-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UAMlZ/2drRebuVNAN68BxzldWXEOI4Yy/6gMrwA7qXWv+ibkfljyMuZ2qHi98QC3 I8M53WWi5bjkLNhr1dpkCw== 0000898822-05-001330.txt : 20051102 0000898822-05-001330.hdr.sgml : 20051102 20051102162206 ACCESSION NUMBER: 0000898822-05-001330 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051102 DATE AS OF CHANGE: 20051102 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: US AIRWAYS GROUP INC CENTRAL INDEX KEY: 0000701345 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 541194634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-33976 FILM NUMBER: 051173529 BUSINESS ADDRESS: STREET 1: 2345 CRYSTAL DR CITY: ARLINGTON STATE: VA ZIP: 22227 BUSINESS PHONE: 7038727000 MAIL ADDRESS: STREET 1: 2345 CRYSTAL DRIVE CITY: ARLINGTON STATE: VA ZIP: 22227 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ACE Aviation Holdings Inc. CENTRAL INDEX KEY: 0001295721 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 5100 DE MAISONNEUVE BOULEVARD WEST CITY: MONTREAL STATE: A8 ZIP: H4A 3T2 BUSINESS PHONE: (514) 422-5000 MAIL ADDRESS: STREET 1: 5100 DE MAISONNEUVE BOULEVARD WEST CITY: MONTREAL STATE: A8 ZIP: H4A 3T2 FORMER COMPANY: FORMER CONFORMED NAME: Ace Aviation Holdings Inc. DATE OF NAME CHANGE: 20040628 SC 13D 1 sched13d.txt - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 US AIRWAYS GROUP, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 90341W 10 8 (CUSIP Number) ACE AVIATION HOLDINGS INC. ATTENTION: SYDNEY J. ISAACS, ESQ. 5100 DE MAISONNEUVE BLVD. WEST MONTREAL, QUEBEC, H4A 3T2 (Name, Address and Telephone Number of Person Authorized to Receive Notices of Communication) SEPTEMBER 27, 2005 (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on the following pages) (Page 1 of 9 pages) - -------------------------------------------------------------------------------- CUSIP NO. 90341W 10 8 13D Page 2 of 9 - -------- ----------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS ACE Aviation Holdings Inc. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS - -------- ----------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - -------- ----------------------------------------------------------------------- 3 SEC USE ONLY - -------- ----------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------- ----------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------- ----------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Canada - -------- ----------------------------------------------------------------------- ------ ------------------------------------------------ NUMBER OF SHARES 7 SOLE VOTING POWER 5,000,000 ------ ------------------------------------------------ BENEFICIALLY OWNED BY 8 SHARED VOTING POWER ------ ------------------------------------------------ EACH REPORTING 9 SOLE DISPOSITIVE POWER 5,000,000 ------ ------------------------------------------------ PERSON WITH 10 SHARED DISPOSITIVE POWER ------ ------------------------------------------------ - -------- ----------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,000,000 - -------- ----------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------- ----------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% - -------- ----------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------- ----------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 90341W 10 8 13D Page 3 of 9 ITEM 1. SECURITY AND ISSUER This Schedule 13D relates to the common stock, par value $0.01 per share (the "Common Stock"), of US Airways Group, Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 111 West Rio Salado Parkway, Tempe, Arizona 85281. ITEM 2. IDENTITY AND BACKGROUND This statement is being filed by ACE Aviation Holdings Inc. (the "Filing Person"), incorporated under the laws of Canada. The principal executive offices of the Filing Person are located at 5100 de Maisonneuve Blvd. West, Montreal, Quebec, H4A 3T2, Canada. The Filing Person's primary business is acting as the parent holding company for Air Canada and related businesses. Annex A hereto, sets forth the name, citizenship, residence or business address and present principal occupation of each executive officer and director of the Filing Person and is incorporated herein by reference. Neither the Filing Person nor any of the individuals referred to on Annex A has, during the past five years, (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, U.S. Federal or State securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The Filing Person acquired 5,000,000 shares of Common Stock (the "Shares") for an aggregate purchase price of $75,000,000. The Filing Person acquired the Shares using working capital. ITEM 4. PURPOSE OF TRANSACTION On September 27, 2005, the Issuer consummated the transactions contemplated by its plan of reorganization, including its previously announced merger transaction with America West Holdings Corporation ("America West Holdings"). In connection with these