Re-engineering procurement function by focusing on improvements in people, process and technology.

2. Use Spend Analysis and e-Sourcing technologies to drive
buy-in and compliance
Presented by: Edward Jimenez
Sr. Sourcing Leader
US Airways
October 22, 2012

3. Key Messages
 Why it’s important to know your customers and the
industry they serve
 Delivering value through People, Processes & Tools
 Understand the enabling power of your spend analysis
and e-Sourcing tools
 Our ―Desired End State‖ for Corporate Purchasing

4. Agenda
 U.S. Airline Industry
 US Airways Overview
 Reengineering the Procurement Function
 Desired End State
 Delivering Value

5. U.S. Airline Industry
 Capacity Management
 Ancillary Revenue
– (US Airways > $500M in 2011)
 Consolidation
 Fuel is 25 to 32% of Operating Expenses
– US Airways does not hedge (since 2009)
 Quality Cabin Service is a key advantage
– 1st Class (Domestic)
– Envoy (International)

6. US Airways Overview
US Airways Chronology
1939 - 1953 1968 1972 1979 1988 / 1989
All American Aviation Allegheny Merges Allegheny Acquires Allegheny Changes PSA & Piedmont
/ Allegheny w/Lake Central /Mohawk Airlines Name to USAir Merge w/USAir
Airlines
1992 1996 May 2005 Sept. 2005
USAir & Trump Shuttle USAir is named America West & US Airways & America
Begin Marketing US Airways US Airways announce West Merger complete
Affiliation plans to merge

7. US Airways Overview
Fact Sheet
 Total Daily Flights: 3,197 daily departures (1,268
US Airways Mainline 1,929 US Airways Express)
 Total Employees: 32,306 (as of 7/1/2012)
– Pilots: 4,234
– Flight Attendants: 6,817
Headquarters – Maintenance and Related: 3,522
111 W. Rio Salado Pkwy. – Fleet Service: 5,779
Tempe, AZ, 85281 United States – Airport Ticket/Gate: 5,010
(480) 693-0800 – Reservations: 1,580
http://www.usairways.com – Other: 5,364
 Hub Operations:
– Charlotte Daily Flights: 633 (264 US Airways Mainline, 369 US Airways Express) Gates: 65
– Philadelphia Daily Flights: 453 (148 US Airways Mainline, 305 US Airways Express) Gates: 87
– Phoenix Daily Flights: 287 (189 US Airways Mainline, 98 US Airways Express) Gates: 56
 Focus City:
– Washington, D.C. Daily Flights: 214 (55 US Airways Mainline, 159 US Airways Express)
Gates: 16

8. US Airways Overview
Across the board, US leading the industry Operations
Good
Good
Flights that depart on time Flights that arrive on time
Good
Good
Bags that don’t arrive on time Scheduled flights completed

9. US Airways Overview
Financials
Not only has US Airways set several operational records, but we also reported a record quarterly
profit. Additionally, we’re ahead of our peers in pretax margin performance, which indicates how much
of every dollar of revenue collected the Company keeps.
2Q12 Pretax Margin 14.7₵- AS
• Operating Revenues:
9.7₵— WN
8.6₵— US 2011 2010 2009
= 6.7₵— B6
6.1₵— DL • Mainline $8,501 $7,645 $6,752
5.5₵— UA • Express $3,061 $2,821 $2,503
1.5₵— AA • Cargo $ 170 149 100
• Other $1,323 $1,293 $1,103
• Totals $13,055 $11,908 $10,458

10. US Airways Purchasing Groups
Fuel Administration Supply Chain / Procurement Corporate Purchasing
 Fuel Hedging & Supply  Technical Purchasing  Aircraft Appearance
‒ Repair Analysis  Clubs
 Fuel Operations ‒ AOG’s / Spare Parts  Company Store
‒ Ground Support Equip.  Corporate / Distresses Travel
 Corporate Finance / Fleet  Copy Center / Print Shop
 Power Plant Programs
Administration  HR Software
‒ Contracts & Leasing
 InFlight (Dinning & Cabin)
 Light / Heavy Maintenance  IT / Telecom Support
 Warehouse & Distribution  Mail Services
 Material Planning  Marketing
 Multi-Function Copiers
 Printed Materials
 Office Supplies
 Safety
 Uniforms
US Airways does not hedge (since 2009)

11. Products & Services

12. Reengineering the Procurement Function
 Understand the Mess
 Current State
 Teaching the Monster to Change
 Where do you start?
 Sourcing Strategy Process Model
 Plan and Execute

13. The Mess

14. The Mess
People Processes Tools
Skills Common
Systems
Corporate
Purchasing Enterprise
Training
Aligned
Customers Material Sourcing
Suppliers
Budgets Strategy
Bill of
Functions Metrics &
Materials
Statement Ethics & Scorecards
of Work Integrity
Best
Practices Contract
Unions
Management

