaware General Corporation Law ("DGCL"). In general, Section 203 of
the DGCL prohibits a Delaware corporation from entering into a "business
combination" with an "interested stockholder" for a period of three years unless
certain exceptions are applicable. Pursuant to the statute, the Company's
election not to be governed by Section 203 will not become effective until the
first anniversary date of the Effective Date.

By opting out of Section 203, America West may be foregoing certain
"anti-takeover" protections that may otherwise be available to it under Section
203 in the event of an unsolicited takeover offer from a party other than
AmWest. However, given the limited protections provided by Section 203, the
significant holdings of Common Stock by AmWest after the Effective Date and
certain other factors, the Company does not believe that the protections
afforded by Section 203 are very significant or that an unsolicited takeover
offer is likely to occur.

With respect to a possible "business combination" or takeover attempt by
AmWest or its affiliates involving the Company, the protective provisions of
Section 203 would not apply to such a transaction because the Board of Directors
of the Company has previously approved of the transactions contemplated by the
Investment Agreement and otherwise described herein prior to the date such
agreement was entered into and prior to the date that AmWest acquired any shares
of Common Stock. However, pursuant to the Stockholders' Agreement, AmWest will
be precluded from consummating any "Business Combination" (as defined in the
Stockholders Agreement) with the Company for a three-year period commencing on
the Effective Date, unless such transaction is recommended or approved in
advance by at least three Independent Directors or a majority of the Common
Stock of the Company not held by AmWest and its affiliates.

DESCRIPTION OF WARRANTS

GENERAL

The Warrants were issued under a Warrant Agreement dated August 25, 1994
(the "Warrant Agreement") between the Company and First Interstate of
California, N.A. as warrant agent (the "Warrant Agent"). The material terms of
the Warrants and the Warrant Agreement are summarized below. The statements
under this caption relating to the Warrants and the Warrant Agreement are
summaries only, however, and do not purport to be complete. Such summaries make
use of terms defined in the Warrant Agreement and are qualified in their
entirety by express reference to the Warrant Agreement, which has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part. All
section references under this heading are references to sections of the Warrant
Agreement.

Each of the 5,850,016 Warrants offered hereby entitles the registered
holder to purchase from the Company one share of Class B Common Stock at a price
of $12.74 ("the Exercise Price") subject to adjustment as provided in the
Warrant Agreement. The Warrants are exercisable by the holders at any time
before August 25, 1999 (the "Expiration Date"). (Section 3.01)

CERTAIN TERMS OF THE WARRANTS

Exercise of Warrants. Warrants may be exercised by surrendering the
Warrant Certificate evidencing such Warrants at the Warrant Agent's Office with
the Election to Exercise form duly completed and executed. Surrendered Warrant
Certificates must be accompanied by payment in full to the Warrant Agent for the
account of the Company (i) in cash, (ii) by certified or official bank check or
(iii) by any combination of

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(i) or (ii) the Warrant Price for each share of Class B Common Stock as to which
Warrants are exercised and any applicable taxes that the Company is not required
to pay as set forth in Sections 4.08 or 6.01. (Section 3.02(a)).

The Company will not be required to issue fractional shares of Class B
Common Stock upon the exercise of the Warrants. In lieu thereof, the Company, at
its option, may purchase the fraction for an amount in cash equal to the
then-current market value of the fraction (as defined in Section 4.01(d)) or
issue scrip of the Company that is non-dividend bearing and non-voting and
exchangeable in combination with other similar scrip for the number of full
shares of Class B Common Stock represented thereby. (Section 3.03)

The Company has the right, except as limited by law or other agreement, to
purchase or otherwise acquire Warrants at such times, in such manner and for
such consideration as it may deem appropriate. (Section 3.04)

The Company will, at all times, reserve and keep available free of
preemptive rights out of its authorized and unissued Class B Common Stock, the
full number of shares of Class B Common Stock, if any, issuable if all
outstanding Warrants then exercisable were to be exercised. Any shares of Class
B Common Stock issued upon a Warrant holder's exercise of any Warrant shall be
validly authorized and issued, fully paid, non-assessable, free of preemptive
rights and free from all taxes (other than those required to be paid by the
holder or its transferees) liens, charges, security interests and claims created
or incurred by the Company in respect of the issuance thereof. (Sections
3.02(b); 4.06)

Adjustment of Warrant Price. The Warrant Price and the number of shares of
Class B Common Stock purchasable upon exercise of each Warrant are subject to
adjustment in certain events, including (a) the payment of a dividend in Common
Stock or certain combinations, subdivisions, or reclassifications of the Common
Stock, (b) the issuance to holders of Common Stock (without any charge to such
holders) of rights, options or warrants entitling the holders thereof to
purchase Common Stock (or securities convertible into Common Stock) at a price
per share less than the then-current market price per share, and (c) certain
distributions by the Company to holders of Common Stock of evidences of its
indebtedness or assets (excluding any cash dividend or distribution out of
retained earnings), all as described in the Warrant Agreement. The Company is
not required to make any adjustment to the Warrant Price unless such adjustment
could require an increase or decrease of at least $.05 in the Warrant Price then
subject to adjustment; provided, however, that any adjustments that are not made
for this reason must be carried forward and taken into account in any subsequent
adjustment. (Section 4.01) The Company may, at its option, reduce the Warrant
Price at any time.

Rights Upon Consolidation, Merger, Sale, Transfer or Reclassification. In
the event of certain consolidations with or mergers of the Company into another
corporation or in the event of certain leases, sales or conveyances of the
property of the Company to another corporation, the holder of each outstanding
Warrant shall have the right to receive, upon exercise of the Warrant, the kind
and amount of shares, securities, property or cash receivable upon such
consolidation, merger, lease, sale or conveyance by a holder of one share of
Class B Common Stock. (Section 4.05(a))

In the event of any liquidation, dissolution or winding up of the affairs
of the Company, each holder of a Warrant may receive, upon exercise of such
Warrant in accordance with the Warrant Agreement, the same kind and amount of
any stock, securities or assets as may be issuable, distributable or payable on
any such dissolution, liquidation, or winding up with respect to each share of
Class B Common Stock of the Company. (Section 4.05(b))

In the event of certain reclassifications or changes of the shares of Class
B Common Stock issuable upon exercise of the Warrants or in the event of the
consolidation or merger of another corporation into the Company in which the
Company is the continuing corporation in which the holders of the shares of
Common Stock thereafter receive shares, other securities, property or cash for
such shares of Common Stock, each holder of a Warrant shall have the right to
receive, upon exercise of the Warrant, the kind and amount of shares, other
securities, property or cash receivable upon such reclassification or change.
(Section 4.05(c))

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Rights as Warrantholders. A holder of Warrants does not have any rights
whatsoever as a stockholder of the Company, either at law or equity, including
but not limited to the right to vote at, or to receive notice of, any meeting of
stockholders of the Company. The consent of any holder is not required with
respect to any action or proceeding of the Company nor do holders, by reason of
the ownership or possession of a Warrant, have any right to receive any cash
dividends, stock dividends, allotments or rights, or other distributions paid,
allotted or distributed or distributable to the stockholders of the Company. A
holder of a Warrant shall not have any rights unless the right is expressly
conferred by the Warrant Agreement or by a Warrant Certificate held by the
holder. (Section 5.01)

PLAN OF DISTRIBUTION

Selling Securityholders may sell or distribute their Securities in
transactions through such underwriters (as may be approved by the Company),
brokers, dealers or agents from time to time or through privately negotiated
transactions, including in distributions to shareholders or partners or other
persons affiliated with one or more Selling Securityholder; provided, however,
that pursuant to the Stockholders' Agreement, certain of the Selling
Securityholders have agreed that (i) they will not dispose of any Common Stock
(other than to an affiliate of the transferor) if, after giving effect thereto
and to any concurrent transaction, the total number of shares of Class B Common
Stock owned by the transferor is less than 200% of the total number of shares of
Class A Common Stock beneficially owned by the transferor; provided, however,
that the preceding will not prohibit any person from transferring or otherwise
disposing of all shares of Common Stock owned by such person; (ii) all of the
Securities issued to the Selling Securityholders shall bear the legend that the
Securities may not be sold, transferred or otherwise disposed of except in
accordance with applicable securities laws; and (iii) the former partners of
AmWest have agreed that subject to certain exceptions they will not, prior to on
or about August 25, 1997, sell in a single transaction or related transaction
51% or more of the combined voting power of all shares of Common Stock then
outstanding unless other holders of Common Stock shall have been given a
reasonable opportunity to participate therein on a pro rata basis and at the
same price per share and on the same economic terms and conditions applicable to
AmWest. See "Principal Stockholders -- Stockholders' Agreement."

The distribution of the Securities may be effected from time to time in one
or more transactions (which may involve crosses or block transactions) (i) in
the over-the-counter market, (ii) in transactions otherwise than in the
over-the-counter market or (iii) through the writing of options on the
Securities (whether such options are listed on an options exchange or
otherwise). Any of such transactions may be effected at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. If the Selling Securityholders effect such
transactions by selling Securities to or through underwriters, brokers, dealers
or agents, such underwriters, brokers, dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Securityholders or commissions from purchasers of Securities for whom
they may act as agent (which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents might be in excess of those
customary in the types of transactions involved). The Selling Securityholders
and any brokers, dealers or agents that participate in the distribution of the
Securities might be deemed to be underwriters, and any profit on the sale of
Securities by them and any discounts, concessions or commissions received by any
such underwriters, brokers, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. Selling Securityholders may
pledge their Securities from time to time in connection with such
Securityholders' financing arrangements. Copernicus may pledge some of its Class
B Common Stock to Bear, Stearns Securities Corp. To the extent any such pledgees
exercise their rights to foreclose on any such pledge, and sell the underlying
Securities, such pledgees may be deemed underwriters with respect to such
Securities and sales by them may be effected under this Prospectus. The Company
will not receive any of the proceeds from the sale of any of the Securities by
the Selling Securityholders.

The Investment Agreement Senior Notes purchased by Fidelity Copernicus
Fund, L.P. ("Copernicus") pursuant to the Investment Agreement (the "Repurchase
Notes") are subject to a repurchase agreement between Copernicus and Lehman
Government Securities Inc. ("LGSI") pursuant to which the notes were sold to
LGSI shortly after their issuance to Copernicus. The agreement is terminable
upon demand by either

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party. During the term of the agreement, Copernicus will be entitled to all
interest or other payments of any nature with respect to the Repurchase Notes.
Upon termination, Copernicus will be required to repurchase, and LGSI will be
obligated to sell, the Repurchase Notes at a price equal to the price paid by
LGSI to purchase the Repurchase Notes from Copernicus, plus an amount that
provides to LGSI a rate of return on the purchase price based on a spread over
LIBOR. LGSI will receive a fee for entering into the repurchase agreement. To
ensure its ability to fulfill its obligation to repurchase the Repurchase Notes,
Copernicus is obligated to maintain certain margin requirements with LGSI. In
the event that Copernicus fails to repurchase the Repurchase Notes or maintain
the required margin, or Copernicus becomes insolvent, LGSI is permitted to sell
the Repurchase Notes. LGSI may enter into one or more similar repurchase
agreements with respect to the Repurchase Notes with other counterparties from
time to time, pursuant to which LGSI may sell the Repurchase Notes to a
counterparty and agree to repurchase the Repurchase Notes upon termination of
the agreement. This Prospectus relates to all offers and sales of the Repurchase
Notes by Copernicus upon termination of the repurchase agreement as well as all
offers and sales of the Repurchase Notes in connection with any of the foregoing
transactions, including, without limitation, the repurchase agreement between
LGSI and Copernicus (including any remedies thereunder) and any repurchase
agreement between LGSI and any counterparty other than Copernicus. LGSI may be
deemed to be an underwriter with respect to the Repurchase Notes by virtue of
any of such sales.

At the time a particular offer of Securities is made, a Prospectus
Supplement, to the extent required, will be distributed which will set forth the
aggregate amount and type of Securities being offered, the names of the Selling
Securityholders, the purchase price, the amount of expenses of the offering and
the terms of the offering, including the name or names of any underwriters,
brokers, dealers or agents, any discounts, commissions and other items
constituting compensation from the Selling Securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.

Under the Exchange Act and applicable rules and regulations promulgated
thereunder, any person engaged in a distribution of any of the Securities may
not simultaneously engage in market making activities with respect to the
Securities for a period, depending upon certain circumstances, of either two
days or nine days prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Securityholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of any of the
Securities by the Selling Securityholders.

Under the securities laws of certain states, the Securities may be sold in
such states only through registered or licensed brokers or dealers. In addition,
in certain states the Securities may not be sold unless the Securities have been
registered or qualify for sale in such state or an exemption from registration
or qualification is available and is complied with.

LEGAL MATTERS

The validity of the shares of Common Stock and certain legal matters
relating to the Senior Notes and Warrants offered hereby have been passed upon
for the Company by Andrews & Kurth L.L.P., Houston, Texas.

66
69

EXPERTS

The financial statements and financial statement schedule of America West
Airlines, Inc., as of December 31, 1994 and 1993, and for the period August 26,
1994 to December 31, 1994, the period January 1, 1994 to August 25, 1994 and for
each of the years in the two-year period ended December 31, 1993, have been
included herein and in the registration statements in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

The reports of KPMG Peat Marwick LLP for the period August 26, 1994 to
December 31, 1994, the period January 1, 1994 to August 25, 1994, and as of
December 31, 1994 contain an explanatory paragraph that states the financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis than those of the Predecessor Company and therefore, are not
comparable in all respects.

67
70

AMERICA WEST AIRLINES, INC.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994

Independent Auditors' Report........................................................ F-2
Balance Sheets as of December 31, 1994 and 1993..................................... F-3
Statements of Operations for the periods August 26, 1994 to December 31, 1994,
January 1, 1994 to August 25, 1994 and the Years ended December 31, 1993 and
1992............................................................................. F-4
Statements of Cash Flows for the periods August 26, 1994 to December 31, 1994,
January 1, 1994 to August 25, 1994 and the Years ended December 31, 1993 and
1992............................................................................. F-5
Statements of Stockholders' Equity (Deficiency) for the periods August 26, 1994 to
December 31, 1994, January 1, 1994 to August 25, 1994 and the Years ended
December 31, 1993 and 1992....................................................... F-6
Notes to Financial Statements....................................................... F-7
CONDENSED FINANCIAL STATEMENTS AS OF MARCH 31, 1995
Condensed Balance Sheets as of March 31, 1995 (Unaudited) and December 31, 1994..... F-24
Condensed Statements of Operations for the three month periods ended March 31, 1995
and 1994 (Unaudited)............................................................. F-25
Condensed Statements of Cash Flows for the three month periods ended March 31, 1995
and 1994 (Unaudited)............................................................. F-26
Notes to Condensed Financial Statements............................................. F-27

F-1
71

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
America West Airlines, Inc.

We have audited the accompanying balance sheets of America West Airlines,
Inc. as of December 31, 1994 and 1993, and the related statements of operations,
cash flows and stockholders' equity (deficiency) for the period August 26, 1994
to December 31, 1994, the period January 1, 1994 to August 25, 1994, and for
each of the years in the two-year period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurances about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of America West Airlines, Inc.
as of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the period August 26, 1994 to December 31, 1994, the period January 1,
1994 to August 25, 1994, and for each of the years in the two-year period ended
December 31, 1993 in conformity with generally accepted accounting principles.

