acquirorAcquiror: US Airways - LCC (assuming no merger)Actual Results ($ million)Trends in Revenues (% changes)Trends in Expenses (% of revenues)Forecast Income Statements ($ millions)201220112010200920082012-112011-102010-092009-08average20122011201020092008average20132014201520162017201820192020Operating revenues:Mainline passenger8,9798,5017,6456,7528,1835.611.213.2(17.5)3.19,2619,5529,85210,16110,48010,80911,14811,498Express passenger3,3263,0612,8212,5032,8798.78.512.7(13.1)4.23,4663,6113,7633,9214,0864,2584,4374,623Cargo155170149100144(8.8)14.149.0(30.6)5.9164174184195207219232246Other1,3711,3231,2931,2541,0383.62.33.120.87.51,4731,5831,7021,8291,9652,1122,2702,439Total operating revenues13,83113,05511,90810,60912,24414,36414,92015,50116,10616,73817,39818,08718,806Operating expenses:Aircraft fuel and related taxes3,4893,4002,4031,8703,97425.226.020.217.632.524.33,4913,6273,7683,9154,0684,2294,3964,571Salaries and related costs2,4882,2722,2442,1652,23118.017.418.820.418.218.62,6682,7712,8792,9913,1093,2313,3593,493Express expenses3,1623,1272,7292,6283,13922.924.022.924.825.624.03,4513,5853,7243,8704,0224,1804,3464,519Aircraft rent6436466706957244.64.95.66.65.95.57958268588929279631,0021,041Aircraft maintenance6726796617007834.95.25.66.66.45.78228548879219589951,0351,076Other rent and landing fees5565555495605624.04.34.65.34.64.6654679705733762792823856Selling expenses4664544213824393.43.53.53.63.63.5505524545566588611636661Special items, net3424555760.20.20.00.50.60.34648505254565861Depreciation and amortization2452372482512241.81.82.12.41.82.0283294306318330343357371Other1,2201,2351,1971,1811,8658.89.510.111.115.210.91,5711,6321,6961,7621,8311,9031,9792,057Total operating expenses12,97512,62911,12710,48714,01714,28714,84015,41716,02016,64817,30417,99018,705Operating income856426781122(1,773)77808386909397101Nonoperating income (expense):Interest income24132483Interest expense, net(343)(327)(329)(241)(218)Other, net122(13)37(83)(240)Total nonoperating expense, net(219)(336)(279)(300)(375)(1.6)(2.6)(2.3)(2.2)(311)(323)(336)(349)(363)(377)(392)(407)Income before income taxes63790502(178)(2,148)(234)(243)(253)(263)(273)(284)(295)(307)Income tax provision0190(38)00.00.10.00.072222222Net income63771502(140)(2,148)(241)(245)(255)(265)(275)(286)(297)(309)add: depreciation283294306318330343357371FCF4249515355576062Earnings per common share:Basic earnings per share3.920.443.11Diluted earnings per share3.280.442.61Shares used for computation (in thousands):Basic162,331162,028161,412Diluted203,978163,743201,131

targetTarget: American Airlines - AMR (assuming no merger)

Actual Results ($ million)Trends in Revenues (% changes)Trends in Expenses (% of revenues)Forecast Income Statements ($ millions)201220112010200920082012-112011-102010-092009-08average20122011201020092008average20132014201520162017201820192020Operating revenues:Mainline passenger18,74317,94716,76015,03718,2344.47.111.5(17.5)1.418,99819,25719,51919,78420,05320,32620,60320,883Passenger - regional affiliates2,9142,7242,3272,0122,4867.017.115.7(19.1)5.23,0643,2223,3883,5633,7473,9404,1434,357Cargo669703672578874(4.8)4.616.3(33.9)(4.5)639611583557533509486465Other24992583239122902172(3.3)8.04.45.43.72,5902,6852,7832,8852,9903,1003,2133,330Total operating revenues24,82523,95722,15019,91723,76625,29225,77526,27426,79027,32327,87528,44529,035Operating expenses:Aircraft fuel and related taxes8,7177,4345,7316,8076,65535.131.025.934.228.030.87,8007,9498,1038,2628,4268,5968,7728,954Salaries and related costs6,2426,3856,2275,5539,01425.126.728.127.937.929.17,3717,5127,6577,8077,9638,1248,2908,462Regional payments to AMR Eagle*1,1422,4182,2271,3531,2984.610.110.16.85.57.41,8722,1712,1712,1712,1712,1712,1712,171Aircraft rent5506735921,1041,2072.22.82.75.55.13.79279449639821,0011,0211,0421,064Aircraft maintenance1,1331,0201,0561,2801,2374.64.34.86.45.25.01,2761,3001,3251,3511,3781,4061,4351,465Other rent and landing fees1,2861,3051,2848539975.25.45.84.34.25.01,2601,2841,3091,3341,3611,3881,4171,446Commissions, booking fees and credit card expense1,0501,0629765054924.24.44.42.52.13.58949119299479669851,0061,026Special items, net38672504875181.63.00.02.42.21.8466475484493503513524535Depreciation and amortization9999509351711,2134.04.04.20.95.13.69199379559749931,0131,0341,055Food service535518490002.22.22.20.00.01.3330337343350357364371379Other2,7442,6372,4812,8083,02411.111.011.214.112.712.03,0393,0973,1573,2193,2833,3503,4183,489Total operating expenses24,78425,12721,99920,92125,65526,15326,91527,39527,89028,40228,93229,47930,046Operating income41(1,170)151(1,004)(1,889)(861)(1,141)(1,121)(1,100)(1,079)(1,057)(1,034)(1,011)Nonoperating income (expense):Interest income25252534181Interest expense, net(662)(689)(654)(744)(803)Other, net280(14)(26)(38)393Total nonoperating expense, net(357)(678)(655)(748)(229)(1.4)(2.8)(3.0)(2.4)(609)(621)(633)(645)(658)(671)(685)(699)Income (Loss) Before Reorganization Items, Net(316)(1,848)(504)(1,752)(2,118)(1,470)(1,762)(1,754)(1,746)(1,737)(1,728)(1,719)(1,710)Reorganization Items, Net**(2,179)(116)000(8.8)(0.5)0.0(3.1)(781)(796)000000Income (Loss) Before Income Taxes(2,495)(1,964)(504)(1,752)(2,118)(2,251)(2,557)(1,754)(1,746)(1,737)(1,728)(1,719)(1,710)Income tax (benefit)(569)0(35)(284)0(2.3)0.0(0.2)(0.8)(207)(210)(215)(219)(223)(228)(232)(237)Net Income (Loss)(1,926)(1,964)(469)(1,468)(2,118)(2,045)(2,347)(1,539)(1,527)(1,514)(1,501)(1,487)(1,473)add: depreciation9199379559749931,0131,0341,055FCF(1,125)(1,410)(584)(553)(521)(488)(453)(417)