transactions, the Filing Person agreed to purchase an aggregate of $75,000,000 of Common Stock at a purchase price of $15 per share (the "Equity Investment") pursuant to an Investment Agreement, dated May 19, 2005, by and among the Issuer, America West Holdings and the Filing Person (the "Investment Agreement"). Pursuant to a letter agreement, dated as of July 7, 2005, by and among the Issuer, America West Holdings, the Filing Person and the other parties thereto (the "July Letter Agreement"), among other things, the Issuer granted the Filing Person options to purchase 1,000,000 additional shares of Common Stock at $15 per share (the "Options"). The Options gave the Filing Person the right to purchase the underlying shares on the same terms and conditions as the Filing Person's prior commitment to buy the Shares. Pursuant to a letter agreement, dated as of September 16, 2005, by and among the Issuer, America West Holdings, the Filing Person and the other parties thereto (the "September Letter Agreement"), the terms upon which the Options may be exercised were amended. On September 28, 2005, PAR Investment Partners acquired all 1,000,000 CUSIP NO. 90341W 10 8 13D Page 4 of 9 Options from the Filing Person for an aggregate purchase price of $1,000,000 pursuant to an Option Purchase Agreement, dated September 22, 2005, by and between PAR Investment Partners and the Filing Person. In connection with the consummation of the Equity Investment, on September 27, 2005, the Filing Person and the Issuer entered into a Stockholder's Agreement (the "Stockholder's Agreement"), a copy of which is filed as an exhibit hereto and incorporated herein by reference. Among other things, the Stockholder's Agreement provides that, subject to certain exceptions, the Filing Person will not sell any of the Shares until six months following September 27, 2005 and that the Issuer will provide certain registration rights to the Filing Person, including payment of certain fees if the Issuer is not able to cause a registration statement to become effective in the agreed upon time period. In addition, the Stockholder's Agreement provides that the Filing Person may nominate an individual to be appointed to the board of directors of the Issuer for a three-year term. The Stockholder's Agreement also provides that (i) for so long as the Filing Person holds at least 66.67% of the number of shares of Common Stock acquired pursuant to the Investment Agreement (the "Investor Threshold"), it will be entitled to nominate a director for successive three-year terms and (ii) if the Filing Person falls below the Investor Threshold, the Filing Person will cause its nominee to resign from the board of directors. Effective September 30, Robert A. Milton, the Filing Person's nominee, was appointed to the Issuer's board of directors. Concurrent with the Equity Investment, the Filing Person and certain of its affiliates entered into the following commercial agreements with the Issuer and its affiliates: (i) Master Services Agreement between Air Canada, America West Airlines, Inc. and US Airways, Inc. for Ground Handling and Airport Facilities, (ii) Memorandum of Understanding between Air Canada, America West Airlines, Inc. and US Airways, Inc. relating to a Code Share Agreement, (iii) Trans-Border Flying Agreement between ACE Aviation Holdings Inc., US Airways Group, Inc. and America West Holdings Corporation, and (iv) Technical Services General Terms Agreement between ACTS Limited Partnership, America West Airlines, Inc. and US Airways, Inc. and related maintenance service agreements. The Shares were acquired principally for investment purposes. The Filing Person intends to review its investment in the Issuer from time to time on the basis of various factors, including the business, financial condition, results of operations and prospects of each of the Issuer and the Filing Person, general economic and industry conditions, the securities markets in general and those for the Issuer's stock in particular, as well as other developments, and to consider the advisability of various alternative courses of action with respect to its investment in the Issuer, including, without limitation, the acquisition or disposition by the Filing Person of shares of Common Stock. Except as described in this Item 4 of Schedule 13D, the Filing Person does not currently have any plans or proposals that relate to or would result in any of the actions specified in clause (a) through (j) of this Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER As of the date of this filing, the Filing Person is the beneficial owner of 5,000,000 shares of Common Stock, representing approximately 7.3% of the issued and outstanding shares of the Issuer, as reported in publicly available information. The Shares reported hereby are directly owned by the Filing Person. CUSIP NO. 90341W 10 8 13D Page 5 of 9 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The references