As discussed in Notes 1 and 2 to the financial statements, on August 25,
1994, America West Airlines, Inc. emerged from bankruptcy. The financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis than those of the Predecessor Company and, therefore, are not
comparable in all respects.

KPMG Peat Marwick LLP
Phoenix, Arizona
February 24, 1995

F-2
72

AMERICA WEST AIRLINES, INC.

BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS EXCEPT SHARE DATA)

REORGANIZED | PREDECESSOR
COMPANY | COMPANY
----------- | -----------
1994 | 1993
----------- | -----------
|
ASSETS |
Current assets: |
Cash and cash equivalents......................................................................... $ 182,581 | $ 99,631
Accounts receivable, less allowance for doubtful accounts of $3,531 in 1994 and $3,030 in 1993.... 57,474 | 65,744
Expendable spare parts and supplies, less allowance for obsolescence of $483 in 1994 and $7,231 |
in 1993......................................................................................... 24,179 | 28,111
Prepaid expenses.................................................................................. 29,284 | 34,939
----------- | -----------
Total current assets........................................................................ 293,518 | 228,425
----------- | -----------
Property and equipment: |
Flight equipment.................................................................................. 452,177 | 872,104
Other property and equipment...................................................................... 92,169 | 180,607
----------- | -----------
544,346 | 1,052,711
Less accumulated depreciation and amortization.................................................... 15,882 | 385,776
----------- | -----------
528,464 | 666,935
Equipment purchase deposits....................................................................... 26,074 | 51,836
----------- | -----------
554,538 | 718,771
----------- | -----------
Restricted cash..................................................................................... 28,578 | 46,296
Reorganization value in excess of amounts allocable to identifiable assets, net..................... 645,703 | --
Other assets, net................................................................................... 22,755 | 23,251
----------- | -----------
$1,545,092 | $1,016,743
=========== | ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) |
Current liabilities: |
Current maturities of long-term debt.............................................................. $ 65,198 | $ 125,271
Accounts payable.................................................................................. 77,569 | 62,957
Air traffic liability............................................................................. 127,356 | 118,479
Accrued compensation and vacation benefits........................................................ 15,776 | 11,704
Accrued interest.................................................................................. 13,109 | 8,295
Accrued taxes..................................................................................... 27,061 | 14,114
Other accrued liabilities......................................................................... 15,376 | 11,980
----------- | -----------
Total current liabilities................................................................... 341,445 | 352,800
----------- | -----------
Estimated liabilities subject to Chapter 11 proceedings............................................. -- | 381,114
Long-term debt, less current maturities............................................................. 465,598 | 396,350
Manufacturers' and deferred credits................................................................. 116,882 | 73,592
Other liabilities................................................................................... 25,721 | 67,149
Commitments and contingencies |
Stockholders' equity (deficiency): |
Preferred stock, $.01 par value. Authorized 48,800,000 shares; no shares issued at December 31, |
1994............................................................................................ -- | --
Class A common stock, $.01 par value. Authorized 1,200,000 shares; issued and outstanding |
1,200,000 shares at December 31, 1994........................................................... 12 | --
Class B common stock, $.01 par value. Authorized 100,000,000 shares; issued and outstanding |
43,936,272 shares at December 31, 1994.......................................................... 439 | --
Preferred stock, $.25 par value. Authorized 50,000,000 shares; Series C 9.75% convertible |
preferred stock, issued and outstanding 73,099 shares at December 31, 1993; $1.33 per share |
cumulative dividend............................................................................. -- | 18
Common stock, $.25 par value. Authorized 90,000,000 shares; issued and outstanding 25,291,102 at |
December 31, 1993............................................................................... -- | 6,323
Additional paid-in capital........................................................................ 587,149 | 197,010
Retained earnings (deficit)....................................................................... 7,846 | (438,626)
----------- | -----------
595,446 | (235,275)
Less deferred compensation and notes receivable -- employee stock purchase plans.................. -- | 18,987
----------- | -----------
Total stockholders' equity (deficiency)..................................................... 595,446 | (254,262)
----------- | -----------
$1,545,092 | $1,016,743
=========== | ==========

See accompanying notes to financial statements.

F-3
73

AMERICA WEST AIRLINES, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)

REORGANIZED | PREDECESSOR COMPANY
COMPANY | -----------------------------------------
------------- | PERIOD FROM
PERIOD FROM | JANUARY 1 YEARS ENDED DECEMBER 31,
AUGUST 26 TO | TO
DECEMBER 31, | AUGUST 25, -------------------------
1994 | 1994 1993 1992
------------- | ----------- ---------- ----------
|
Operating revenues: |
Passenger................................................ $ 437,775 | $ 882,140 $1,246,564 $1,214,816
Cargo.................................................... 16,648 | 27,645 40,161 42,077
Other.................................................... 15,343 | 29,243 38,639 37,247
------------- | ----------- ---------- ----------
Total operating revenues............................. 469,766 | 939,028 1,325,364 1,294,140
------------- | ----------- ---------- ----------
Operating expenses: |
Salaries and related costs............................... 117,562 | 213,722 305,429 324,255
Rentals and landing fees................................. 90,822 | 173,710 274,708 338,391
Aircraft fuel............................................ 58,165 | 100,646 166,313 186,042
Agency commissions....................................... 37,265 | 78,988 106,368 106,661
Aircraft maintenance materials and repairs............... 17,590 | 28,109 31,000 38,366
Depreciation and amortization............................ 26,684 | 56,694 81,894 86,981
Restructuring charges.................................... -- | -- -- 31,316
Other.................................................... 82,807 | 179,653 238,598 256,940
------------- | ----------- ---------- ----------
Total operating expenses............................. 430,895 | 831,522 1,204,310 1,368,952
------------- | ----------- ---------- ----------
Operating income (loss).............................. 38,871 | 107,506 121,054 (74,812)
------------- | ----------- ---------- ----------
Nonoperating income (expenses): |
Interest income.......................................... 3,834 | 470 728 1,418
Interest expense (contractual interest of $44,747, |
$72,961 and $73,931 for the periods ended August 25, |
1994, and December 31, 1993 and 1992, respectively).... (22,636) | (33,998) (54,192) (55,826)
Loss on disposition of property and equipment............ (398) | (1,659) (4,562) (1,283)
Reorganization expense, net.............................. -- | (273,659) (25,015) (16,216)
Other, net............................................... 65 | 131 (89) 14,958
------------- | ----------- ---------- ----------
Total nonoperating expenses, net..................... (19,135) | (308,715) (83,130) (56,949)
------------- | ----------- ---------- ----------
Income (loss) before income taxes and extraordinary |
item............................................... 19,736 | (201,209) 37,924 (131,761)
------------- | ----------- ---------- ----------
Income taxes............................................... 11,890 | 2,059 759 --
------------- | ----------- ---------- ----------
Income (loss) before extraordinary item.............. 7,846 | (203,268) 37,165 (131,761)
------------- | ----------- ---------- ----------
Extraordinary gain on elimination of debt.................. -- | 257,660 -- --
------------- | ----------- ---------- ----------
Net income (loss).................................... $ 7,846 | $ 54,392 $ 37,165 $ (131,761)
============= | =========== ========= =========
Earnings (loss) per share: |
Primary: |
Income (loss) before extraordinary item................ $ .17 | $ (7.03) $ 1.50 $ (5.58)
Extraordinary item..................................... -- | 9.02 -- --
------------- | ----------- ---------- ----------
Net income (loss).................................... $ .17 | $ 1.99 $ 1.50 $ (5.58)
============= | =========== ========= =========
Fully Diluted: |
Income (loss) before extraordinary item................ $ .17 | $ (4.96) $ 1.04 $ (5.58)
Extraordinary item..................................... -- | 6.37 -- --
------------- | ----------- ---------- ----------
Net income (loss).................................... $ .17 | $ 1.41 $ 1.04 $ (5.58)
============= | =========== ========= =========
Shares used for computation: |
Primary.................................................. 45,127 | 28,550 27,525 23,914
============= | =========== ========= =========
Fully diluted............................................ 45,127 | 40,452 41,509 23,914
============= | =========== ========= =========

See accompanying notes to financial statements.

F-4
74

AMERICA WEST AIRLINES, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

REORGANIZED | PREDECESSOR COMPANY
COMPANY | --------------------------------------
------------- | PERIOD FROM
PERIOD FROM | JANUARY 1 YEARS ENDED DECEMBER
AUGUST 26 TO | TO 31,
DECEMBER 31, | AUGUST 25, ----------------------
1994 | 1994 1993 1992
------------- | ----------- -------- ---------
|
Cash flows from operating activities: |
Net income (loss)........................................... $ 7,846 | $ 54,392 $ 37,165 $(131,761)
Adjustments to reconcile net income (loss) to cash provided |
by operating activities: |
Depreciation and amortization............................. 15,538 | 56,694 81,894 86,981
Amortization of deferred overhauls........................ 356 | -- -- --
Amortization of reorganization value in excess of amounts |
allocable to identifiable assets........................ 11,145 | -- -- --
Amortization of manufacturers' and deferred credits....... (3,961) | (2,966) (5,186) (5,869)
Loss on disposition of property and equipment............. 398 | 1,659 4,562 1,283
Restructuring charges..................................... -- | -- -- 31,316
Reorganization items...................................... -- | 185,226 18,167 3,188
Extraordinary gain on extinguishment of debt.............. -- | (257,660) -- --
Other..................................................... 1,178 | (383) (554) 866
|
Changes in operating assets and liabilities: |
Decrease (increase) in accounts receivable, net........... 27,439 | (18,769) (927) 19,418
Decrease (increase) in spare parts and supplies, net...... 1,165 | 397 6,320 (2,384)
Decrease in prepaid expenses.............................. 4,371 | 1,284 2,627 812
Decrease (increase) in other assets and restricted cash... 1,219 | 12,971 (5,295) (1,141)
Increase (decrease) in accounts payable................... (17,289) | (15,557) 9,014 (8,473)
Increase (decrease) in air traffic liability.............. (26,452) | 30,510 8,749 30,723
Increase (decrease) in accrued compensation |
and vacation benefits................................... (11,667) | 15,739 (1,300) (1,491)
Increase in accrued interest.............................. 7,517 | 4,694 10,368 25,640
Increase (decrease) in accrued taxes...................... (2,104) | 25,999 (1,764) 2,968
Increase (decrease) in other accrued liabilities.......... (13,785) | 67,429 644 18,204
Increase (decrease) in other liabilities.................. (4,996) | (19,443) (11,126) 6,465
------------- | ----------- -------- ---------
Net cash provided by (used in) operating activities..... (2,082) | 142,216 153,358 76,745
|
Cash flows from investing activities: |
Purchases of property and equipment......................... (14,658) | (61,271) (54,324) (69,208)
Decrease in equipment purchase deposits..................... -- | -- -- 14,425
Proceeds from disposition of property....................... 600 | 334 3,715 383
------------- | ----------- -------- ---------
Net cash used in investing activities................... (14,058) | (60,937) (50,609) (54,400)
|
Cash flows from financing activities: |
Proceeds from issuance of DIP financing..................... -- | -- -- 53,000
Proceeds from issuance of debt.............................. -- | 100,000 -- 22,804
Repayment of debt including DIP financing................... (23,355) | (173,699) (77,501) (75,871)
Issuance of common stock.................................... 3 | 114,862 -- --
------------- | ----------- -------- ---------
Net cash provided by (used in) financing activities..... (23,352) | 41,163 (77,501) (67)
------------- | ----------- -------- ---------
Net increase (decrease) in cash and cash equivalents.... (39,492) | 122,442 25,248 22,278
------------- | ----------- -------- ---------
Cash and cash equivalents at beginning of period.............. 222,073 | 99,631 74,383 52,105
------------- | ----------- -------- ---------
Cash and cash equivalents at end of period.................... $ 182,581 | $ 222,073 $ 99,631 $ 74,383
============ | =========== ======== =========

See accompanying notes to financial statements.

F-5
75
AMERICA WEST AIRLINES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIODS AUGUST 26 TO DECEMBER 31, 1994, JANUARY 1 TO AUGUST 25, 1994
AND THE YEARS ENDED DECEMBER 31, 1993, AND 1992
(IN THOUSANDS EXCEPT PER SHARE AND SHARE AMOUNTS)

DEFERRED
COMPENSATION
AND NOTES
CONVERTIBLE CLASS A CLASS B ADDITIONAL RETAINED RECEIVABLE --
PREFERRED COMMON COMMON COMMON PAID-IN EARNINGS/ EMPLOYEE STOCK
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT) PURCHASE PLANS TOTAL
----------- ------- ------- ------- ---------- ----------- ----------------- ---------

Balance at January 1,
1992...................... $ 91 $-- $ -- $5,904 $ 191,825 $(342,358) $ (21,972) $(166,510)
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Issuance of 346,661 shares
of common stock pursuant
to convertible
subordinated
debentures............... -- -- -- 86 3,599 -- -- 3,685
Employee restricted stock
deferred compensation.... -- -- -- -- -- -- 101 101
Employee stock purchase
plan:
Issuance of 7,305 shares
of common stock at:
$.19-$2.63 per share..... -- -- -- 2 (13) -- 81 70
Deferred compensation.... -- -- -- -- (4) -- 1,478 1,474
Preferred stock dividends
Series B: $5.41 per
share.................. -- -- -- -- -- (1,575) -- (1,575)
Series C: $1.33 per
share.................. -- -- -- -- -- (97) -- (97)
Net loss................... -- -- -- -- -- (131,761) -- (131,761)
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Balance at December 31,
1992..................... 91 -- -- 5,992 195,407 (475,791) (20,312) (294,613)
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Issuance of 170,173 shares
of common stock pursuant
to Series B convertible
subordinated
debentures............... -- -- -- 43 1,896 -- -- 1,939
Issuance of 1,164,596
shares of common stock
pursuant to convertible
preferred stock.......... (73) -- -- 291 (218) -- -- --
Employee restricted stock
deferred compensation.... -- -- -- -- -- -- 21 21
Employee stock purchase
plan:
Cancellation of 11,330
shares of common stock
at: $.22-$1.59 per
share.................... -- -- -- (3 ) (38) -- 49 8
Deferred compensation.... -- -- -- -- (37) -- 1,255 1,218
Net income................. -- -- -- -- -- 37,165 -- 37,165
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Balance at December 31,
1993..................... 18 -- -- 6,323 197,010 (438,626) (18,987) (254,262)
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Issuance of 336,277 shares
of common stock pursuant
to convertible preferred
stock dividends.......... -- -- -- 84 2,932 -- -- 3,016
Employee stock purchase
plan:
Cancellation of 7,678
shares of common stock
at:
$1.19-$4.03 per share.... -- -- -- (2 ) (49) -- 43 (8)
Deferred compensation.... -- -- -- -- (1) -- 606 605
Issuance of 108,825 shares
of common stock pursuant
to exercise of stock
options.................. -- -- -- 27 166 -- -- 193
Net income................. -- -- -- -- -- 54,392 -- 54,392
Eliminate predecessor
equity accounts in
connection with fresh
start.................... (18) -- -- (6,432) (200,058) 206,508 -- --
Eliminate employee stock
receivable............... -- -- -- -- -- (18,338) 18,338 --
Record excess of
reorganization value over
identifiable assets...... -- -- -- -- -- 668,702 -- 668,702
Sale of 1,200,000 shares of
Class A common
stock and 14,000,000
shares of Class B common
stock.................... -- 12 140 -- 114,710 -- -- 114,862
Issuance of 29,925,000
shares of new Class B
common stock............. -- -- 299 -- 472,339 (472,638) -- --
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Balance at August 25,
1994..................... -- 12 439 -- 587,049 -- -- 587,500
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Issuance of 272 shares of
common stock pursuant to
exercise of stock
warrants................. -- -- -- -- 3 -- -- 3
Issuance of 11,000 shares
of restricted stock...... -- -- -- -- 97 -- -- 97
Net income................. -- -- -- -- -- 7,846 -- 7,846
----- ------- ------- ------- ---------- ----------- ----------------- ---------
Balance at December 31,
1994..................... $ -- $12 $ 439 $ -- $ 587,149 $ 7,846 $ -- $ 595,446
========= ====== ====== ======= ========= ========== =============== =========

See accompanying notes to financial statements.

