I think there were a few factors.
There were several fatal accidents. under the USAir brand: US5050 (1989), US1491 (1991), US405 (1992), US427 (1994), US1016 (1994).
USAir was suffering from a poor public image as well as an unfortunate series of fatal accidents.
The airline was complicated due to a series of mergers: Allegheny, Piedmont, PSA, Empire, Mohawk, The T***p Shuttle. The route network was very much short-haul with high labour costs. There were some interesting hubs that seemed to overlap: a hub in Dayton and in Indianapolis with a "focus city in Cleveland;" Syracuse and LaGuardia, smaller foci in New Orleans and Kansas City for USAir Express. It was all over the place, and not necessarily lucrative.
The fleet was older, and thus had higher fuel and maintenance costs. Drawing from mergers and its own fleet, USAir had overlapping F28's, F100s, DC-9s, BAC 1-11s... it was a complicated and inefficient network.
Meanwhile, the competition had simplified: they had removed hubs, simplified and modernized their fleets, and focused on high-revenue, longhaul business class traffic, especially in the North Atlantic.
USAir tried to establish a stronger North Atlantic presence through an alliance with British Airways. This included a bizarre "wet lease," in which USAir 767s were painted to look like BA aircraft. They even had a designated flight on Dash-8 from Washington/National to JFK to connect with a Concorde departure. All of this was short-lived.
USAir also tried establishing itself in other niches. They emphasized Florida (the short-lived Florida Shuttle) and California (the California Shuttle), and a stronger presence to the Caribbean. They partnered with LatinPass, but this, also, was brief.
USAir brought in Stephen Wolf from United. Wolf was--err--"uptown." He was a francophile, and he wanted a more European flair. His plan involved rebranding as US "Airways" to a livery that looked A LOT like United. The once patriotic blue and red cabins gave way to two-tone grey.
The attention would be on business travellers (the magazine was renamed "Attaché" and the forward cabin became Envoy Class.) US Airways rapidly added transatlantic routes. The airline got rid of its older aircraft, moving toward a predominantly Airbus fleet. The many hubs were simplified to just a few.
In its next iteration, the America West takeover led to a white livery, blue leather seats, and (I think) sharper uniforms. The Pittsburgh hub dismantled and Phoenix became a stronghold. More longhaul overwater routes developed, including services to Hawaii, Brazil, and Israel. The service was suffered. At one point, passengers had to pay for water. The A320s and 321s on transcon flights were painfully uncomfortable--even in first class, the food was sad, the crews dismissive, and there was no entertainment.
Bravo, sir! VERY well stated!!
I would like to think that my response, had I been sooner, would have been equal to this.
One additional factor to consider is the "merger mania" of the late 1980's/early 1990's, where an airlines was NOTHING unless it had merged with another airline. Even the lesson of the Pan Am acquisition of National was lost, because USAir said, "hold my beer", and bought PSA. Instead of the reliable hourly shuttle service between Southern California and Northern California, customers experienced horrific delays, as that shuttle service was replaced with flights coming from the east coast, which were routinely delayed, driving customers away by the hundreds, and into the waiting arms of Southwest Airlines, to whom the PSA operating manuals were gifted shortly before absorption. Within a year, the PSA presence USAir had so wanted was gone.
The airline, in turn, was sent reeling from this loss of revenue (along with others), and couldn't find its way. Management was clueless, and the airline faltered. Then came the crashes, and the airline risked complete collapse. But the rebranding - and the focus that came with it - started turning the airline around.