2000–2004: September 11 and financial woes
Beginning in 2000, US Airways started retiring aircraft in an attempt to simplify its fleet and reduce costs, replacing many of its older planes with the new Airbus A320-family aircraft.
On May 24, 2000 US Airways announced plans to be acquired for $4.3 billion by UAL Corp., the parent company of United Airlines, the world's largest commercial carrier at the time. The complex deal drew immediate objections from labor unions, consumer advocates and antitrust regulators. Negotiations stalled; with both airlines losing money, and the deal all but certain to be blocked by the federal government, UAL withdrew its purchase offer on July 27, 2001, paying US Airways a $50 million penalty for withdrawing from the deal.
As the largest carrier at Washington National Airport, US Airways was disproportionately affected by that airport's extended closure following the September 11 terrorist attacks. The resulting financial disaster precipitated the closure of the airline's MetroJet network, which led to the de-hubbing of the subsidiary's primary operating base at Baltimore-Washington International Airport and the furloughing of thousands of employees. The airline entered Chapter 11 bankruptcy on August 11, 2002, but received a government-guaranteed loan through the Air Transportation Stabilization Board and was able to exit bankruptcy in 2003 after a relatively short period. The airline made major cost reductions during its bankruptcy, but it still encountered higher-than-average per-seat-mile costs. On October 19, 2005, the airline repaid the government-guaranteed loan by refinancing the debt with other lenders.
In 2003 US Airways began exploring the availability of financing and merger partners, and after no financing was available, US Airways filed for Chapter 11 bankruptcy again in 2004 for the second time in two years.
The airline merged in 2005 with America West Airlines; The merger was treated as a reverse takeover of US Airways by America West Airlines under FASB rules and regulations. Under harsh financial conditions, America West initiated a merger with the larger carrier that took them out of bankruptcy and created what is today the 5th largest US based airline in terms of revenue. After the merger, the new airline retained the US Airways name. The name choice was based on studies indicating that the US Airways name had better brand recognition worldwide than the America West name.
In early 2003, US Airways management liquidated the pensions of its 6,000 pilots by releasing their pensions into the federal pension program Pension Benefit Guaranty Corporation. The company was one of the first major airlines to eliminate pilots' pensions in order to cut costs.
Following a trial run of selling in-flight food in 2003, US Airways discontinued free meal service on domestic flights later that year.
2003–2004: Pittsburgh hub conflict
US Airways operations in Pittsburgh following hub elimination.In late 2003-early 2004, US Airways lobbied for lower operating fees at Pittsburgh International Airport, citing its economies of scale as the primary carrier and largest tenant at the airport. US Airways attempted to leverage its adverse cash position and "red ink" in the years following 9/11 to negotiate better financial terms with the airport. The Allegheny County Airport Authority rejected US Airways' demands for reduced landing fees and lower lease payments, in part due to antitrust and FAA regulations that required the airport operator to extend the same financial terms to all carriers if it accepted US Airways' demands. US Airways threatened to move traffic to rival hubs in Philadelphia and Charlotte, and the airline made good on its threat in November 2004, reducing its flights at Pittsburgh International Airport from primary-hub to secondary-hub status. The airline, led by former ExpressJet Airlines CEO David N. Siegel, continued to demote Pittsburgh International Airport in subsequent years until it became only a focus city airport for the company. As of 2010, Pittsburgh is no longer listed as a US Airways focus city. US Airways now operates an average of only 39 departures a day exclusively to domestic destinations, compared to 2001 when it was a hub with 500+ flights a day with service across the United States and to Europe.
Western Pennsylvania leaders, and most notably the designer of the 1992 modernization of Pittsburgh International, Tasso Katselas have pointed out that the reason for the fees and payments being higher than average is expressly because U.S. Airways requested the most modern and advanced airport in the world in return for basing its hub there. Katselas has also been vocal that the issue of negotiable fees and payments are irrelevant to the three biggest costs of any airline, namely fuel, time and labor, all of which his redesign of PIT in 1987-1992 created the most efficient, least costly and least financially wasteful airfield in the world. Although conceding that those updates cost more, they are more than offset on Pittsburgh's vast built in nonnegotiable fuel, time and to a lesser degree labor savings.
In August 2004, US Airways attempted to build a Latin American gateway at Ft. Lauderdale/Hollywood, announcing service to 10 cities in Latin America and the Caribbean. The attempt was largely unsuccessful and short-lived, in part due to Fort Lauderdale's proximity to American Airlines’ hub at Miami International Airport and its extensive Latin American network. US Airways also began a process of de-emphasizing its hub-and-spoke system to capitalize on direct flights between major eastern airports such as Washington National Airport and New York-LaGuardia.
The airline became the 15th member of the Star Alliance on May 4, 2004.
Fuel costs and deadlocked negotiations with organized labor, chiefly the Air Line Pilots Association, traditionally the first group to come to a concessionary agreement, forced US Airways into a second round of Chapter 11 bankruptcy protection proceedings on September 12, 2004. Widespread employee discontent and a high volume of employee sick calls were blamed by the airline for a staff shortage around the 2004 Christmas holiday, a public relations disaster which led to speculation that the airline could be liquidated; the USDOT found that the problems were caused primarily by poor airline management.