F-6
76

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1993 AND 1992

America West Airlines, Inc., (the "Predecessor Company") filed a voluntary
petition on June 27, 1991, to reorganize under Chapter 11 of the U.S. Bankruptcy
Code. On August 10, 1994, the Plan of Reorganization ("Plan"), filed by the
Predecessor Company, was confirmed and became effective on August 25, 1994 (the
"Effective Date"). On August 25, 1994, America West Airlines, Inc., (the
"Reorganized Company" or the "Company") adopted fresh start reporting in
accordance with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") of the American Institute
of Certified Public Accountants. Accordingly, the Company's post-reorganization
balance sheet and statement of operations have not been prepared on a consistent
basis with such pre-reorganization financial statements and are not comparable
in all respects to financial statements prior to reorganization. For accounting
purposes, the inception date of the Reorganized Company is deemed to be August
26, 1994. A vertical black line is shown in the financial statements to separate
the Reorganized Company from the Predecessor Company since they have not been
prepared on a consistent basis of accounting.

1. CHAPTER 11 REORGANIZATION

The following occurred upon the Effective Date:

- The partners of AmWest Partners, L.P. ("AmWest"), a limited partnership
which includes TPG Partners, L.P. ("TPG"); Continental Airlines, Inc.
("Continental"); and Mesa Airlines, Inc. ("Mesa"); together with Lehman
Brothers, Inc. ("Lehman") and Fidelity Investments ("Fidelity"), as
assignees of AmWest, invested $205.3 million in consideration for the
issuance of securities by the Reorganized Company, consisting of (i)
1,200,000 shares of Class A Common Stock at a price of $7.467 per share;
(ii) 12,981,636 shares of Class B Common Stock, consisting of 12,259,821
shares at a price of $7.467 per share and 721,815 shares at $8.889 per
share (representing shares acquired as a result of cash elections made by
unsecured creditors); (iii) 2,769,231 Warrants to purchase shares of
Class B Common Stock at an exercise price of $12.74 per share and (iv)
$100 million principal amount of 11 1/4% Senior Unsecured Notes, due
September 1, 2001. AmWest was dissolved immediately after the Effective
Date with all rights being delegated to the partners and assignees of
AmWest.

- Pre-existing equity interests of the Company were cancelled, the
Company's obligations to certain prepetition creditors were restructured
and general unsecured nonpriority prepetition creditors received, in full
satisfaction of their claims, their pro rata share of approximately
26,053,185 shares of Class B Common Stock and $6,416,214 in cash. Holders
of the Company's pre-existing common equity interests received, on a pro
rata basis, 2,250,000 shares of Class B Common Stock and Warrants to
purchase 6,230,769 shares of Class B Common Stock. In addition, pursuant
to the exercise of subscription rights, holders of pre-existing equity
interests received 1,615,179 shares of Class B Common Stock for an
aggregate purchase price of $14,357,326 ($8.889 per share), including
holders of pre-existing preferred equity interests. TPG and Fidelity, the
holders of preferred equity interests of the Predecessor Company received
their pro rata share of (i) $500,000 in cash and (ii) 125,000 shares of
Class B Common Stock for an aggregate purchase price of $1,111,125.

- The Company entered into certain Alliance Agreements with Continental and
Mesa relating to code-sharing, schedule coordination and certain other
relationships and agreements. With respect to Mesa, a pre-existing code
share agreement was extended to August 2004.

F-7
77

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

- The Company executed letter agreements with Fidelity and Lehman
relating to the settlement of certain prepetition claims. On October
14, 1994, the Company issued an additional $23 million of 11 1/4%
Senior Unsecured Notes, due September 2001, and made a prepayment of a
$1.3 million lease obligation. Additionally, cash payments of $2.1
million and $1.2 million were made to Fidelity and Lehman,
respectively.

- The Plan also provided for many other matters, including the
satisfaction of certain other prepetition claims in accordance with
negotiated settlement agreements, the disposition of the various
types of claims asserted against the Company, the adherence to the
Company's aircraft lease agreements, the amendment of the Company's
aircraft purchase agreements and the release of the Company's
employees from all obligations arising under the Company's stock
purchase plan in consideration for the cancellation of the shares of
Predecessor Company stock securing such obligations.

As of December 31, 1994, distributions on $295 million of allowed general
unsecured claims had been made. Approximately 21.6 million shares of the
Company's Class B Common Stock and cash proceeds equivalent to an additional
524,000 shares have been distributed in settlement. The remaining shares will be
distributed as the remaining general unsecured claims are allowed. To the extent
that the total allowed amount of claims is less than the $345 million reserve
set by the Bankruptcy Court, the holders of such claims will receive a
supplemental distribution.

Reorganization expense recorded by the Predecessor Company consisted of the
following:

YEARS ENDED
PERIOD FROM DECEMBER 31,
JANUARY 1 TO -------------------
AUGUST 25, 1994 1993 1992
--------------- ------- -------
(IN THOUSANDS)

Professional fees and other expenses related to
the Chapter 11 proceedings...................... $ 31,959 $ 9,419 $16,498
Adjustments of assets and liabilities to fair
value........................................... 166,829 -- --
Provisions for settlement of claims............... 66,626 18,231 1,748
Reorganization success bonuses.................... 11,956 -- --
Interest income................................... (3,711) (2,635) (2,030)
--------- ------- -------
$ 273,659 $25,015 $16,216
========= ======= =======

2. FRESH START REPORTING

In connection with its emergence from bankruptcy, the Company adopted fresh
start reporting in accordance with SOP 90-7. The fresh start reporting common
equity value of $587.5 million was determined by the Company with the assistance
of its financial advisors. The significant factors used in the determination of
this value were analyses of industry, economic and overall market conditions and
the historical and estimated performance of the Company as well as of the
airline industry, discussions with various potential investors and certain other
financial analyses.

Under fresh start reporting, the reorganization value of the entity has
been allocated to the Company's assets and liabilities on a basis substantially
consistent with purchase accounting. The portion of reorganization value not
attributable to specific tangible assets has been recorded as "Reorganization
Value in Excess of Amounts Allocable to Identifiable Assets" in the accompanying
balance sheet as of December 31, 1994. The fresh start reporting adjustments,
primarily related to the adjustment of the Company's assets and liabilities to
fair market values, will have a significant effect on the Company's future
statements of operations. The more significant of these adjustments relate to
reduced depreciation expense on property and equipment, increased

F-8
78

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

amortization expense relating to reorganization value in excess of amounts
allocable to identifiable assets, and increased interest expense and reduced
aircraft rent expense for leases adjusted to fair market rental rates.

The effects of the Plan and fresh start reporting on the balance sheet at
the Effective Date are as follows (in thousands):

(A) (B) (C)
PREDECESSOR ISSUE OF REORGANIZED
COMPANY DEBT DEBT & FRESH START COMPANY
AUG. 25, 1994 DISCHARGE STOCK ADJUSTMENTS AUG. 25, 1994
------------- --------- -------- ----------- -------------

ASSETS
Current assets:
Cash and cash equivalents.................... $ 156,401 $(140,284) $205,956 $ -- $ 222,073
Accounts receivable, net..................... 77,682 -- 6,831 -- 84,513
Expendable spare parts and supplies.......... 27,715 -- -- (2,371) 25,344
Prepaid expenses............................. 34,540 -- -- (885) 33,655
------------- --------- -------- ----------- -------------
Total current assets........................... 296,338 (140,284) 212,787 (3,256) 365,585
Property and equipment, net.................... 702,442 -- -- (138,830) 563,612
Restricted cash................................ 30,503 -- -- -- 30,503
Reorganization value in excess of amounts
allocable
to identifiable assets....................... -- -- -- 668,702 668,702
Other assets, net.............................. 24,497 -- 1,575 (2,449) 23,623
------------- --------- -------- ----------- -------------
Total assets................................... $ 1,053,780 $(140,284) $214,362 $ 524,167 $ 1,652,025
============ ========= ======== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities:
Current maturities of long-term debt......... $ 119,185 $(65,014) $ -- $ -- $ 54,171
Accounts payable............................. 98,080 6,500 -- 969 105,549
Air traffic liability........................ 153,808 -- -- -- 153,808
Accrued compensation and vacation benefits... 27,443 -- -- -- 27,443
Accrued interest............................. 5,620 -- -- -- 5,620
Accrued taxes................................ 26,613 14,405 -- -- 41,018
Other accrued liabilities.................... 29,161 -- -- -- 29,161
------------- --------- -------- ----------- -------------
Total current liabilities...................... 459,910 (44,109) -- 969 416,770
Estimated liabilities subject to Chapter 11
proceedings.................................. 382,769 (382,769) -- -- --
Long-term debt, less current maturities........ 368,939 28,934 100,000 -- 497,873
Manufacturers' and deferred credits............ 70,625 -- -- 51,530 122,155
Other liabilities.............................. 57,932 -- -- (30,205) 27,727
Stockholders' equity (deficiency):
Preferred stock.............................. 18 -- -- (18) --
Common stock, Predecessor Company............ 6,432 -- -- (6,432) --
Common stock, Reorganized Company............ -- -- 152 299 451
Additional paid in capital................... 200,058 -- 114,710 272,281 587,049
Accumulated deficit.......................... (474,565) 257,660 (500) 217,405 --
------------- --------- -------- ----------- -------------
(268,057) 257,660 114,362 483,535 587,500
Deferred compensation and notes receivable --
employee stock purchase plans.............. 18,338 -- -- (18,338) --
------------- --------- -------- ----------- -------------
Total stockholders' equity (deficiency)........ (286,395) 257,660 114,362 501,873 587,500
------------- --------- -------- ----------- -------------
Total liabilities & stockholders' equity
(deficiency)................................. $ 1,053,780 $(140,284) $214,362 $ 524,167 $ 1,652,025
============ ========= ======== ========== ============

- ---------------
(a) To record the discharge or reclassification of prepetition obligations as
well as the repayment in cash of $77.6 million of D.I.P. financing and a
$62.7 million priority term loan.
(b) To record proceeds received from the issuance of new debt and equity
securities and to record the preferred stock settlement payment of $500,000
and the receipt of approximately $1.1 million for the purchase of Class B
Common Stock.
(c) To record adjustments to reflect assets and liabilities at fair market
values and to record reorganization value in excess of amounts allocable to
identifiable assets.

F-9
79

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Financial Reporting for Bankruptcy Proceedings

The Company implemented the guidance as to financial reporting by entities
that have filed petitions with the Bankruptcy Court, provided by SOP 90-7 in the
accompanying financial statements.

Pursuant to SOP 90-7, prepetition liabilities are reported on the basis of
the expected amounts of such allowed claims, as opposed to the amounts for which
those allowed claims may be settled and are classified as "Liabilities Subject
to Chapter 11 Proceedings". The accrual for interest on such unsecured or
undersecured liabilities was discontinued from the period June 27, 1991 to
August 25, 1994, the Effective Date of the Plan.

(b) Cash Equivalents

Cash equivalents consist of all highly liquid debt instruments purchased
with original maturities of three months or less and are carried at cost which
approximates market.

Restricted cash includes cash deposits securing certain letters of credit
and cash held in Company accounts, but pledged to an institution which processes
credit card sales transactions.

(d) Expendable Spare Parts and Supplies

Flight equipment expendable spare parts and supplies are valued at average
cost. Allowances for obsolescence are provided, over the estimated useful life
of the related aircraft and engines, for spare parts expected to be on hand at
the date the aircraft are retired from service.

(e) Property and Equipment

Property and equipment were recorded at cost as of December 31, 1993 and at
fair market value as of August 25, 1994; subsequent acquisitions are recorded at
cost. Interest capitalized on advance payments for aircraft acquisitions and on
expenditures for aircraft improvements are part of these costs. Interest
capitalized was $621,000 for the period August 26, 1994 through December 31,
1994. No interest was capitalized while the Company was in bankruptcy. 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 property and equipment range
from three to twelve years for owned property and equipment and to thirty years
for the reservation and training center and technical support facilities. The
estimated useful lives of the Company's owned aircraft, jet engines, flight
equipment and rotable parts range from eleven to twenty-two 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.

Routine maintenance and repairs are charged to expense as incurred. The
cost of major scheduled airframe, engine and certain component overhauls are
capitalized and amortized over the periods benefited and included in aircraft
maintenance materials and repairs for the Reorganized Company, as part of fresh
start reporting, and in depreciation and amortization expense for the
Predecessor Company. Additionally, a provision for the estimated cost of
scheduled airframe and engine overhauls required to be performed on leased
aircraft prior to their return to the lessors has been provided.

(f) Reorganization Value in Excess of Amounts Allocable to Identifiable Assets

Reorganization value in excess of amounts allocable to identifiable assets
is amortized on a straight line basis over 20 years. Accumulated amortization at
December 31, 1994 is approximately $11.1 million. As more

F-10
80

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

fully discussed at Note 9, with respect to the period ended December 31, 1994, a
reduction in reorganization value in excess of amounts allocable to identifiable
assets of $11.9 million was recorded as a result of the utilization of
Predecessor Company tax attributes. The Company assesses the recoverability of
this asset based upon expected future undiscounted cash flows and other relevant
information.

(g) Frequent Flyer Awards

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.

(h) Manufacturers' and Deferred Credits

In connection with the acquisition of certain aircraft and engines, the
Company receives various credits. Such manufacturers' credits are deferred until
the aircraft and engines are delivered, at which time they are either applied as
a reduction of the cost of acquiring owned aircraft and engines, resulting in a
reduction of future depreciation expense, or amortized as a reduction of rent
expense for leased aircraft and engines. Unamortized amounts were written off at
the Effective Date.

(i) Deferred Credit -- Operating Leases

Operating leases were adjusted to fair market value at the Effective Date.
The net present value of the difference between the contractual lease rates and
the fair market rates has been recorded as a deferred credit in the accompanying
balance sheets. The deferred credit will be increased through charges to
interest expense and decreased on a straight-line basis as a reduction in rent
expense over the applicable lease periods. At December 31, 1994, the unamortized
balance of the deferred credit was $116.9 million.

(j) Revenue Recognition

Passenger revenue is recognized when the transportation is provided. Ticket
sales for transportation which has not yet been provided are reflected in the
financial statements as air traffic liability.

(k) Passenger Traffic Commissions and Related Fees

Passenger traffic commissions and related fees are expensed when the
transportation is provided and the related revenue is recognized. Passenger
traffic commissions and related fees not yet recognized are included as a
prepaid expense.