15. The Mess Unleashed
Customer 1 Customer 2
Customer 3 Customer 4

16. Current State

17. Corporate Purchasing Functional Excellence
People Tools & Systems
• Demonstrate Highest Ethical Standards
• Spend Analysis & eSourcing
• Capabilities and Skills for the Future
(Recruiting) • ShopUS / Sceptre (Authorization Levers)
• Engaged, Diverse Workforce • E5 / Data Warehouse (Accounting tools)
• Share Point (Purchasing Website)
• Detailed Customer Knowledge and focus
Processes
Preferred Suppliers
• Enterprise Aligned
• Valued Relationships
• Gate Reviews (Project Approval
Process) • Global Supply Chain Networks
• Project Management Best Practices • Continuous Improvement
• Sourcing Strategy Process Model • Quality and Performance Driven
• Demonstrate Highest Ethical
Standards
Delivering Value

18. Teaching the Monster to Change
 Where are we going?
 How are we getting there?

19. Where do you start?
People Processes Tools
 Ineffective, tactical, reactive, n  No Standard Processes  Limited Data / Spend Visibility
on-strategic thinking
 Limited Policy Enforcement  Poor or Limited use of Technology
 Limited customer knowledge
 Cost Leakage  Weak Invoice Reconciliation /
 Decentralized organization Management
 Processes not leveraged
 High turnover  Limited Long Term Forecasting
 Limited Contracts & Price Approach
 Tribal knowledge culture Agreements
 Minimal Market Analysis
 No clear career develop path
 High Process / Labor Costs
 Complex Union Issues
 Limited 3rd Party Cost Structure
Analysis

20. e-Enabling our Business
Domestic Global
Procurement Supply Chain Supply Chain
Professional Strategic Sourcing
Standard Data Warehouse
and Tools
Detailed Customer  Supplier Portal
Knowledge Transportation
 e-Sourcing /Auctions
 e-Collaboration & Data Transmittal
 e-Purchase Orders & Payments
Project
 e-PO File Management Finance
Management
 Supplier Performance
Enabling Power of Our Tools

21. Understand the enabling power of your spend
analysis and e-Sourcing tools
Working Together

22. Sourcing Strategy Approach
The Corporate Purchasing function is transitioning from a transaction-oriented perspective to a strategic-
oriented enterprise. The Sourcing Strategy Process Model highlighted below will help drive
this transformation and provide US Airways customers greater overall value in the Supply Chain Process.
Sourcing Strategy Process Model
1 2 3 4 5 6
Conduct Develop Implement &
Profile Conduct Supply Issue RFP’s
Opportunity Commodity Manage
Commodities Market Analysis & Negotiate
Assessment Strategy Performance
Assess and prioritize Develop a detailed profile Conduct market Develop organization Develop and issue Implement contracts
opportunities based of commodities including analysis to identify wide commodity RFP’s based on and/or pricing
on a thorough spend profile & industry acquisition strategy sourcing agreements, continually
department-wide Specifications trends, supply & based on commodity strategy, conduct measure, track, and
spend analysis demand profile & supply market negotiations, evaluat manage performance
levers, potential new analysis e proposals and
suppliers, negotiation negotiate contracts &
levers, and available pricing agreements
contract vehicles

23. Aircraft Appearance Strategy
Sourcing Strategy / Customer Metrics / Supplier Scorecard & KPI’s

24. Aircraft Appearance Strategy
Customer Bill of Material and Statement of Work

25. Aircraft Appearance Strategy
Aircraft Appearance SKU’s
Note:
33 SKU’s and 17 suppliers are controlled by MLCO

26. Office Supplies Strategy
Supplier A - ScoreCard Performance as of 9/18/2012
Monthly Status Performance Summary in 2012-2013
Metric # Description Owner Goal Actual Apr May Jun Jul Aug Sep Oct Nov Dec
1.5% Rebate
US01 Monthly Spend Bell/Miner $233.3K $ 327,418 B B B B B
1.5% Rebate
US02 Cum Spend Bell/Miner $1.166M $1.481M B B B B B
US03 Fill Rate Bell/Miner 98% 99.59% G G G B B
US04 Returns Bell/Miner <1.7% 0.87% R G G B B
US05 Order Size Bell/Miner <$50 @ 15% 17.35% G G G G G
US06 Customer Calls Bell/Miner <45 Avg 26 Y G G Y B
Measurement Codes:
B B = Blue Significantly ahead of plan
G G = Green On plan
Y Y = Yellow Marginally off plan
R R = Red Significantly off plan
Major Milestones:
4/1/11 06/2012 06/2013 06/2014 4/1/15 4/1/16
Annual Quarterly Annual Quarterly Annual Quarterly Start Sourcing Quarterly New Contract
New Contract Quarterly
Vendor Reviews Vendor Reviews Vendor Reviews Process Reviews Awarded
Awarded Reviews
Expo Expo Expo

27. Desired End States
Utilizing people, processes and tools to lower our CASM
(cost per available seat mile) and increase profitability!

28. Thank You!