to and descriptions of the Stockholder's Agreement, July Letter Agreement and September Letter Agreements are incorporated herein by reference. Such references and descriptions are qualified in their entirety by the full texts of such documents, copies of which are filed as Exhibits 99.1, 99.2 and 99.3, respectively, and incorporated herein by reference. In addition, Robert A. Milton, the Chairman, President and Chief Executive Officer of the Filing Person, entered, in his capacity as a director of the Issuer and not as a representative of the Filing Person, into two letter agreements with the Issuer's underwriters on September 27, 2005, one regarding the Issuer's proposed issuance of Common Stock (the "Stock Letter Agreement") and the other regarding the Issuer's proposed issuance of Senior Convertible Notes and options to purchase Senior Convertible Notes (the "Notes Letter Agreement"). The Stock Letter Agreement and the Notes Letter Agreement each restrict Mr. Milton from transferring any Common Stock for a period of 180 days, which period may be extended by up to 34 days under specified circumstances. If a material event for the Issuer occurs during the 17 days prior to or 16 days following the expiration of such 180-day period, then the transfer restrictions shall be extended until the 18th day following the occurrence of such material event. Mr. Milton does not currently own any Common Stock. The foregoing description is qualified in its entirety by the full texts of the Stock Letter Agreement and the Notes Letter Agreement, copies of which are filed as Exhibits 99.4 and 99.5, respectively, and incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 99.1 Stockholder's Agreement, dated as of September 27, 2005, between US Airways Group, Inc. and the ACE Aviation Holdings Inc. (incorporated herein by reference to Exhibit 10.1 to the Issuer's Current Report on Form 8-K dated September 27, 2005 and filed with the Securities and Exchange Commission on October 3, 2005 (File No. 001-08444)). 99.2 July Letter Agreement, dated as of July 7, 2005, between US Airways Group, Inc., America West Holdings Corporation, ACE Aviation Holdings Inc. and the other parties thereto (incorporated herein by reference to Exhibit 10.2 to the Issuer's Current Report on Form 8-K dated July 7, 2005 and filed with the Securities and Exchange Commission on July 13, 2005 (File No. 001-08444)). 99.3 September Letter Agreement, dated as of September 16, 2005, between US Airways Group, Inc., America West Holdings Corporation, ACE Aviation Holdings Inc. and the other parties thereto (incorporated herein by reference to Exhibit 99.4 to the Schedule 13D dated September 27, 2005 and filed by PAR Capital Management, Inc. with the Securities and Exchange Commission on October 7, 2005 (File No. 005-33976)). 99.4 Stock Letter Agreement, dated as of September 27, 2005, between Merrill Lynch & Co. and Robert A. Milton. 99.5 Notes Letter Agreement, dated as of September 27, 2005, between Merrill Lynch & Co. and Robert A. Milton. CUSIP NO. 90341W 10 8 13D Page 6 of 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 2, 2005 ACE AVIATION HOLDINGS INC. /s/ Sydney John Isaacs --------------------------------------------- Name: Sydney John Isaacs Title: Senior Vice President, Corporate Development and Chief Legal Officer CUSIP NO. 90341W 10 8 13D Page 7 of 9 EXHIBIT INDEX Exhibit No. Exhibit 99.1 Stockholder's Agreement, dated as of September 27, 2005, between US Airways Group, Inc. and the ACE Aviation Holdings Inc. (incorporated herein by reference to Exhibit 10.1 to the Issuer's Current Report on Form 8-K dated September 27, 2005 and filed with the Securities and Exchange Commission on October 3, 2005 (File No. 001-08444)). 99.2 July Letter Agreement, dated as of July 7, 2005, between US Airways Group, Inc., America West Holdings Corporation, ACE Aviation Holdings Inc. and the other parties thereto (incorporated herein by reference to Exhibit 10.2 to the Issuer's Current Report on Form 8-K dated July 7, 2005 and filed with the Securities and Exchange Commission on July 13, 2005 (File No. 001-08444)). 99.3 September Letter Agreement, dated as of September 16, 2005, between US Airways Group, Inc., America West Holdings Corporation, ACE Aviation Holdings Inc. and the other parties thereto (incorporated herein by reference to Exhibit 99.4 to the Schedule 13D dated September 27, 2005 and filed by PAR Capital Management, Inc. with the Securities and Exchange Commission on October 7, 2005 (File No. 005-33976)). 99.4 Stock Letter Agreement, dated as of September 27, 2005, between Merrill Lynch & Co. and Robert A. Milton. 