(l) Income Taxes

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. As more fully
discussed at Note 9, adoption of the new standard changed the Company's method
of accounting for income taxes from the deferred approach to an asset and
liability approach.

As with the prior standard, the Company continues to account for its
general business credits by use of the flow-through method.

(m) Per Share Data

F-11
81

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

reflect net income adjusted for interest on borrowings effectively reduced by
the proceeds from the assumed exercise of common stock equivalents but only if
the effect of such adjustments are dilutive.

Fully diluted earnings per share is based on the weighted average number of
shares of common stock outstanding, dilutive common stock equivalents (stock
options and warrants), and the conversion of outstanding convertible preferred
stock as well as for the Predecessor Company the conversion of convertible
subordinate debentures. Fully diluted earnings per share reflect net income
adjusted for interest on borrowings effectively reduced by the proceeds from the
assumed exercise of common stock equivalents but only if the effect of such
adjustments are dilutive.

(n) Reclassification

Certain prior period reclassifications have been made in the Predecessor
Company's financial statements to conform to the Reorganized Company's
presentation.

4. LONG-TERM DEBT

Long-term debt at December 31 consists of the following:

REORGANIZED PREDECESSOR
COMPANY COMPANY
-------------- --------------
1994 1993
-------------- --------------
(IN THOUSANDS) (IN THOUSANDS)

SECURED
Notes payable, fixed interest rates of 6.00% to 10.79% and
floating
interest rates of various LIBOR + 1.5% to 3.5%,
installments due
through 2008.............................................. $307,077 $402,448
Borrowings under lines of credit, floating interest rates of
Prime + 1% to three month LIBOR + 4%, installments due
through 1999. No available borrowings remain. ............ 24,225 18,589
Notes payable, floating interest rate of Prime + 1%,
installments
due through 1999. (a)..................................... 34,097 --
DIP financing............................................... -- 83,577
------- -------
365,399 504,614
UNSECURED
11 1/4% senior notes, face amount of $123 million, interest
only payments until due in 2001. (b)...................... 120,843 --
Notes payable, fixed interest rates of 6% to 8% and floating
interest rates of three month LIBOR + 3%, installments due
through 2000. ............................................ 41,752 10,734
Other....................................................... 2,802 6,273
------- -------
165,397 17,007
Total long-term debt.............................. 530,796 521,621
Less: current maturities.......................... (65,198) (125,271)
-------- --------
$465,598 $396,350
======== ========

- ---------------
(a) Approximately $29.5 million was drawn on a letter of credit facility that
secured certain industrial development bonds (the "Bonds") used by the
Company to build its aircraft maintenance facility in Phoenix, Arizona (the
"Hangar"). The issuer of the letter of credit facility was in turn
reimbursed for such draws under a reimbursement agreement among the Company,
that issuer and a certain bank group (the "Banks"). The reimbursement
agreement was secured by the Hangar. At the Effective Date, the Company and
the Banks agreed to facilitate repayment of the obligation created under the
reimbursement agreement with two loans, the principal loan for $29.5 million
and the interest loan for $6.5 million.

F-12
82

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

These two loans are secured by the Hangar. The interest loan is repaid with
monthly level principal payments and interest at the prime rate plus 1% and
matures in August 1996. Amortization of the principal loan is calculated
over 12 years with a five year maturity in August 1999; and payments are
made monthly of level principal and interest at the prime rate plus 1%,
with the balance of the loan, or $12.5 million, being due at its maturity.
Additionally, if the Company does not re-market the Bonds prior to August
25, 1995 (the proceeds from which will be used to retire the then
outstanding balance of the principal loan), the Company is required to make
an additional $5.0 million principal repayment under the principal loan in
October 1995.

(b) On the Effective Date, the Company issued $100 million of 11 1/4% Senior
Unsecured Notes (the "Senior Notes") at a discount of 1.575% as part of the
investment by AmWest, and on October 14, 1994, the Company issued an
additional $23 million of the Senior Notes. The notes mature in September,
2001 and interest is payable in arrears semi-annually commencing on March 1,
1995. The Senior Notes may be redeemed at the option of the Company; (i)
prior to September 1, 1997; (a) at any time, in whole but not in part, at a
redemption price of 105% of the principal amount of the Senior Notes plus
accrued and unpaid interest, if any, to the redemption date or; (b) from
time to time in part from the net proceeds of a public offering of its
capital stock at a redemption price equal to 105% of the principal amount,
plus accrued and unpaid interest, if any, to the redemption date except for
amounts mandatorily redeemed; (ii) on or after September 1, 1997 at any time
in whole or from time to time in part, at a redemption price equal to the
following percentage of principal redeemed, plus accrued and unpaid interest
to the date of redemption, if redeemed during the 12-month period beginning:

SEPTEMBER 1, PERCENTAGE
------------ ----------
1997 105.0%
1998 103.3%
1999 101.7%
2000 100.0%

The Senior Notes are also subject to mandatory redemption if the Company
consummates a Public Offering Sale, as defined in the Indenture, prior to
September 1, 1997, and immediately prior to such consummation, the Company
has cash and cash equivalents, not subject to any restriction on
disposition of at least $100 million. Then the Company shall redeem the
Senior Notes at a redemption price equal to 104% of the aggregate principal
amount of the Senior Notes so redeemed plus accrued and unpaid interest to
the redemption date. The aggregate redemption price and accrued unpaid
interest of the Senior Notes to be redeemed shall equal the lesser of: (a)
50% of the net proceeds of such Public Offering Sale and; (b) the excess if
any of; (i) $20 million and; (ii) the amount of any net offering proceeds
of any Public Offering Sale received prior to September 1, 1997. The
Indenture contains a limitation on investment covenant with which the
Company was in compliance at December 31, 1994.

At December 31, 1994, the estimated maturities of long-term debt are as follows:

(IN THOUSANDS)

1995..................................... $ 65,198
1996..................................... 55,566
1997..................................... 48,316
1998..................................... 44,653
1999..................................... 57,203
Thereafter............................... 259,860
--------
$530,796
========

F-13
83

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Secured financings totaling $365 million are collateralized by assets,
primarily aircraft and engines, with a net book value of $422.6 million at
December 31, 1994.

Prepetition long-term debt totaling approximately $224 million was included
in Estimated Liabilities Subject to Chapter 11 Proceedings at December 31, 1993.
As part of the reorganization, approximately $85.6 million of long-term debt was
restructured and included as long-term debt secured at December 31, 1994.

Certain of the Company's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants for
which the Company was in compliance at December 31, 1994.

5. CAPITAL STOCK

Preferred Stock

The Company's Board of Directors by resolution may authorize the issuance
of the Preferred Stock as a class, in one or more series, having the number of
shares, designations, relative voting rights, dividend rights, liquidation and
other preferences, and limitation that the Board of Directors fixes without any
stockholder approval. No shares of Preferred Stock have been issued.

Common Stock

The holders of Class A Common Stock are entitled to fifty votes per share,
and the holders of Class B Common Stock are entitled to one vote per share, on
all matters submitted to a vote of common stockholders except that voting rights
of non-U.S. citizens are limited. The Class A Common Stock is convertible into
an equal number of Class B shares at any time at the election of the holders of
the Class A Common Stock.

Holders of Common Stock of all classes participate equally as to any
dividends or distributions on the Common Stock, except that dividends payable in
shares of Common Stock, or securities to acquire Common Stock, will be made in
the same class of common stock as that held by the recipient of the dividend.
Holders of Common Stock have no right to cumulate their votes in the election of
directors. The Common Stock votes together as a single class, subject to the
right to a separate class vote in certain instances required by law.

Pursuant to the Stockholders' Agreement, the partners and assignees of
AmWest and GPA will vote all shares of Common Stock owned by them in favor of
the reelection of the initially designated independent directors for as long as
such independent directors continue to serve until the third annual meeting.

In addition to the voting and other provisions of the Stockholders'
Agreement, AmWest and GPA agreed that (i) the partners and assignees of AmWest
will vote in favor of GPA's nominee to the Company's Board of Directors, and
(ii) GPA will vote in favor of the partners and assignees of AmWest's nine
nominees to the Company's Board of Directors for so long as (a) the partners and
assignees of AmWest own at least 5% of the voting equity securities of the
Company, and (b) GPA owns at least 2% of the voting equity securities of the
Company.

Warrants

The Company issued approximately 10.4 million Warrants to purchase Class B
Common Stock with an exercise price of $12.74 per share as part of the
reorganization. The Warrants are exercisable by the holders anytime before
August 25, 1999 and 10.4 million shares of Class B Common Stock have been
reserved for the exercise of these warrants.

F-14
84

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. RESTRICTED STOCK AND STOCK OPTIONS

In December 1994, the Company's Board of Directors approved the America
West Airlines, Inc. 1994 Incentive Equity Plan (the "Incentive Plan") subject to
approval of the stockholders. Under the Incentive Plan, up to 3.5 million shares
of Class B Common Stock may be issued to cover all outstanding awards under this
plan, of which, no more than 1.5 million will be issued as Restricted Stock or
Bonus Stock. The Company's Board of Directors granted 11,000 shares of
restricted stock under the Incentive Plan and recorded compensation expense of
$96,250 based on the fair value of $8.75 at the date of grant. Additionally,
1,267,000 options to purchase common stock at $8.75 per share, the fair value at
date of grant were granted under the Incentive Plan. Also, 39,000 options to
purchase common stock were granted at $8.75 per share, the fair value at date of
grant, to members of the Board of Directors who are not employees of the
Company. As of December 31, 1994, 11,000 shares of restricted stock were vested
and 255,000 options to purchase common stock were exercisable, both contingent
upon stockholder approval of the Incentive Plan.

7. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) defined contribution plan, covering essentially
all employees of the Company. Participants may contribute from 1 to 15% of their
pre-tax earnings to a maximum of $9,240 in 1995. In April 1994, the Company
increased the Company matched portion from 25% to 50% of a participant's
contributions up to 6% of the participant's annual pre-tax earnings. The
Company's contribution expense to the plan totaled $3.8 million, $2.1 million
and $2 million in 1994, 1993 and 1992, respectively.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

The carrying amount approximates fair value because of the short maturity
of those instruments.

Accounts Receivable and Accounts Payable

The carrying amount of accounts receivable and accounts payable
approximates fair value as they are expected to be collected or paid within 90
days of year-end.

Long-term Debt, Including Current Maturities (at December 31, 1994)

The fair value of long-term debt, including current maturities, was
approximately $515 million based on quoted market prices for the same or similar
debt including debt of comparable remaining maturities.

Long-term Debt Including Current Maturities and Estimated Liabilities
Subject to Chapter 11 Proceedings (December 31, 1993)

The fair value of long-term debt and estimated liabilities subject to
Chapter 11 proceedings cannot readily be estimated as quoted market prices are
not available. Additionally, future cash flows cannot be estimated as the
repayment of these instruments is subject to disposition within the bankruptcy
proceedings.

9. INCOME TAXES

The Company follows Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). The Predecessor Company had adopted SFAS
109 as of January 1, 1993. Under SFAS 109, deferred tax assets (subject to a
possible valuation allowance) and liabilities are recognized for the expected
future tax consequences of events that are reflected in the Company's financial
statements or tax returns.

F-15
85

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income tax expense:

For the periods shown below, the Company recorded income tax expense as follows:

REORGANIZED PREDECESSOR COMPANY
COMPANY --------------------------------------
------------------ YEARS ENDED
PERIOD FROM PERIOD FROM DECEMBER 31,
AUGUST 26 TO JANUARY 1 TO -------------
DECEMBER 31, 1994 AUGUST 25, 1994 1993 1992
------------------ ------------------ ---- ------
(IN THOUSANDS) (IN THOUSANDS)

Current taxes:
Federal............................... $ -- $1,869 $675 $ --
State................................. 36 190 84 --
------- ------ ---- ------
36 2,059 759 --
Deferred taxes:......................... -- -- -- --
Income tax expense attributable to
reorganization items.................. 11,854 -- -- --
------- ------ ---- ------
Income tax expense...................... $11,890 $2,059 $759 $
======= ====== ==== ======

With respect to the period August 26, 1994 to December 31, 1994, income tax
expense pertains both to income before extraordinary item as well as certain
adjustments necessitated by the effectiveness of the Plan and the resultant
fresh start adjustments to the Company's financial statements. The Company's
reorganization and the associated implementation of fresh start reporting gave
rise to significant items of expense for financial reporting purposes that are
not deductible for income tax purposes. In large measure, it is these
nondeductible (for income tax purposes) expenses that result in an effective tax
rate (for financial reporting purposes) significantly greater than the current
U.S. corporate statutory rate of 35 percent. Nevertheless, the Company's actual
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes. This difference in
financial expense compared to actual income tax liability is in part
attributable to the utilization of certain tax attributes of the Predecessor
Company that serve to reduce the Company's actual income tax liability. The
excess of financial expense over the Company's actual income tax liability
(approximately $11.8 million) is applied to reduce the carrying balance of the
Company's reorganization value in excess of amounts allocable to identifiable
assets.

For the periods January 1, 1994 to August 25, 1994, and years ended
December 31, 1993 and 1992, income tax expense pertains solely to income before
extraordinary item. No income tax expense was recognized with respect to the
extraordinary gain resulting from the cancellation of indebtedness that occurred
in connection with the effectiveness of the Plan as such gain is not subject to
income taxation.

A reconciliation of taxes at the federal statutory rate ("expected taxes")
of 35% to those reflected in the financial statements (the "effective rate") is
as follows:

F-16
86

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

REORGANIZED
COMPANY PREDECESSOR COMPANY
------------------ ---------------------------------
PERIOD FROM PERIOD FROM YEAR ENDED
AUGUST 26 TO JANUARY 1 TO DECEMBER 31,
DECEMBER 31, 1994 AUGUST 25, 1994 1993
------------------ ------------------ ------------
(IN THOUSANDS) (IN THOUSANDS)

Taxes at U.S. statutory rate...................... $ 6,908 $ 19,758 $ 13,273
Benefit of loss carryforwards..................... -- (17,889) (12,598)
State taxes....................................... 1,663 190 84
Amortization of reorganization value in excess
of amounts allocable to identifiable assets..... 3,901 -- --
Other............................................. (582) -- --
------- -------- --------
Total................................... $11,890 $ 2,059 $ 759
======= ======== ========

As of December 31, 1994, the Company has available net operating loss,
business tax credit and alternative minimum tax credit carryforwards for Federal
income tax purposes of approximately $557.9 million, $12.7 million and $.57
million, respectively. The net operating loss carryforwards expire during the
years 1999 through 2009 while the business credit carryforwards expire during
the years 1997 through 2006. However, such carryforwards are not fully available
to offset federal (and in certain circumstances, state) alternative minimum
taxable income. Further, as a result of a statutory "ownership change" (as
defined for purposes of sec.382 of the Internal Revenue Code) that occurred as a
result of the effectiveness of the Company's Plan of Reorganization, the
Company's ability to utilize its net operating loss and business tax credit
carryforwards may be restricted. The alternative minimum tax credit may be
carried forward without expiration and is available to offset future income tax
payable.

