In This E-Line VF3 Reminder and Information US Air Lender Threatens to Liquidate It United Airlines' Employee/Management Cooperation Remains Strong United Files for Bankruptcy Protection

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VF3 Reminder and Information 

Please note: Application Deadline extended to December 11

The VF3 is the same in all respects as VF2 except for the shorter duration of the initial period (less than 6 months), which results in benefits being available for that entire period (January 7-May 30). VF2 was the same as VF1 except that medical was provided for only the first 120 days instead of the first two years. Everything else, including our commitment not to contest unemployment--is the same.

Application forms are available on the AFA US Airways website (http://www.afausairways.org/Furlough/VolFurloughRequest3.htm) in the crew rooms and on theHub (http://thehub.usairways.com/). The form must be submitted to Inflight Administration in Crystal City. The deadline for Inflight Administration to receive the form is December 11, 2002. Please ensure you are using the correct updated form. It states "2003 Voluntary Furlough 3 (VF3) Program Request Form" on the top of it.

Here are some highlights of the Voluntary Furlough 3 Agreement:

Scheduled to commence January 7, 2003 

Duration choices of VF 3:
- 4.75 Months VF3 beginning Jan 7, 2003 and ending May 31, 2003
- 10.75 Months VF3 beginning Jan 7, 2003 and ending Dec 1, 2003
- 16.75 Months VF3 beginning Jan 7, 2003 and ending May 31, 2004
- 22.75 Months VF3 beginning Jan 7, 2003 and ending Dec 1, 2004
- 28.75 Months VF3 beginning Jan 7, 2003 and ending May 31, 2005
- 34.75 Months VF3 beginning Jan 7, 2003 and ending Dec 1, 2005 

• Open to flight attendants who will not be involuntarily furloughed 

• Must be in an "active" and "available" status at the beginning of voluntary furlough 

• Unlimited on-line travel privileges for eligible family members, except for companion passes 

• Continued current group health and welfare benefits for first 120 days of voluntary furlough 

• Sick bank and vacation day(s) accrual for January 2003 only 

• Continued seniority and longevity accrual 

• May retire with benefits from a voluntary furlough status 

• No entitlement to furlough pay if awarded a voluntary furlough 

Voluntary furlough flight attendants who have a balance of less than $5,000 in the US Airways, Inc. 401(k) Savings Plan, will be required to take a distribution of Plan funds. You may be able to defer payment of taxes if you roll your distribution over into another qualified vehicle such as an IRA. The Fidelity Service Center for US Airways will send distribution information to all Plan participants after January 7, 2003. You will receive similar distribution information if you have a balance of less than $5,000 in the ESOP. Fidelity will send information on the ESOP in April 2003. If you have an outstanding 401(k) loan, you will continue to be responsible for making timely loan payments in order to avoid loan default and associated tax penalties. Contact the Fidelity Service Center for US Airways at (800) 354-3412 to make necessary payment arrangements.

Those flight attendants who bid for a VF 2 and did not receive it must apply for a VF 3 to be considered.

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US Air Lender Threatens to Liquidate It
Sat Dec 7, 1:38 PM ET


NEW YORK (Reuters) - The chief executive of the primary lender to bankrupt US Airways Group said he would liquidate the airline if unions refused to provide $200 million in additional wage and benefit concessions, The New York Times reported on Saturday.

David Bronner, CEO of the Retirement Systems of Alabama, said he did not expect to have to follow through on his ultimatum and predicted that cost-cutting discussions between the airline and its employees would result in an agreement by next week, The New York Times reported.

"What's their alternative?" Bronner asked rhetorically. "If they don't want to do this, we'll Chapter 7 it."

Alabama Retirement Systems has provided Arlington, Virginia-based US Airways with debtor-in-possession financing to help it operate while under bankruptcy protection. Bronner said that without the concessions, "we'll pull the DIP financing and they're gone."

Bronner's stance with the US Airways unions is an example of the tough stance analysts expect airlines to begin taking with employees now that a bankruptcy filing by UAL Corp.'s United Airlines (see below).


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United Files for Bankruptcy Protection
Source: Associated Press 
Publication date: 2002-12-09

CHICAGO (AP) - United Airlines made the largest bankruptcy filing in aviation history Monday, saying it was the only way to keep the world's No. 2 airline flying after two years of heavy losses. 