99.5 Notes Letter Agreement, dated as of September 27, 2005, between Merrill Lynch & Co. and Robert A. Milton. CUSIP NO. 90341W 10 8 13D Page 8 of 9 Annex A - ------------------- --------- ----------------------------- -------------------- Name Citize- Business Address Title and nship Principal Occupation - ------------------- --------- ----------------------------- -------------------- Officers - ------------------- --------- ----------------------------- -------------------- Robert A. Milton USA / 5100 de Maisonneuve Blvd. West Chairman of the Canada Montreal, Quebec Board, President Canada H4A 3T2 & Chief Executive Officer, ACE Aviation Holdings Inc. - ------------------- --------- ----------------------------- -------------------- Brian Dunne Ireland Same as above Executive Vice President & Chief Financial Officer, ACE Aviation Holdings Inc. - ------------------- --------- ----------------------------- -------------------- Greg Cote Canada Same as above Senior Vice President, Corporate Finance & Strategy, ACE Aviation Holdings Inc. - ------------------- --------- ----------------------------- -------------------- Duncan Dee Canada Same as above Senior Vice President, Corporate Affairs & Chief Administrative Officer, ACE Aviation Holdings Inc. - ------------------- --------- ----------------------------- -------------------- Sydney John Isaacs Canada Same as above Senior Vice President, Corporate Development & Chief Legal Officer, ACE Aviation Holdings Inc. - ------------------- --------- ----------------------------- -------------------- Jack McLean Canada 355 Portage Avenue Controller, Winnipeg, Manitoba ACE Aviation Canada R3B 2C3 Holdings, Inc. - ------------------- --------- ----------------------------- -------------------- Non-officer Directors - ------------------- --------- ----------------------------- -------------------- Bernard Attali France 6, rue Christophe Colomb Country Advisor / Paris, France 75008 Texas Pacific Group France - ------------------- --------- ----------------------------- -------------------- Robert E. Brown Canada 8585 Cote de Liesse President and Chief P.O. Box 1800 Executive Officer, Saint-Laurent, Quebec CAE Inc. Canada H4L 4X4 - ------------------- --------- ----------------------------- -------------------- Carlton D. Donaway USA 299 Park Avenue Senior Advisor, New York, New York Cerberus Capital United States 10171 Management, L.P. - ------------------- --------- ----------------------------- -------------------- CUSIP NO. 90341W 10 8 13D Page 9 of 9 - ------------------- --------- ----------------------------- -------------------- Michael Green USA / 299 Park Avenue President - Canada New York, New York Operations, United States 10171 Cerberus Capital Management, L.P. - ------------------- --------- ----------------------------- -------------------- W. Brett Ingersoll USA 299 Park Avenue Managing Director, New York, New York Cerberus Capital United States 10171 Management L.P. - ------------------- --------- ----------------------------- -------------------- Pierre Marc Johnson Canada 1250 Rene-Levesque Blvd. West Senior Counsel, Suite 2500 Heenan Blaikie Montreal, Quebec Canada H3B 4Y1 - ------------------- --------- ----------------------------- -------------------- Richard H. McCoy Canada 33 Crescent Road Retired Toronto, Ontario Canada M4W 1T4 - ------------------- --------- ----------------------------- -------------------- John T. McLennan Canada 131 Bell Road Corporate Director Mahone Bay, Nova Scotia Canada B0J 2E0 - ------------------- --------- ----------------------------- -------------------- David I. Richardson Canada 107 Thompson Road, R.R.#1 Corporate Director Grafton, Ontario Canada K0K 2G0 - ------------------- --------- ----------------------------- -------------------- Marvin Yontef Canada 5300 Commerce Court West Senior Partner, 199 Bay Street Stikeman Elliott Toronto, Ontario LLP Canada M5L 1B9 - ------------------- --------- ----------------------------- -------------------- EX-99 2 lettone.txt EXHIBIT 99.4 September 27, 2005 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 World Financial Center New York, New York 10080 Re: PROPOSED PUBLIC OFFERING BY U.S. AIRWAYS GROUP, INC. Dear Sirs: The undersigned, a director of U.S. Airways Group, Inc., a Delaware corporation (the "Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") proposes to enter into a Purchase Agreement (the "Purchase Agreement") with the Company providing for the public offering of shares (the "Securities") of the Company's common stock, par value $.01 per share (the "Common Stock"). In recognition of the benefit that such an offering will confer upon the undersigned as a director of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees, in his personal capacity and not as representative of ACE Aviation Holdings Inc., with each underwriter to be named in the Purchase Agreement that, during a period of 180 days from the date of the Purchase Agreement, the undersigned will not, without the prior written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of the Company's Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, in his personal capacity and not as representative of ACE Aviation Holdings Inc., or file, or cause to be filed, any