Composition of Deferred Tax Items:

The Company has not recognized any net deferred tax items as of December
31, 1994. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities are a result of
the temporary differences related to the items described as follows:

REORGANIZED
COMPANY PREDECESSOR COMPANY
----------------- ----------------------------------------
DECEMBER 31, 1994 AUGUST 25, 1994 DECEMBER 31, 1993
----------------- ------------------ -----------------
(IN THOUSANDS) (IN THOUSANDS)

Deferred income tax liabilities:
Property and equipment, principally
depreciation and fresh start
differences.......................... $ (71,425) $ (70,367) $(105,242)
--------- --------- ---------
Deferred tax assets:
Aircraft leases........................... 63,354 65,787 20,594
Reorganization expenses................... 32,654 32,654 16,527
Net operating loss carryforwards.......... 215,119 210,939 212,124
Tax credit carryforwards.................. 13,272 13,272 12,706
Other..................................... 10,892 13,809 9,707
--------- --------- ---------
Total deferred tax assets....... 335,291 336,461 271,658
--------- --------- ---------
Valuation allowance....................... (263,866) (266,094) (166,416)
--------- --------- ---------
Net deferred items.............. -- $ -- $ --
========= ========= =========

F-17
87

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

SFAS 109 requires a "more likely than not" criterion be applied when
evaluating the realizability of a deferred tax asset. Given the Company's
history of losses for income tax purposes, the volatility of the industry within
which the Company operates and certain other factors, the Company has
established a valuation allowance principally for the portion of its deductible
temporary differences, including net operating loss and other carryforwards that
may not be available due to expirations or other limitations after consideration
of net reversals of future taxable and deductible amounts. In this context, the
Company has taken into account prudent and feasible tax planning strategies.
After application of the valuation allowance, the Company's net deferred tax
assets and liabilities are zero. If the Company, in future tax periods, were to
recognize tax benefits attributable to tax attributes of the Predecessor Company
(such as net operating loss and other carryforwards), any such benefit would be
applied to reduce the balance of reorganization value in excess of amounts
allocable to identifiable assets.

10. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS

Cash paid for interest, net of amounts capitalized, during the period
August 26, 1994 through December 31, 1994, January 1, 1994 through August 25,
1994 and the years ended December 31, 1993 and 1992 was approximately $11
million, $29 million, $44 million and $46 million, respectively.

Cash paid for income taxes during the period August 26, 1994 through
December 31, 1994, January 1, 1994 through August 25, 1994 and the year ended
December 31, 1993 was $425,000, $1,253,000 and $537,000, respectively.

Cash flows from reorganization items in connection with the Chapter 11
proceedings were as follows:

JANUARY 1 TO YEARS ENDED DECEMBER 31,
AUGUST 25, ----------------------------
1994 1993 1992
------------ ----------- ------------
(IN THOUSANDS)

Interest received on cash accumulations................ $ 3,711 $ 2,635 $ 2,030
Professional fees paid for services rendered........... (23,563) (7,372) (11,346)
D.I.P. financing issuance costs paid................... -- (1,378) (1,760)

In addition, during the period August 26 through December 31, 1994, January
1, 1994 through August 25, 1994 and the years ended December 31, 1993 and 1992,
the Company had the following non-cash financing and investing activities:

REORGANIZED
COMPANY PREDECESSOR COMPANY
-------------- -----------------------------------------
PERIOD FROM PERIOD FROM
AUGUST 26 TO JANUARY 1 TO YEARS ENDED DECEMBER 31,
DECEMBER 31, AUGUST 25, -------------------------
1994 1994 1993 1992
-------------- ------------- ------- -------
(IN THOUSANDS) (IN THOUSANDS)

Equipment acquired through capital
leases.................................. $ -- $ 138 $ 709 $ 437
Conversion of long-term debt to common
stock................................... -- -- 1,938 3,685
Notes payable issued to seller............ -- -- 818 22,804
Notes payable issued for administrative
claims.................................. -- -- 11,597 --
Accrued interest reclassified to long-term
debt.................................... -- 5,563 15,137 16,443
Draws taken by third parties letter of
credit.................................. -- -- -- 11,201
Preferred dividend declared but unpaid.... -- -- -- 1,672
Issuance of stock as success bonus........ -- 1,224 -- --

F-18
88

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. EXTRAORDINARY ITEM

The extraordinary gain recorded in the period January 1 through August 25,
1994 includes $257.7 million from the discharge of indebtedness pursuant to the
consummation of the Plan of Reorganization.

12. COMMITMENTS AND CONTINGENCIES

(a) Leases

As of December 31, 1994, the Company had 68 aircraft under operating leases
with remaining terms ranging from five months to approximately 23 years. The
Company has options to purchase certain of the aircraft at fair market values at
the end of the lease terms. Certain of the agreements require security deposits
and maintenance reserve payments. The Company also leases certain terminal
space, ground facilities and computer and other equipment under noncancelable
operating leases.

At December 31, 1994, the scheduled future minimum cash rental payments
under noncancelable operating leases with initial terms of more than one year
including those leases entered into through February 1995 are as follows:

(IN THOUSANDS)

1995................................................... $ 212,340
1996................................................... 205,236
1997................................................... 185,753
1998................................................... 163,520
1999................................................... 159,989
Thereafter............................................. 1,172,241
----------
$2,099,079
==========

Rent expense (excluding landing fees) was approximately $245 million, $245
million and $307 million for the combined twelve months ended December 31, 1994
and the years ended December 31, 1993 and 1992, respectively.

Collectively, the operating lease agreements require security deposits with
lessors of $11.5 million and bank letters of credit of $17.6 million. The
letters of credit are collateralized by $17.6 million of restricted cash as of
December 31, 1994.

(b) Revenue Bonds

Special facility revenue bonds issued by a municipality have been used to
fund the acquisition of leasehold improvements at the Phoenix Sky Harbor
International Airport which have been leased by the Company. Under the operating
lease agreements, which commenced in 1990, the Company is required to make
rental payments sufficient to pay principal and interest when due on the bonds.

On August 25, 1994, the Company entered into a Restated and Amended Trust
Indenture in which the Series 1989 and Series 1990 Bonds were retired
contemporaneously with the issuance of the Series 1994A and Series 1994B Bonds.
Pursuant to the agreement, payment of principal and interest at 8.3% on the
Series 1994A Bonds commenced on the Effective Date and ends on January 1, 2006
while payment of principal and interest at 8.2% on the Series 1994B Bonds
commenced on the Effective Date and ends on January 1, 1999. At December 31,
1994, the outstanding balance was $21.2 million.

At December 31, 1994, the Company had on order a total of 24 Airbus
A320-200 aircraft with an aggregate net cost estimated at $1.1 billion. Delivery
dates of the aircraft will fall in the years 1998 through

F-19
89

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2000 with an option to defer the 1998 deliveries. If new A320 aircraft are
delivered as a result of the renegotiated put agreement (described below), the
Company will have the right to cancel on a one-for-one basis, up to a maximum of
eight non-consecutive aircraft deliveries hereunder, subject to certain
conditions. The Company also has the option to cancel without cause up to an
additional four aircraft, and the Company has the right to assign all or some of
these delivery positions to Continental.

At December 31, 1994, the Company had a put agreement for eight aircraft
with deliveries to start not earlier than June 30, 1995 and end on June 30,
1999. Under the agreement, new or "like new" A320-200, or new or used B737-300
or B757-200 aircraft may be put to the Company at a rate of no more than two
aircraft in 1995, and, with respect to each ensuing year during the put period,
of no more than three aircraft. In addition, no more than five used aircraft may
be put to the Company, and for every new A320 aircraft put to the Company, the
Company has the right to reduce the deliveries under the AVSA A320 purchase
contract on a one-for-one basis. During each January of the put period, the
Company will negotiate the type and delivery dates of the put aircraft for that
year. The puts will require 150-day notice and will be leased at fair market
rates for terms ranging from three to eighteen years, depending on the type and
condition of the aircraft. In 1995, three aircraft (one used B737-300 in
February and two new A320-200s in April) will be delivered to the Company under
this agreement. As part of the agreement, certain cash payments and securities
were issued to the put holder pursuant to the Plan (see Note 13).

The Company had certain aircraft purchase contracts with Boeing. In
connection with the Plan, the Company reached a settlement in which the purchase
contracts were rejected and equipment purchase deposits were kept by Boeing in
full settlement of the rejection damages.

In December 1994, the Company entered into a support contract with
International Aero Engines ("IAE") which provides for the purchase by the
Company of six new V2500-A5 spare engines scheduled for delivery beginning in
1998 through 2000 for use on the A320 fleet. Such engines have an estimated
aggregate cost of $42.3 million for which the Company has provided a $1.5
million security deposit in the form of a letter of credit. Pursuant to a side
letter to an earlier contract with IAE, the Company agreed to purchase from IAE
prior to December 31, 1995, a new or used V2500-A1 engine. However, the Company
expects to, with IAE's consent, acquire an additional "A5" engine in lieu of
this "A1" engine.

The following table reflects estimated cash payments under the aircraft and
engine purchase contracts. Actual payments may vary due to inflation factor
adjustments and changes in the delivery schedule of the equipment. The estimated
cash payments include the progress payments that will be made in cash, as
opposed to being financed under an existing progress payment financing facility.

(IN THOUSANDS)

1995........................................................... $ 3,223
1996........................................................... 32,608
1997........................................................... 58,230
1998........................................................... 379,309
1999........................................................... 355,540
2000........................................................... 350,863
----------
$1,179,773
==========

At December 31, 1994, the Company has significant capital commitments for a
number of new aircraft, as discussed above. Although the Company has arranged
for financing for up to one-half of such commitment, the Company will require
substantial capital from external sources to meet the remaining financial
commitments. The Company intends to seek additional financing (which may include
public debt financing or private financing) in the future when and as
appropriate. There can be no assurance that sufficient financing will be
obtained for all aircraft and other capital requirements. A default by the
Company under any such commitment could have a material adverse effect on the
Company.

F-20
90

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(d) Concentration of Credit Risk

The Company does not believe it is subject to any significant concentration
of credit risk. At December 31, 1994, approximately 82 percent of the Company's
receivables related to tickets sold to individual passengers through the use of
major credit cards or to tickets sold by other airlines and used by passengers
on America West. These receivables are short-term, generally being settled
shortly after the sale or in the month following usage. Bad debt losses, which
have been minimal in the past, have been considered in establishing allowances
for doubtful accounts.

(e) Contingent Legal Obligations

Certain administrative and priority tax claims are pending against the
Company, which, if ultimately allowed by the Bankruptcy Court, would represent
general obligations of the Company. Such claims include claims of various state
and local tax authorities and certain contractual indemnification obligations.
Management cannot predict whether or to what extent any of the pending
administrative and priority tax claims will result in liabilities to the
Company. Should such liabilities be incurred, future operating results could be
adversely affected. However, based on information currently available,
management believes that the disposition will not have a material adverse effect
on the Company's financial condition.

13. RELATED PARTY TRANSACTIONS

In exchange for certain concessions principally arising from cancellation
of the right of GPA to lease to America West 10 Airbus A320 aircraft at
specified rates, GPA received (i) 900,000 shares of Class B Common Stock; (ii)
1,384,615 Warrants to purchase shares of Class B Common Stock at an exercise
price of $12.74 per share; (iii) a cash payment of approximately $30.5 million;
(iv) the rights to require the Company to lease up to eight aircraft of types
operated by the Company, which rights must be exercised by June 30, 1999.

The Company has entered into various aircraft and leasing arrangements with
GPA at terms comparable to those obtained from third parties for similar
transactions. The Company leases 16 aircraft from GPA and the rental payments
for such leases amount to $63.1 million, $63.1 million, and $63.8 million for
the combined twelve months ended December 31, 1994, 1993 and 1992, respectively.
As of December 31, 1994, the Company was obligated to pay approximately $1.1
billion under these leases which expire at various times through the year 2013.

The Company has entered into Alliance Agreements with Continental and Mesa,
both of whom invested in the Company. Pursuant to a code-sharing agreement with
Mesa entered into in December 1992, the Company collects a per-passenger charge
for facilities, reservations and other services from Mesa for enplanements on
the Mesa system. Such payments by Mesa to the Company totaled $2.5 million and
$1.9 million for the twelve months ended December 31, 1994 and 1993,
respectively.

In October 1994, the Company issued an additional $23.0 million of 11 1/4%
Senior Unsecured Notes to Fidelity and Lehman in exchange for full settlement of
certain prepetition unsecured claims. Additionally, cash payments of $2.1
million and $1.3 million were made to Fidelity and Lehman, respectively.

14. ESTIMATED LIABILITIES SUBJECT TO CHAPTER 11 PROCEEDINGS AND REORGANIZATION
EXPENSE

Under Chapter 11, certain claims against the Company in existence prior to
the filing of the petitions for relief under the Code are stayed while the
Company continued business operations as debtor-in-possession. These prepetition
liabilities were settled as part of the Plan and were classified as "Estimated
liabilities subject to Chapter 11 proceedings" prior to the Effective Date.

F-21
91

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Estimated liabilities subject to Chapter 11 proceedings as of December 31,
1993 consisted of the following:

Long-term debt (including convertible subordinated debentures of
$138.9 million)................................................. $224,642
Accounts payable and accrued liabilities.......................... 113,945
Accrued interest.................................................. 16,808
Accrued taxes..................................................... 25,719
--------
$381,114
========

15. RESTRUCTURING CHARGES

Restructuring charges consist of the following:

1992
--------------
(IN THOUSANDS)

Write-off for certain assets related to station closures or
route restructuring.......................................... $ 9,529
Provision for spare parts for aircraft types no longer in
service...................................................... 12,651
Provision for employee severance............................... 2,284
Loss on return of aircraft..................................... 6,852
-------
$31,316
=======

The restructuring charges were necessitated primarily by aircraft fleet
reductions and other operational changes. The Company has reduced its fleet to
87 aircraft and has reduced the number of aircraft types in the fleet from five
to three.

F-22
92

AMERICA WEST AIRLINES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data for 1994 and 1993 are as follows:

1ST 2ND 3RD 4TH
1994 -- REORGANIZED COMPANY QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------- -------- -------- --------- --------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE
AMOUNTS)

Total operating revenues....................... $ 127,315 $342,451
Operating income............................... 8,336 30,535
Nonoperating expense, net...................... (5,293) (13,842)
Income tax expense............................. (1,825) (10,065)
Net income..................................... 1,218 6,628
Earnings per share:
Primary...................................... .03 .15
Fully diluted................................ .03 .15

1994 -- PREDECESSOR COMPANY
- -----------------------------------------------

Total operating revenues....................... $345,264 $363,351 230,413
Operating income............................... 37,750 44,146 25,610
Nonoperating expense, net (a).................. (21,943) (23,171) (263,601)
Income tax expense............................. (632) (839) (588)
Net income (a)................................. 15,175 20,136 19,081
Earnings per share:
Primary...................................... .56 .74 .69
Fully diluted................................ .40 .52 .49

1993 -- PREDECESSOR COMPANY
- -----------------------------------------------

Total operating revenues....................... 316,605 324,910 335,113 348,736
Operating income............................... 17,168 25,179 32,981 45,726
Nonoperating expense, net...................... (14,990) (14,710) (18,285) (35,145)
Income tax expense............................. (44) (209) (293) (213)
Net income..................................... 2,134 10,260 14,403 10,368
Earnings per share:
Primary...................................... .09 .41 .56 .40
Fully diluted................................ .09 .28 .38 .28

- ---------------
(a) During the third quarter of 1994, the Company recorded reorganization
expenses of $255.4 million as well as an extraordinary gain of $257.7
million from the discharge of debt pursuant to the Plan of Reorganization.