*These are payments under a Purchase Agreement, between AMR and its wholly-owned subsidiary, AMR Eagle, which are not recurring costs.**These are assumed to be non-recurring from 2015 onwards.

mergedMerged CompanyABA+BForecast Income Statements ($ millions)Forecast Income Statements ($ millions)Difference201320142,0152,0162,0172,0182,0192,020Percentage increase in salesExpenses as a percentage of revenue2013201420152016201720182019202020132014201520162017201820192020Actual ResultsIncluding Merger and Restructuring CostsStart of Realization of SynergiesHorizonOperating revenues:Mainline passenger20,21828,80829,45630,11930,79731,49032,19832,9232.2528,25928,80829,37029,94530,53331,13531,75132,381Passenger - regional affiliates3,1316,8347,1537,4887,8398,2058,5898,9914.686,5306,8347,1527,4847,8338,1988,5808,980Cargo6857857907968028088148200.74803785768753739728718710Other2,70936,42638,45240,59142,84845,23147,74650,4015.5635,59236,42637,28938,18239,10540,06141,04942,072Total operating revenues26,74372,85376,75279,89483,18586,63490,24894,03571,18572,85374,57976,36478,21180,12282,09884,143Operating expenses:Aircraft fuel and related taxes7,83911,57521,16322,02922,93723,88811,73225,92827.5711,29111,57511,87012,17712,49512,82513,16913,525Salaries and related costs5,46010,28318,31219,06119,84720,66921,53122,43523.8610,03910,28310,53610,79911,07211,35511,64911,955Regional payments to AMR Eagle*3,3265,75612,06112,55513,07213,61414,18214,77715.715,3235,7565,8956,0416,1926,3516,5166,689Aircraft rent7681,7713,5313,6763,8273,9864,1524,3264.601,7221,7711,8211,8731,9281,9852,0442,105Aircraft maintenance1,2602,1544,1314,3004,4774,6634,8585,0615.382,0972,1542,2122,2732,3362,4012,4692,540Other rent and landing fees1,1521,9633,6573,8073,9644,1284,3014,4814.771,9131,9632,0142,0672,1222,1802,2402,302Commissions, booking fees and credit card expense1,1581,4352,7052,8162,9323,0533,1813,3143.521,3991,4351,4731,5131,5541,5971,6411,687Special items, net55952383086416,6379379761,0171.08512523534545557569582595Depreciation and amortization8531,2312,1522,2402,3322,4292,5302,6372.801,2031,2311,2611,2911,3231,3561,3911,426Others2,9695,0668,8109,1709,5489,94410,35910,79311.484,9415,0665,1965,3315,4715,6175,7685,926Total operating expenses25,34441,75677,20280,36999,42387,16177,65194,62040,44041,75642,81243,91045,05046,23647,46948,751Operating income1,39931,097(450)(474)(16,238)(527)12,596(585)30,74431,09731,76732,45433,16133,88534,62935,392Nonoperating income (expense):Interest income20Interest expense, net(856)Other, net(88)Total nonoperating expense, net(924)(944)000000(920)(944)(969)(994)(1,021)(1,048)(1,077)(1,107)Income (Loss) Before Reorganization Items, Net47530,153(450)(474)(16,238)(527)12,596(585)29,82430,15330,79831,46032,14032,83733,55234,285Reorganization Items, Net***2,6551,200000000(781)(796)000000Income (Loss) Before Income Taxes(2,180)28,953(450)(474)(16,238)(527)12,596(585)30,60530,94930,79831,46032,14032,83733,55234,285Income tax (benefit)(346)10,134(157)(166)(5,683)(185)4,409(205)(200)(209)(213)(217)(221)(226)(230)(235)Net Income (Loss)-1,8341,2312,1522,2402,3322,4292,5302,6371,2031,2311,2611,2911,3231,3561,3911,426008919491,0091,0731,1401,210add: depreciation8531,2312,1522,2402,3322,4292,5302,6371,2031,2311,2611,2911,3231,3561,3911,426PV(net synergies): 143,972FCF(981)2,4624,3044,4804,6654,8585,0615,2732,4052,4622,5222,5832,6472,7132,7812,853