registration statement under the Securities Act of 1933, as amended, with respect to any of the foregoing (collectively, the "Lock-Up Securities") or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. Notwithstanding the foregoing, if: (1) during the last 17 days of the 180-day lock-up period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day lock-up period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day lock-up period, the restrictions imposed by this lock-up agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, as applicable, unless Merrill Lynch waives, in writing, such extension. The undersigned hereby acknowledges and agrees that written notice of any extension of the 180-day lock-up period pursuant to the previous paragraph will be delivered by Merrill Lynch to the Company (in accordance with Section 12 of the Purchase Agreement) and that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up agreement during the period from the date of this lock-up agreement to and including the 34th day following the expiration of the initial 180-day lock-up period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the 180-day lock-up period (as may have been extended pursuant to the previous paragraph) has expired. For greater certainty, nothing herein shall impose any obligations on ACE Aviation Holdings Inc. or restrict in any manner the ability of ACE Aviation Holdings Inc. to act in respect of any of its shares of the Company's Common Stock. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions. Very truly yours, Signature /s/ Robert Milton ----------------------- Print Name: ROBERT MILTON ---------------------- 3 EX-99 3 letttwo.txt EXHIBIT 99.5 September 27, 2005 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 World Financial Center New York, New York 10080 Re: PROPOSED PUBLIC OFFERING BY U.S. AIRWAYS GROUP, INC. Dear Sirs: The undersigned, a director of U.S. Airways Group, Inc., a Delaware corporation (the "Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch" or, the "Initial Purchaser") proposes to enter into a Purchase Agreement (the "Purchase Agreement") with the Company providing for the offering (the "Offering"), pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act", by Merrill Lynch, of Senior Convertible Notes due 2020 of the Company (the "Initial Securities") and the grant by the Issuers to the Initial Purchaser of the option to purchase additional Senior Convertible Notes due 2020 (the "Option Securities"). The Initial Securities, together with the Option Securities, are collectively referred to as the "Securities". In recognition of the benefit that such an offering will confer upon the undersigned as a director of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees, in his personal capacity and not as representative of ACE Aviation Holdings Inc., with each underwriter to be named in the Purchase Agreement that, during a period of 180 days from the date of the Purchase Agreement, the undersigned will not, without the prior written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of the Company's Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, in his personal capacity and not as representative of ACE Aviation Holdings Inc., or file, or cause to be filed, any registration statement under the Securities Act of 1933, as amended, with respect to any of the foregoing (collectively, the "Lock-Up Securities") or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. Notwithstanding the foregoing, if: (1) during the last 17 days of the 180-day lock-up period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day lock-up period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day lock-up period, the restrictions imposed by this lock-up agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, as applicable, unless Merrill Lynch waives, in writing, such extension. The undersigned hereby acknowledges and agrees that written notice of any extension of the 180-day lock-up period pursuant to the previous paragraph will be delivered by Merrill Lynch to the Company (in accordance with Section 12 of the Purchase Agreement) and that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up agreement during the period from the date of this lock-up agreement to and including the 34th day following the expiration of the initial 180-day lock-up period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the 180-day lock-up period (as may have been extended pursuant to the previous paragraph) has expired. For greater certainty, nothing herein shall impose any obligations on ACE Aviation Holdings Inc. or restrict in any manner the ability of ACE Aviation Holdings Inc. to act in respect of any of its shares of the Company's Common Stock. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions. Very truly yours, Signature /s/ Robert Milton ---------------------- Print Name: ROBERT MILTON ---------------------- 3 -----END PRIVACY-ENHANCED MESSAGE-----