F-23
93
AMERICA WEST AIRLINES, INC.

CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents........................................ $ 213,406 $ 182,581
Accounts receivable, less allowance for doubtful accounts of
$3,505 in 1995 and $3,531 in 1994............................. 86,746 57,474
Expendable spare parts and supplies, less allowance for
obsolescence of $859 in 1995 and $483 in 1994................. 26,264 24,179
Prepaid expenses................................................. 35,616 29,284
----------- ------------
Total current assets.......................................... 362,032 293,518
----------- ------------
Property and equipment:
Flight equipment................................................. 477,995 452,177
Other property and equipment..................................... 93,573 92,169
----------- ------------
571,568 544,346
Less accumulated depreciation and amortization................... 28,413 15,882
----------- ------------
543,155 528,464
Equipment purchase deposits...................................... 27,489 26,074
----------- ------------
570,644 554,538
----------- ------------
Restricted cash.................................................... 30,078 28,578
Reorganization value in excess of amounts allocable to identifiable
assets, net...................................................... 637,495 645,703
Other assets, net.................................................. 23,783 22,755
----------- ------------
$ 1,624,032 $1,545,092
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............................. $ 64,977 $ 65,198
Accounts payable................................................. 92,311 77,569
Air traffic liability............................................ 187,310 127,356
Accrued compensation and vacation benefits....................... 16,533 15,776
Accrued interest................................................. 7,759 13,109
Accrued taxes.................................................... 45,349 27,061
Other accrued liabilities........................................ 15,620 15,376
----------- ------------
Total current liabilities..................................... 429,859 341,445
----------- ------------
Long-term debt, less current maturities............................ 453,452 465,598
Manufacturers' and deferred credits................................ 115,520 116,882
Other liabilities.................................................. 24,309 25,721
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000 shares; no
shares issued at March 31, 1995 or December 31, 1994.......... -- --
Class A common stock, $.01 par value. Authorized 1,200,000
shares; issued and outstanding 1,200,000 shares at March 31,
1995 and December 31, 1994.................................... 12 12
Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued and outstanding 43,966,645 shares at March 31,
1995 and 43,936,272 at December 31, 1994...................... 440 439
Additional paid-in capital....................................... 587,384 587,149
Retained earnings................................................ 13,056 7,846
----------- ------------
Total stockholders' equity.................................... 600,892 595,446
----------- ------------
$ 1,624,032 $1,545,092
========= ==========

See accompanying notes to condensed financial statements.

F-24
94

AMERICA WEST AIRLINES, INC.

CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

REORGANIZED | PREDECESSOR
COMPANY | COMPANY
------------- | -------------
THREE MONTHS | THREE MONTHS
ENDED | ENDED
MARCH 31, | MARCH 31,
------------- | -------------
1995 | 1994
------------- | -------------
|
Operating revenues: |
Passenger....................................................... $ 323,459 | $ 324,427
Cargo........................................................... 11,376 | 10,491
Other........................................................... 10,955 | 10,346
------------- | -------------
Total operating revenues..................................... 345,790 | 345,264
------------- | -------------
Operating expenses: |
Salaries and related costs...................................... 89,180 | 79,471
Rentals and landing fees........................................ 68,254 | 66,259
Aircraft fuel................................................... 39,694 | 37,932
Agency commissions.............................................. 28,965 | 29,111
Aircraft maintenance materials and repairs...................... 12,764 | 7,929
Depreciation and amortization................................... 20,128 | 21,153
Other........................................................... 61,910 | 65,659
------------- | -------------
Total operating expenses..................................... 320,895 | 307,514
------------- | -------------
Operating income............................................. 24,895 | 37,750
------------- | -------------
Nonoperating income (expense): |
Interest income................................................. 2,874 | 161
Interest expense (contract interest of $16,437 for 1994)........ (15,879) | (13,175)
Loss on disposition of property and equipment................... (923) | (542)
Reorganization expense, net..................................... -- | (8,396)
Other, net...................................................... 1 | 9
------------- | -------------
Total nonoperating expenses, net............................. (13,927) | (21,943)
------------- | -------------
Income before income taxes and extraordinary item................. 10,968 | 15,807
------------- | -------------
Income taxes...................................................... 5,758 | 632
------------- | -------------
Net income........................................................ 5,210 | 15,175
Retained earnings (deficit) at beginning of period................ 7,846 | (438,626)
------------- | -------------
Retained earnings (deficit) at end of period...................... $ 13,056 | $(423,451)
=========== | ===========
Earnings per share: |
Primary: |
Net income................................................... $ .12 | $ .56
=========== | ===========
Fully Diluted: |
Net income................................................... $ .12 | $ .40
=========== | ===========
Shares used for computation: |
Primary...................................................... 45,165,959 | 29,152,729
Fully diluted................................................ 45,165,959 | 41,055,183

See accompanying notes to condensed financial statements.
F-25
95
AMERICA WEST AIRLINES, INC.

CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

REORGANIZED | PREDECESSOR
COMPANY | COMPANY
------------- | -------------
THREE MONTHS | THREE MONTHS
ENDED | ENDED
MARCH 31, | MARCH 31,
------------- | -------------
1995 | 1994
------------- | -------------
|
Cash flows from operating activities: |
Net income.................................................... $ 5,210 | $ 15,175
Adjustments to reconcile net income to cash provided by |
operating activities: |
Depreciation and amortization.............................. 11,920 | 21,153
Amortization of manufacturers' and deferred credits........ (2,642) | (1,114)
Amortization of deferred overhauls......................... 859 | --
Amortization of reorganization value in excess of amounts |
allocable to identifiable assets......................... 8,208 | --
Loss on disposition of property and equipment.............. 923 | 542
Reorganization items....................................... -- | 3,703
Other...................................................... 851 | (187)
Changes in operating assets and liabilities: |
Increase in accounts receivable, net.......................... (29,031) | (22,798)
Increase in spare parts and supplies, net..................... (2,081) | (1,192)
Increase in prepaid expenses.................................. (6,332) | (5,179)
Decrease (increase) in other assets and restricted cash....... (2,528) | 6,481
Increase in accounts payable.................................. 13,462 | 4,823
Increase in air traffic liability............................. 59,954 | 45,325
Increase in accrued compensation and vacation benefits........ 757 | 686
Increase (decrease) in accrued interest....................... (5,318) | 1,530
Increase in accrued taxes..................................... 18,288 | 10,756
Increase in other accrued liabilities......................... 479 | 3,139
Increase (decrease) in other liabilities...................... 441 | (3,209)
------------- | -------------
Net cash provided by operating activities............. 73,420 | 79,634
Cash flows from investing activities: |
Purchases of property and equipment........................... (28,950) | (13,665)
Proceeds from disposition of property......................... 312 | 172
------------- | -------------
Net cash used in investing activities................. (28,638) | (13,493)
Cash flows from financing activities: |
Repayment of debt............................................. (13,958) | (14,320)
Exercise of warrants.......................................... 1 | --
------------- | -------------
Net cash used in financing activities................. (13,957) | (14,320)
Net increase in cash and cash equivalents............. 30,825 | 51,821
------------- | -------------
Cash and cash equivalents at beginning of period.............. 182,581 | 99,631
------------- | -------------
Cash and cash equivalents at end of period.................... $ 213,406 | $ 151,452
=========== | ===========

See accompanying notes to condensed financial statements.
F-26
96
AMERICA WEST AIRLINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 1995

America West Airlines, Inc., (the "Predecessor Company") filed a voluntary
petition on June 27, 1991, to reorganize (the "Reorganization") under Chapter 11
of the U.S. Bankruptcy Code. On August 10, 1994, the Plan of Reorganization
("Plan"), filed by the Predecessor Company, was confirmed and became effective
on August 25, 1994 (the "Effective Date"). For a detailed discussion of the
Company's Plan, refer to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994. On August 25, 1994, America West Airlines, Inc., (the
"Reorganized Company" or the "Company") adopted fresh start reporting in
accordance with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") of the American Institute
of Certified Public Accountants. Accordingly, the Company's post-reorganization
balance sheet and statement of operations have not been prepared on a basis
consistent with such pre-reorganization financial statements and are not
comparable in all respects to financial statements prior to reorganization. For
accounting purposes, the inception date of the Reorganized Company is deemed to
be August 26, 1994. A vertical black line is shown in the financial statements
to separate the Reorganized Company from the Predecessor Company since they have
not been prepared on a consistent basis of accounting.

1. BASIS OF PRESENTATION

The unaudited condensed financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission but do not include all information and footnotes
required by generally accepted accounting principles. 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, 1994.

2. PER SHARE DATA

Primary earnings per share is based upon the weighted average number of
shares of common stock outstanding and dilutive common stock equivalents (stock
options and warrants). Primary earnings per share reflect net income adjusted
for interest on borrowings effectively reduced by the proceeds from the assumed
exercise of common stock equivalents, but only if the effects of such
adjustments are dilutive.

Fully diluted earnings per share is based on the weighted average number of
shares of common stock outstanding, dilutive common stock equivalents (stock
options and warrants), the conversion of outstanding convertible preferred stock
and for the Predecessor Company the conversion of convertible subordinated
debentures. Fully diluted earnings per share reflect net income adjusted for
interest on borrowings effectively reduced by the proceeds from the assumed
exercise of common stock equivalents, but only if the effects of such
adjustments are dilutive.

3. CAPITAL STOCK

PREFERRED STOCK

The Company's Board of Directors by resolution may authorize the issuance
of the Preferred Stock as a class, in one or more series, having the number of
shares, designations, relative voting rights, dividend rights, liquidation and
other preferences, and limitations that the Board of Directors fixes without any
stockholder approval. No shares of Preferred Stock have been issued.
F-27
97
AMERICA WEST AIRLINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

COMMON STOCK

The holders of Class A Common Stock are entitled to fifty votes per share,
and the holders of Class B Common Stock are entitled to one vote per share, on
all matters submitted to a vote of common stockholders, except that voting
rights of non-U.S. citizens are limited. The Class A Common Stock is convertible
into an equal number of Class B shares at any time at the election of the
holders of the Class A Common Stock.

Holders of Common Stock of all classes participate equally as to any
dividends or distributions on the Common Stock, except that dividends payable in
shares of Common Stock, or securities to acquire Common Stock, will be made in
the same class of common stock as that held by the recipient of the dividend.
Holders of Common Stock have no right to cumulate their votes in the election of
directors. The Common Stock votes together as a single class, subject to the
right to a separate class vote in certain instances required by law.

Pursuant to an agreement, the partners and assignees of AmWest Partners,
L.P. ("AmWest") and GPA Group plc, ("GPA") will vote all shares of Common Stock
owned by them in favor of the reelection of the initially designated independent
directors for as long as such independent directors continue to serve until the
third annual meeting after the Reorganization.

In addition to the voting and other provisions of the agreement, AmWest and
GPA agreed that (i) the partners and assignees of AmWest will vote in favor of
GPA's nominee to the Company's Board of Directors, and (ii) GPA will vote in
favor of the partners and assignees of AmWest's nine nominees to the Company's
Board of Directors for so long as (a) the partners and assignees of AmWest own
at least 5% of the voting equity securities of the Company, and (b) GPA owns at
least 2% of the voting equity securities of the Company.

WARRANTS

The Company issued approximately 10.4 million warrants to purchase Class B
Common Stock with an exercise price of $12.74 per share as part of the
Reorganization. The warrants are exercisable by the holders anytime before
August 25, 1999, and 10.4 million shares of Class B Common Stock have been
reserved for the exercise of these warrants.

4. RESTRICTED STOCK AND STOCK OPTIONS

In December 1994, the Company's Board of Directors approved the America
West Airlines, Inc. 1994 Incentive Equity Plan (the "Incentive Plan"). The
stockholders of the Company approved the Incentive Plan at the Annual Meeting in
May 1995. Under the Incentive Plan, up to 3.5 million shares of Class B Common
Stock may be issued to cover awards under this plan, of which, no more than 1.5
million will be issued as restricted stock or bonus stock. As of March 31, 1995,
the Company's Board of Directors granted 41,334 shares of restricted stock and
1,437,000 options to purchase Class B Common Stock at $8.75 per share, the fair
market value at the date of grant, under the Incentive Plan. Also, 39,000
options to purchase common stock were granted at $8.75 per share, the fair
market value at date of grant, to members of the Board of Directors who are not
employees of the Company. As of March 31, 1995, 18,583 shares of restricted
stock were vested and 255,000 options to purchase common stock were exercisable.
F-28
98
AMERICA WEST AIRLINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109) upon its emergence from bankruptcy. The
Predecessor Company had adopted SFAS 109 as of January 1, 1993.

Income tax expense:

For the periods shown below, the Company recorded income tax expense as
follows:

REORGANIZED | PREDECESSOR
COMPANY | COMPANY
-------------- | --------------
THREE MONTHS | THREE MONTHS
ENDED | ENDED
MARCH 31, 1995 | MARCH 31, 1994
-------------- | --------------
(IN THOUSANDS) | (IN THOUSANDS)
|
Current taxes: |
Federal.............................................. $ 10 | $450
State................................................ 18 | 182
------- | ------
28 | 632
Deferred taxes:........................................ -- | --
Income tax expense |
Attributable to reorganization items................. 5,730 | N/A
------- | ------
Income tax expense..................................... $5,758 | $632
======== | ======

For the period ended March 31, 1995, income tax expense pertains both to
income from continuing operations as well as certain adjustments necessitated by
the effectiveness of the Plan and the resultant fresh start adjustments to the
Company's financial statements. The Company's Reorganization and the associated
implementation of fresh start reporting gave rise to significant items of
expense for financial reporting purposes that are not deductible for income tax
purposes. In large measure, it is these nondeductible (for income tax purposes)
expenses that result in income tax expense (for financial reporting purposes)
significantly greater than taxes computed at the current U.S. corporate
statutory rate of 35 percent. Nevertheless, the Company's actual income tax
liability (i.e., income taxes payable) is considerably lower than income tax
expense shown for financial reporting purposes.

For the period ended March 31, 1994, income tax expense pertains solely to
income from continuing operations.

6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS

Cash paid for interest and income taxes during the three months ended March
31, 1995 and 1994 was as follows:

F-29
99
AMERICA WEST AIRLINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, during the three months ended March 31, 1995 and 1994, the
Company had the following non-cash financing and investing activities:

REORGANIZED | PREDECESSOR
COMPANY | COMPANY
-------------- | --------------
THREE MONTHS | THREE MONTHS
ENDED | ENDED
MARCH 31, 1995 | MARCH 31, 1994
-------------- | --------------
(IN THOUSANDS) | (IN THOUSANDS)
|
Equipment acquired through capital leases.............. $ -- | $ 111
Accrued interest reclassified to long-term debt........ $ 32 | $ 2,101
Notes payable issued to seller......................... $ 1,415 | $ --

7. COMMITMENTS AND CONTINGENCIES

(a) Leases

At March 31, 1995, the Company had a put agreement for seven aircraft with
deliveries to start no earlier than June 30, 1995 and end on June 30, 1999 (the
"1994 Put Agreement"). Under the agreement, new or used B737-300, B757-200, or
new or "like new" A320-200 aircraft may be put to the Company at a rate of no
more than two aircraft in 1995, and with respect to each ensuing year during the
put period, of no more than three aircraft. In addition, no more than five used
aircraft may be put to the Company, and for every new A320 aircraft put to the
Company, the Company has the right to reduce deliveries under an A320 purchase
contract on a one-for-one basis. During each January of the put period, the
Company will negotiate the type and delivery dates for terms ranging from three
to eighteen years, depending on the type and condition of the aircraft.