Notes:Increase in revenue is taken as an average of the trend of sales growth for pre-merger companies.Expenses as a percentage of sales is taken as an average of the trend of the particular expense to revenue ratio for pre-merger companies.Effective corporate tax rate is taken at 35% for the merged company.Synergies (in the form of additional revenue and cost savings) are taken as $900million and &1,000million, respectively. Details of these figures are:A: AAG expects additional revenue of $900million. (Source: http://www.cbsnews.com/news/american-airlines-us-airways-announce-11b-merger/) This is due to two main reasons:1. "Capacity: Total system capacity is expected to be up approximately 3% vs. 2013 primarily due to more active aircraft, larger gauge aircraft replacingsmaller gauge legacy aircraft, and longer stage length. Full year domestic capacity is expected to be up approximately 1% and international capacity isexpected to be up approximately 7% vs. 2013."2. "Cargo / Other Revenue: Includes cargo revenue, frequent flyer revenue, ticket change fees, excess/overweight baggage fees, first and second bag fees,contract services, simulator rental, airport clubs and inflight service revenues."(Source: Investor Relations Update, April 2014, American AirlinesB: "While the public sees US Airways as an integrated unit, it actually must operate as two separate carriers in which legacy US Air pilots and flight attendants can only fly on legacy US Air planes and legacy America West pilots and flight attendants can only fly on legacy America West planes. This prevents US Airways from achieving maximum fleet utilization that management says costs the airline $10 million a year." (Source: finance.fortune.com)C: The agreement would be around $190 million less than the $990 million American tentatively plans to cut in labor costs. (Source: finance.fortune.com)D: "In 2013, special charges consisted primarily of a $192 million charge related to US Airways' pilot MOU that became effective upon the close of the Merger, $96 million related to professional fees and fees for US Airways to exit the Star Alliance, a $107 million charge related to the American's pilot long-term disability obligation, $58 million in severance, $56 million related to employee awards granted in connection with the Merger, a $43 million charge for workers' compensation claims, and a $33 million impairment charge associated with certain Boeing 757 aircraft held for sale. These charges were offset in part by a $31 million special credit related to a change in accounting method resulting from the modification of American's AAdvantage miles agreement with Citibank, a $67 million gain on the sale of slots at LaGuardia Airport as a result of the settlement reached with the DOJ and the cancellation of equity awards in connection with the Merger." (10-K 2013, AAG) The only costs excluding merger costs are severance costs and impairment charges (58+33).E: "They anticipate total cost savings of roughly $1,000 million." (Source: http://www.cbsnews.com/news/american-airlines-us-airways-announce-11b-merger/) If the total cost savings are $150million, the cost savings individually identified are subtracted from this amount to find out 'other' cost savings.F: Source: http://www.cbsnews.com/news/american-airlines-us-airways-announce-11b-merger/

DCFValuation of target assuming no merger20132014201520162017201820192020horizonnet income ($millions)(1,125)(1,410)(584)(553)(521)(488)(453)(417)(417)year123456788WACC0.110.110.110.110.110.110.110.110.11sustainable growth0.066($3,912)(4,068)or:($7,980)millionor:($7.98)billion

Valuation of acquiror assuming no merger (stand-alone valuation)20132014201520162017201820192020horizonnet income ($millions)424951535557606262year123456788WACC0.050.050.050.050.050.050.050.050.05sustainable growth0.040$3393,042or:$3,381millionor:$3.38billionValuation after merger20132014201520162017201820192020horizonnet income ($millions)(981)2,4624,3044,4804,6654,8585,0615,2735,273year123456788WACC0.070.070.070.070.070.070.070.070.07sustainable growth0.066$20,451344,660or:$365,111millionor:$365.11billion

price range & comparablesDetermination of offer price range:min = max[PV(target),MV(target)]PV = (7,980)MV* = 90Hence, min = 90max = min + PV(NS)PV(NS)*** = $143,971.66Hence, max = 144,062

alpha** = 0.11PV(OP) = 16,087price range: 90