Rapid growth put tremendous financial strain on the operation, and America West ended the year with a $45.6 million loss, and only $26 million cash on hand. Bankruptcy predictions were imminent, despite management's opinion that the losses were needed to ensure America West's future. Beauvais and Conway responded by cutting back growth and a much-touted "return to profitability" in 1988. The airline made one major commitment to Phoenix, signing a lease for the new Terminal 4, soon to rise out of the sands of Sky Harbor.
Terminal 4 would offer valet parking, increased operational room, and 28 gates dedicated to America West. Two Phoenix Clubs were included, one on the mezzanine of each concourse. A dedicated commuter gate was included, replacing the converted facilities of Gate 30. Pride was running high with the new terminal, growing fleet, and new wide-body aircraft on order. To assist with the growth of the hub, a new baggage sorting facility was built rampside between the two concourses of Terminal 3. It featured a $2.3 million laser sorting system for originating bags, 12 loading piers, and a large increase in capacity from the original Terminal 3 bagroom. A Phoenix Club would be built atop this room in 1989.
Commuter service continued to grow during this time, with a steady increase in the Dash 8 fleet and service to mid-level California destinations from both Phoenix and Las Vegas. In some cases, the commuter service was added to Las Vegas only, making Las Vegas almost equal to Phoenix in terms of hub operation.
America West started to participate in industry consolidation during 1988. The airline filed a formal complaint against the USAir/Piedmont merger, but this complaint was dismissed due to lack of standing. The airline then put a bid in for the Eastern Shuttle - $726 million for 10 757s and 21 727 aircraft. America West would end up losing to Donald Trump in the convoluted tale of Eastern.
Returning to 1988, Minneapolis was added from Las Vegas. Northwest was still maintaining the 757 fleet, and MSP was added as a Nite Flight to turn a non-revenue ferry into a revenue operation. With the opening of the Hangar, America West brought all 737 maintenance in-house, and started pursuing contract maintenance work.
During 1988, America West Captain Pat Lynch founded Operation Freedom Bird, a program designed to transport Vietnam Veterans to Washington to see the Vietnam Memorial, discuss any unresolved issues and participate in Veterans Day ceremonies. America West was the primary sponsor of this program until the late 1990s, and provided the transportation for Veterans to get to Washington.