In April 1995, the Company entered into agreements to lease one Boeing 757
aircraft and two A320 aircraft. Under the arrangements, the Boeing 757 aircraft
has a term of two years with payments due monthly and the two A320 aircraft have
a term of eight years with payments due monthly. The two A320 aircraft were
received under the 1994 Put Agreement, reducing the number of put aircraft from
seven at March 31, 1995 to five.

(b) Contingent Legal Obligations

Certain administrative and priority tax claims are pending against the
Company, which, if ultimately allowed by the bankruptcy court, would represent
general obligations of the Company. Such claims include claims of various state
and local tax authorities and certain contractual indemnification obligations.
Management cannot predict whether or to what extent any of the pending
administrative and priority tax claims will result in liabilities to the
Company. Should such liabilities be incurred, future operating results could be
adversely affected. However, based on information currently available,
management believes that the disposition will not have a material adverse effect
on the Company's financial condition.

8. RELATED PARTY TRANSACTIONS

The Company has entered into various aircraft acquisitions and leasing
arrangements with GPA, a stockholder of the Company, at terms comparable to
those obtained from third parties for similar transactions. The Company
currently leases 18 aircraft from GPA and the rental payments for such leases
amount to $16.6 million and $15.3 million for the three months ended March 31,
1995 and 1994, respectively. As of March 31, 1995, the Company was obligated to
pay approximately $1.1 billion under these leases through the year 2013.
F-30
100
AMERICA WEST AIRLINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

As part of the Reorganization, both Continental Airlines ("Continental")
and Mesa Airlines ("Mesa") made an investment in the Company. In addition, the
Company entered into alliance agreements with Continental and Mesa. Pursuant to
a code-sharing agreement with Mesa entered into in December 1992 (which was
prior to Mesa becoming a significant stockholder), the Company collects a
per-passenger charge for facilities, reservations and other services from Mesa
for enplanements in Phoenix on the Mesa system. Such payments by Mesa to the
Company totaled $598,000 and $655,000 for the three months ended March 31, 1995
and 1994, respectively.

9. REORGANIZATION EXPENSE

Reorganization expense is comprised of items of income, expense, gain or
loss that were realized or incurred by the Company as a result of the
Reorganization. Such items consisted of the following at March 31, 1994.

(IN THOUSANDS)

Professional fees and other expenses related to the Chapter 11
filing....................................................... $5,064
Provision for settlement of claims............................. 4,180
Interest income................................................ (848)
-------
$8,396
=======

F-31
101

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SECURITYHOLDERS OR ANY UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------

TABLE OF CONTENTS

PAGE
----

Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 10
The Company........................... 14
Use of Proceeds....................... 16
Dividend Policy....................... 16
Capitalization........................ 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 29
Management............................ 39
Certain Transactions.................. 46
Principal Stockholders................ 47
Selling Securityholders............... 50
Shares Eligible for Future Sale....... 50
Description of the Senior Notes....... 51
Description of Capital Stock.......... 61
Description of Warrants............... 63
Plan of Distribution.................. 65
Legal Matters......................... 66
Experts............................... 67
Index to Financial Statements......... F-1

- ------------------------------------------------------
- ------------------------------------------------------

- ------------------------------------------------------
- ------------------------------------------------------
AMERICA WEST
AIRLINES, INC.

1,200,000 SHARES
CLASS A COMMON STOCK

18,698,704 SHARES
CLASS B COMMON STOCK

$123,000,000 11 1/4%
SENIOR UNSECURED NOTES DUE 2001

5,850,016 CLASS B
COMMON STOCK WARRANTS

------------------------

PROSPECTUS
------------------------

, 1995

------------------------------------------------------
------------------------------------------------------
102

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the issuance and distribution of the securities being registered hereby:

Securities and Exchange Commission Filing Fee........................... $ 9,448.00
Blue Sky Filing Fees and Expenses....................................... 1,000.00
Printing Costs.......................................................... 52,500.00
Legal Fees and Expenses................................................. 27,500.00
Accounting Fees and Expenses............................................ 30,000.00
Trustee's Fees and Expenses............................................. N/A
Miscellaneous........................................................... 1,052.00
-----------
Total(1)...................................................... $121,500.00
==========

- ---------------
(1) Total includes an estimated $76,500 of expenses related to the issuance and
distribution of the securities registered hereby that were incurred prior to
the filing of this post-effective amendment. Expenses related solely to this
post-effective amendment total $45,000 and include: (i) Printing
Costs -- $27,500; (ii) Legal Fees and Expenses ($7,500) and (iii) Accounting
Fees and Expenses -- $10,000.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law ("DGCL") authorizes,
inter alia, a corporation generally to indemnify any person ("indemnitee") who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation, in a similar position with another corporation or
entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. With respect to actions or
suits by or in the right of the corporation; however, an indemnitee who acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation is generally limited to attorneys' fees and
other expenses, and no indemnification shall be made if such person is adjudged
liable to the corporation unless and only to the extent that a court of
competent jurisdiction determines that indemnification is appropriate. Section
145 further provides that any indemnification shall be made by the corporation
only as authorized in each specific case upon a determination by the (i)
stockholders, (ii) board of directors by a majority vote of a quorum of
disinterested directors so directs, that indemnification of the indemnitee is
proper because he has met the applicable standard of conduct. Section 145
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
by-law agreement, vote of stockholders or disinterested directors or otherwise.

Section 8.02 of the Company's By-laws, a copy of which is filed as Exhibit
3.2 to this Registration Statement provides, in substance, that directors,
officers, employees and agents shall be indemnified to the fullest extent
permitted by Section 145 of the DGCL.

Article 12.0 of the Company's Restated Certificate of Incorporation, a copy
of which is filed as Exhibit 3.1 to this Registration Statement, limits the
liability of directors of the Company to the Company or its stockholders (in
their capacity as directors but not in their capacity as officers) to the
fullest extent permitted by the DGCL. Specifically, directors of the Company
will not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchase or redemptions as provided in section 174 of the DGCL or (iv) for any
transaction from

II-1
103

which the director derived an improper personal benefit. The Restated
Certificate of Incorporation also provides that if the DGCL is amended after the
approval of the Restated Certificate of Incorporation to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Company will be eliminated or limited to the
full extent permitted by the DGCL, as so amended.

The form of the Third Revised Investment Agreement filed as Exhibit 10.1 to
this Registration Statement contains certain provisions for indemnification of
directors and officers of the Company and the Selling Securityholder against
civil liabilities under the Securities Act. Certain of these provisions are set
forth in the form of the Registration Rights Agreement filed as Exhibit 4.6 to
this Registration Rights Agreement.

The Company intends to enter into indemnification agreements with certain
of its directors providing for indemnification to the fullest extent permitted
by the laws of the State of Delaware. These agreements provide for specific
procedures to better assure the directors' rights to indemnification, including
procedures for directors to submit claims, for determination of directors
entitled to indemnification (including the allocation of the burden of proof and
selection of a reviewing party) and for enforcement of directors'
indemnification rights.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following summarizes transactions occurring within the last three years
in which the Company has sold securities without registration under the
Securities Act.

On February 15, 1991, the Company sold 253,422 shares of its common stock
to Transpacific Enterprises, Inc. for $1,393,821, or $5.50 per share, in
reliance upon the exemption set forth in Section 4(2) of the Securities Act.

On the Effective Date, the Company issued the following securities in
connection with its Reorganization:

1. The Company issued 26,053,185 shares of Class B Common Stock to
holders of approximately $310 million of allowed, general unsecured
prepetition claims against the Company in satisfaction of such claims in
reliance upon the exemption set forth in Section 1145 of the Bankruptcy
Code.

2. The Company issued 3,865,179 shares of Class B Common Stock
(1,615,179 of which shares are to be issued in exchange for cash,
aggregating $14,357,326, provided by such equity holders upon the exercise
of rights to subscribe for such shares at a price of $8.889 per share) and
6,230,769 Warrants to the holders of pre-existing equity interests in the
Company in consideration of cancellation of such pre-existing equity
interests in reliance upon the exemption set forth in Section 1145 of the
Bankruptcy Code.

3. The Company issued 900,000 shares of Class B Common Stock and
1,384,615 Warrants to Guiness Peat Aviation and its affiliates ("GPA") in
satisfaction of claims of GPA against the Company in reliance upon the
exemption set forth in Section 1145 of the Bankruptcy Code.

4. The Company issued the following securities to partners of AmWest
(or to Lehman Brothers Inc. or certain funds and accounts managed or
advised by Fidelity Management Trust Company, in each case as assignees of
AmWest's rights to acquire such securities) for new consideration paid to
the Company in accordance with the Company's Plan: (i) 1,200,000 shares of
Class A Common Stock for $7.467 per share; (ii) 12,981,636 shares of Class
B Common Stock for $7.467 per share and 721,815 shares of Class B Common
Stock for $8.889 per share; (iii) $100 million principal amount of Senior
Notes for $100 million in cash; and (iv) 2,769,231 Warrants, separate
consideration for which was not specified. The Company relied upon the
exemption set forth in Section 4(2) of the Securities Act.

In September, 1994 the Company issued 125,000 shares of Class B Common
Stock to William A. Franke, the Chief Executive Officer of America West, as a
reorganization success bonus.

In October 1994, the Company issued Additional Senior Notes and cash to
Fidelity and Lehman in exchange for full satisfaction of pre-existing secured
claims and other interests.

II-2
104

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.

(a) The following exhibits are filed as part of this Registration
Statement:

EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------

2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11 of the
Bankruptcy Code -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
3.1 -- Restated Certificate of Incorporation of America West Airlines,
Inc. -- Incorporated by reference to the Company's Report on Form 8-K
dated September 8, 1994.
3.2 -- Restated By-laws of America West Airlines, Inc., as
amended -- Incorporated by reference to the Company's Report on Form 10-K
dated December 31, 1994.
4.1 -- Indenture for $130,000,000 11 1/4% Senior Notes due 2001 dated August 25,
1994, of America West Airlines, Inc. and American Bank National
Association, as trustee -- Incorporated by reference to the Company's
Report on Form 8-K dated September 9, 1994.
4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above).
4.3 -- Warrant Agreement dated August 25, 1994 between America West Airlines,
Inc. and First Interstate, N.A., as Warrant Agent -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above).
4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated August 25,
1994 among America West Airlines, Inc., AmWest Partners, L.P., GPA Group
plc and certain other Stockholder Representatives -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- First Amendment to Stockholders' Agreement for America West Airlines, Inc.
dated September 6, 1994 among Air Partners II, L.P., TPG Partners, L.P.,
TPG Parallel I, L.P., Continental Airlines, Inc., Mesa Airlines, Inc., GPA
Group plc and certain other stockholder representatives -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- Registration Rights Agreement dated August 25, 1994 among America West
Airlines, Inc., AmWest Partners, L.P. and other holders -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.7 -- Article 4.0 of the Company's Restated Certificate of Incorporation
(included in Exhibit 3.1 above).
5.1 -- Opinion of Andrews & Kurth L.L.P.
10.1 -- Third Revised Investment Agreement dated April 21, 1994 between America
West Airlines, Inc. and AmWest Partners, L.P. -- Incorporated by reference
to Exhibit 10.A to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1994.
10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994 between
America West Airlines and AmWest Partners, L.P. -- Incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA Group plc,
dated June 13, 1994 -- Incorporated by Reference to the Company's
Registration Statement on Form S-1 (No. 54243), as amended.
10.15 -- America West Airlines Management Resignation Allowance Guidelines, as
amended, dated November 18, 1993 -- Incorporated by Reference to the
Company's Registration Statement on Form S-1 (No. 54243), as amended.
10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto), dated as of
September 28, 1990 between AVSA, S.A.R.L. and the Company, together with
Letter Agreement Nos. 1-10, inclusive -- Incorporated by reference to
Exhibit 10-(D)(1) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990.
10.17 -- Loan Agreement, dated as of September 28, 1990, among the Company, AVSA
and AVSA, as agent -- Incorporated by reference to Exhibit 10-(D)(2) to
the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1990.

II-3
105

EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------

10.19 -- V2500 Support Contract Between the Company and International Aero Engines
AG, dated September 28, 1990, together with Side Letters Nos. 1-4,
inclusive -- Incorporated by reference to Exhibit 10-(D)(3) to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1990.
10.20 -- Cash Management Agreement, dated September 28, 1991, among the Company, BT
and First Interstate of Arizona, N.A. -- Incorporated by reference to
Exhibit 10-D(21) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.21 -- First Amendment to Cash Management Agreement, dated December 1, 1991,
among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-D(22) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.22 -- Second Amendment to Cash Management Agreement, dated September 1, 1992,
among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-O(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.23 -- Restructuring Agreement, dated December 1, 1991 between the Company and
Kawasaki -- Incorporated by reference to Exhibit 10-D(24) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company and
Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.25 -- First Amendment to A320 Put Agreement, dated September 1,
1992 -- Incorporated by reference to Exhibit 10-R(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company and GPA
Group plc -- Incorporated by reference to Exhibit 10-D(26) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991.
10.27 -- First Amendment to A320 Put Agreement, dated as of September 1, 1992 --
Incorporated by reference to Exhibit 10-S(2) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.
10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA Group plc,
GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the
Company -- Incorporated by reference to Exhibit 10-D(27) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.29 -- Official Statement dated August 11, 1986 for the $54,000,000 Variable Rate
Airport Facility Revenue Bonds -- Incorporated by reference to Exhibit
10.e to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1986.
10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use Agreement")
among the City of Phoenix, The Industrial Development Authority of the
City of Phoenix, Arizona and the Company -- Incorporated by reference to
Exhibit 10-D(9) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1989.
10.31 -- First Amendment dated August 1, 1990 to Airport Use
Agreement -- Incorporated by reference to Exhibit 10-(D)(9) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the Company,
the Bank signatories thereto, and Bank of America National Trust and
Savings Association, as Agent for the Banks (the "Revolving Loan
Agreement") -- Incorporated by reference to Exhibit 10-1 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1990.
10.33 -- First Amendment dated April 17, 1990 to Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.

II-4
106

EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------

10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(13) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990.
10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between the
Company and IAE -- Incorporated by reference to Exhibit 10-(D)(4) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.37 -- Master Credit Modification Agreement dated as of October 1, 1992, among
the Company, IAE International Aero Engines AG, Intlaero (Phoenix A320)
Inc., Intlaero (Phoenix B737) Inc., CAE Electronics Ltd., and Hughes
Rediffusion Simulation Limited -- Incorporated by reference to Exhibit
10-L to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10.38 -- Credit Agreement, dated as of September 28, 1990 between the Company and
IAE -- Incorporated by reference to Exhibit 10-(D)(5) to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1990.
10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1,
1991 -- Incorporated by reference to Exhibit 10-(M)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15,
1991 -- Incorporated by reference to Exhibit 10-(M)(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1,
1992 -- Incorporated by reference to Exhibit 10-(M)(4) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.42 -- Form of Third Amended and Restated Credit Agreement dated September 30,
1993, among the Company, various lenders, and BT Commercial Corp. as
Administrative Agent (without exhibits) -- Incorporated by reference to
Exhibit 10-(N)(1) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
10.43 -- Form of Amended and Restated Management Letter Agreement, dated as of
September 30, 1993 from the Company to the Lenders -- Incorporated by
reference to Exhibit 10-N(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993.
10.44 -- Form of Amendment to Amended and Restated Management Letter Agreement;
Consent to Amendment of By-laws dated February 8, 1994 from the Company to
the Lenders -- Incorporated by reference to Exhibit 10-N(3) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
10.45 -- Fourth Amended and Restated Credit Agreement dated June 30,
1994 -- Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1994.
10.46 -- Key Employee Protection Agreement dated as of June 27, 1994 between
America West Airlines, Inc. and William A. Franke -- Incorporated by
reference to the Company's Registration Statement on Form S-1 (No. 54243),
as amended.
10.47 -- Management Rights Agreement dated August 25, 1994 between TPG Partners
L.P., TPG Genpar, L.P. and America West Airlines, Inc. -- Incorporated by
reference to the Company's Registration Statement on Form S-1 (No. 54243),
as amended.
10.48 -- V2500 Support Contract dated December 23, 1994 between America West
Airlines, Inc. and International Aero Engineers, as
amended -- Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan
Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.

II-5
107

EXHIBIT
NUMBER TITLE
---------- -----

10.50 -- Employment Agreement dated as of December 1, 1994 between America West
Airlines, Inc. and William A. Franke -- Incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
10.51 -- Employment Agreement dated as of December 1, 1994 between America West
Airlines, Inc. and A. Maurice Myers, as amended -- Incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
11.1 -- Statement re: computation of net income (loss) per common share.
12.1 -- Statement re: computation of ratio of earnings to fixed charges.
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1 above).
*23.2 -- Consent of KPMG Peat Marwick LLP (independent auditors) -- Included at
page S-1.
24.1 -- Power of Attorney (included on the signature pages of this Registration
Statement.)
25.1 -- Statement of Eligibility on Form T-1 of American Bank National
Association, as trustee under the Senior Note Indenture -- Incorporated by
reference to the Company's Registration Statement on Form S-1 (No. 54243),
as amended.
27 -- Financial Data Schedule.

- ---------------
* Filed herewith.

(b) Financial Statement Schedule:

The following financial statement schedule is filed as part of this
Registration Statement, but not included in the Prospectus.

SCHEDULE PAGE
-------- ----

Independent Auditors' Report on Schedule and Consent.................. S-1
Schedule VIII -- Valuation and Qualifying Accounts.................... S-2

All other schedules for which provision is made in Regulation S-X of the
Commission are not required under the related instructions or are
inapplicable or the required information is included in the financial
statements or notes thereto and, therefore, have been omitted.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-6
108

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Post-Effective Amendment to the Registration
Statement, as amended to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Phoenix, State of Arizona on the 15th day of
June, 1995.

AMERICA WEST AIRLINES, INC.

By: *

------------------------------------
William A. Franke,
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement, as amended has been signed by the following persons
in the capacities indicated on June 15, 1995.

SIGNATURE TITLE
- ------------------------------------------ --------------------------

* Chairman of the Board and
- ------------------------------------------ Chief Executive Officer
William A. Franke (Principal Executive
Officer)

* President, Chief Operating
- ------------------------------------------ Officer and Director
A. Maurice Myers

* Vice President and
- ------------------------------------------ Controller (Principal
Raymond T. Nakano Financial and Accounting
Officer)

* Director
- ------------------------------------------
Julia Chang Bloch

* Director
- ------------------------------------------
Stephen Bollenbach

* Director
- ------------------------------------------
Frederick W. Bradley

* Director
- ------------------------------------------
James G. Coulter
* Director
- ------------------------------------------
John F. Fraser

* Director
- ------------------------------------------
John L. Goolsby

II-7
109

SIGNATURE TITLE
- ------------------------------------------ --------------------------

* Director
- ------------------------------------------
Richard C. Kraemer

* Director
- ------------------------------------------
John R. Power, Jr.
* Director
- ------------------------------------------
Larry L. Risley
* Director
- ------------------------------------------
Richard P. Schifter

* Director
- ------------------------------------------
John F. Tierney

* Director
- ------------------------------------------
Raymond S. Troubh

*by: /s/ MARTIN J. WHALEN
- ------------------------------------------
Martin J. Whalen
Attorney-in-Fact

II-8
110

INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT

The Board of Directors and Stockholders
America West Airlines, Inc.

Under date of February 24, 1995, we reported on the balance sheets of
America West Airlines, Inc. as of December 31, 1994 and 1993, and the related
statements of operations, cash flows and stockholders' equity (deficiency) for
the period August 26, 1994 to December 31, 1994, the period January 1, 1994 to
August 25, 1994 and for each of the years in the two-year period ended December
31, 1993, which are included herein. In connection with our audits of the
aforementioned financial statements, we also audited the related financial
statement schedule as included in the registration statements. The financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits. In our opinion, the financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

The audit report on the financial statements of America West Airlines, Inc.
referred to above contains an explanatory paragraph that states that as
discussed in Notes 1 and 2 to the financial statements, on August 25, 1994,
America West Airlines, Inc. emerged from bankruptcy. The financial statements of
the Reorganized Company reflect the impact of adjustments to reflect the fair
value of assets and liabilities under fresh start reporting. As a result, the
financial statements of the Reorganized Company are presented on a different
basis than those of the Predecessor Company and, therefore, are not comparable
in all respects.

KPMG Peat Marwick LLP

Phoenix, Arizona

June 15, 1995

S-1
111

AMERICA WEST AIRLINES, INC.

SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE PERIODS AUGUST 26 TO DECEMBER 31, 1994, JANUARY 1 TO AUGUST 25, 1994
AND THE YEARS ENDED DECEMBER 31, 1993 AND 1992
(IN THOUSANDS)

BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------

Allowance for doubtful receivables:
Period ended:
August 26, 1994 to December 31, 1994........ $2,833 $1,074 $ -- $ 376 $ 3,531
======== ======== ======== ======== =======
Allowance for doubtful receivables:
Period ended:
January 1, 1994 through August 25, 1994..... $3,030 $4,742 $ -- $4,939 $ 2,833
======== ======== ======== ======== =======
Years ended:
December 31, 1993........................... $2,542 $5,474 $ -- $4,986 $ 3,030
======== ======== ======== ======== =======
December 31, 1992........................... $3,603 $3,800 $ -- $4,861 $ 2,542
======== ======== ======== ======== =======
Reserve for obsolescence:
Period ended:
August 26, 1994 to December 31, 1994........ $ -- $ 483 $ -- $ -- $ 483
======== ======== ======== ======== =======
Reserve for obsolescence:
Period ended:
January 1, 1994 through August 25, 1994..... $7,231 $ 794 $ -- $8,025(a) $ --
======== ======== ======== ======== =======
Years ended:
December 31, 1993........................... $6,921 $ 902 $ -- $ 592 $ 7,231
======== ======== ======== ======== =======
December 31, 1992........................... $3,638 $3,283 $ -- $ -- $ 6,921
======== ======== ======== ======== =======

- ---------------
(a) Includes fresh start adjustment of approximately $7,885.

S-2
112

EXHIBIT INDEX

EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------

2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11
of the Bankruptcy Code -- Incorporated by reference to the
Company's Report on Form 8-K dated September 9, 1994.
3.1 -- Restated Certificate of Incorporation of America West Airlines,
Inc. -- Incorporated by reference to the Company's Report on Form
8-K dated September 8, 1994.
3.2 -- Restated By-laws of America West Airlines, Inc., as
amended -- Incorporated by reference to the Company's Report on
Form 10-K dated December 31, 1994.
4.1 -- Indenture for $130,000,000 11 1/4% Senior Notes due 2001 dated
August 25, 1994, of America West Airlines, Inc. and American Bank
National Association, as trustee -- Incorporated by reference to
the Company's Report on Form 8-K dated September 9, 1994.
4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above).
4.3 -- Warrant Agreement dated August 25, 1994 between America West
Airlines, Inc. and First Interstate, N.A., as Warrant
Agent -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above).
4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated
August 25, 1994 among America West Airlines, Inc., AmWest
Partners, L.P., GPA Group plc and certain other Stockholder
Representatives -- Incorporated by reference to the Company's
Report on Form 8-K dated September 9, 1994.
4.6 -- First Amendment to Stockholders' Agreement for America West
Airlines, Inc. dated September 6, 1994 among Air Partners II,
L.P., TPG Partners, L.P., TPG Parallel I, L.P., Continental
Airlines, Inc., Mesa Airlines, Inc., GPA Group plc and certain
other stockholder representatives -- Incorporated by reference to
the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- Registration Rights Agreement dated August 25, 1994 among America
West Airlines, Inc., AmWest Partners, L.P. and other
holders -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
4.7 -- Article 4.0 of the Company's Restated Certificate of
Incorporation (included in Exhibit 3.1 above).
5.1 -- Opinion of Andrews & Kurth L.L.P.
10.1 -- Third Revised Investment Agreement dated April 21, 1994 between
America West Airlines, Inc. and AmWest Partners,
L.P. -- Incorporated by reference to Exhibit 10.A to the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1994.
10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994
between America West Airlines and AmWest Partners,
L.P. -- Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA
Group plc, dated June 13, 1994 -- Incorporated by Reference to
the Company's Registration Statement on Form S-1 (No. 54243), as
amended.
10.15 -- America West Airlines Management Resignation Allowance
Guidelines, as amended, dated November 18, 1993 -- Incorporated
by Reference to the Company's Registration Statement on Form S-1
(No. 54243), as amended.

113

EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------

10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto),
dated as of September 28, 1990 between AVSA, S.A.R.L. and the
Company, together with Letter Agreement Nos. 1-10,
inclusive -- Incorporated by reference to Exhibit 10-(D)(1) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990.
10.17 -- Loan Agreement, dated as of September 28, 1990, among the
Company, AVSA and AVSA, as agent -- Incorporated by reference to
Exhibit 10-(D)(2) to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1990.
10.19 -- V2500 Support Contract Between the Company and International Aero
Engines AG, dated September 28, 1990, together with Side Letters
Nos. 1-4, inclusive -- Incorporated by reference to Exhibit
10-(D)(3) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990.
10.20 -- Cash Management Agreement, dated September 28, 1991, among the
Company, BT and First Interstate of Arizona, N.A. -- Incorporated
by reference to Exhibit 10-D(21) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991.
10.21 -- First Amendment to Cash Management Agreement, dated December 1,
1991, among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-D(22) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991.
10.22 -- Second Amendment to Cash Management Agreement, dated September 1,
1992, among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-O(3) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.23 -- Restructuring Agreement, dated December 1, 1991 between the
Company and Kawasaki -- Incorporated by reference to Exhibit
10-D(24) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company
and Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10.25 -- First Amendment to A320 Put Agreement, dated September 1, 1992 --
Incorporated by reference to Exhibit 10-R(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company
and GPA Group plc -- Incorporated by reference to Exhibit
10-D(26) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.27 -- First Amendment to A320 Put Agreement, dated as of September 1,
1992 -- Incorporated by reference to Exhibit 10-S(2) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA
Group plc, GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the
Company -- Incorporated by reference to Exhibit 10-D(27) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991.
10.29 -- Official Statement dated August 11, 1986 for the $54,000,000
Variable Rate Airport Facility Revenue Bonds -- Incorporated by
reference to Exhibit 10.e to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1986.

114

EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------

10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use
Agreement") among the City of Phoenix, The Industrial Development
Authority of the City of Phoenix, Arizona and the
Company -- Incorporated by reference to Exhibit 10-D(9) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1989.
10.31 -- First Amendment dated August 1, 1990 to Airport Use Agreement --
Incorporated by reference to Exhibit 10-(D)(9) to the Company's
Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the
Company, the Bank signatories thereto, and Bank of America
National Trust and Savings Association, as Agent for the Banks
(the "Revolving Loan Agreement") -- Incorporated by reference to
Exhibit 10-1 to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1990.
10.33 -- First Amendment dated April 17, 1990 to Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1990.
10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1990.
10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving
Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(13)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990.
10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between
the Company and IAE -- Incorporated by reference to Exhibit
10-(D)(4) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1990.
10.37 -- Master Credit Modification Agreement dated as of October 1, 1992,
among the Company, IAE International Aero Engines AG, Intlaero
(Phoenix A320) Inc., Intlaero (Phoenix B737) Inc., CAE
Electronics Ltd., and Hughes Rediffusion Simulation
Limited -- Incorporated by reference to Exhibit 10-L to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.38 -- Credit Agreement, dated as of September 28, 1990 between the
Company and IAE -- Incorporated by reference to Exhibit 10-(D)(5)
to the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1990.
10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1, 1991 --
Incorporated by reference to Exhibit 10-(M)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15, 1991 --
Incorporated by reference to Exhibit 10-(M)(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1, 1992 --
Incorporated by reference to Exhibit 10-(M)(4) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.42 -- Form of Third Amended and Restated Credit Agreement dated
September 30, 1993, among the Company, various lenders, and BT
Commercial Corp. as Administrative Agent (without exhibits) --
Incorporated by reference to Exhibit 10-(N)(1) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993.

115

SEQUENTIAL
EXHIBIT NUMBERED
NUMBER TITLE PAGE
------- ----- ----------

10.43 -- Form of Amended and Restated Management Letter Agreement, dated
as of September 30, 1993 from the Company to the
Lenders -- Incorporated by reference to Exhibit 10-N(2) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1993.
10.44 -- Form of Amendment to Amended and Restated Management Letter
Agreement; Consent to Amendment of By-laws dated February 8, 1994
from the Company to the Lenders -- Incorporated by reference to
Exhibit 10-N(3) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993.
10.45 -- Fourth Amended and Restated Credit Agreement dated June 30,
1994 -- Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1994.
10.46 -- Key Employee Protection Agreement dated as of June 27, 1994
between America West Airlines, Inc. and William A.
Franke -- Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 54243), as amended.
10.47 -- Management Rights Agreement dated August 25, 1994 between TPG
Partners L.P., TPG Genpar, L.P. and America West Airlines,
Inc. -- Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 54243), as amended.
10.48 -- V2500 Support Contract dated December 23, 1994 between America
West Airlines, Inc. and International Aero Engineers, as
amended -- Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan --
Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
10.50 -- Employment Agreement dated as of December 1, 1994 between America
West Airlines, Inc. and William A. Franke -- Incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.51 -- Employment Agreement dated as of December 1, 1994 between America
West Airlines, Inc. and A. Maurice Myers, as
amended -- Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
11.1 -- Statement re: computation of net income (loss) per common share.
12.1 -- Statement re: computation of ratio of earnings to fixed charges.
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1
above).
*23.2 -- Consent of KPMG Peat Marwick LLP (independent
auditors) -- Included at page S-1.
24.1 -- Power of Attorney (included on the signature pages of this
Registration Statement.)
25.1 -- Statement of Eligibility on Form T-1 of American Bank National
Association, as trustee under the Senior Note
Indenture -- Incorporated by reference to the Company's
Registration Statement on Form S-1 (No. 54243), as amended.
27 -- Financial Data Schedule.

- ---------------
* Filed herewith.