The Chapter 11 filing was the fifth-largest ever as measured by assets. 

The suburban Chicago-based company has lost $4 billion in the last two years due to a slumping economy, flawed business strategies and the Sept. 11 terrorist attacks. It faced debt payments of $875 million later this week. 

"We're in control of United's destiny," United CEO Glenn Tilton said in a telephone interview. "We've made a good decision for United. It is in fact Chapter 1. ... This is a tremendous opportunity for United to transform this company and to emerge stronger than ever." 

Tilton told customers and employees at O'Hare International Airport that the carrier would keep flying. "We are now going to take this occasion to create a new beginning for United," he said. 

Tilton said he expects the bankruptcy process to be completed within 18 months. 

At a bankruptcy hearing at 7 a.m., Chief Judge Eugene R. Wedoff issued orders allowing United to keep operating until another hearing Monday when he is to issue further orders allowing the airline to continue its operations. 

United said it obtained $1.5 billion in financing from several banks to continue operating. The airline said it has $800 million in cash on hand. 

The airline has promised to keep flying while it sheds costs under the auspices of a bankruptcy judge and overhauls its business plan to try to become profitable again. As of Monday's filing, United had assets of $22.8 billion and liabilities of $21.2 billion, the company said. 

United operates about 1,700 flights a day, or about 20 percent of all U.S. flights. It has the most extensive worldwide route structure of any airline. 

The bankruptcy filing will come at a steep price for the 83,000 employees who own 55 percent of the company. A bankruptcy court judge is almost certain to order wage and job cuts and could dissolve the employee stock ownership plan. 

Two of United's unions, the Air Line Pilots Association and the Association of Flight Attendants, said both sides must work together during restructuring. 

"Any successful restructuring of United in bankruptcy must involve continued cooperation and collaboration among ALPA, United management and all of the company's labor unions," the pilots' union said. We look forward to those discussions." 

The carrier's stock, which reached $100 a share in 1997, fell 12 cents to 81 cents a share in late-morning trading on the New York Stock Exchange Monday. 

The bankruptcy restructuring also is likely to result in fewer flights. Experts say frequent-flier miles and basic fare levels are likely to be retained for the short term, although fare hikes are likely over the longer haul. 

A spokesman for United's pilots union urged passengers Sunday not to abandon the airline during a bankruptcy filing. 

"This is going to be painful for the stockholders and the employees, but the airline's going to keep flying and we're going to come out of this stronger," pilot Herb Hunter said. "The passengers shouldn't notice any difference." 

Airline consultant Robert Mann said the company will have to keep the morale of United's workers from falling too low. 

"It's certainly demoralizing to employees, and the risk is that it will somehow translate into less friendly service - in effect getting customers in the middle of an emotional problem," said Mann, of R.W. Mann & Co. in Port Washington, N.Y. 

On pace to lose an industry-record $2.5 billion this year, United had pinned its last hopes of avoiding bankruptcy on getting federal backing for $1.8 billion of a $2 billion loan that banks wouldn't otherwise provide. But the Air Transportation Stabilization Board, created last year to help the airline industry recover after Sept. 11, rejected United's request on Wednesday. 

White House spokesman Ari Fleischer declined to comment on the bankruptcy filing. Fleischer said the Bush administration would not second-guess the stabilization board's decision. 

The linchpin to United's proposal was $5.2 billion in labor cutbacks by 2008, but the three-member federal panel said the airline's business plan was financially unsound and a loan guarantee would have risked U.S. taxpayers picking up the tab. 

United has struggled even more than other airlines during the industry's worst-ever slump. The carrier already had lost about $1 billion since mid-2000 by the time of the attacks because of labor turmoil, the industry's highest costs and several failed strategies, including a costly and time-consuming bid to acquire US Airways - itself now in Chapter 11 bankruptcy. 

United cut service and laid off nearly 20,000 workers after the terrorist attacks, but it hasn't come close to making up for revenue lost from the drop-off in business travel. 

United's filing dwarfs all other airline bankruptcies. The previous largest was by Continental Airlines in 1990. United listed almost $25.4 billion in assets as of Sept. 30 - more than twice Continental's when it filed. 

It also is one of the 10 largest bankruptcies in U.S. history - a list topped by the recent failures WorldCom and Enron. It is the 11th time a major U.S. airline has filed for bankruptcy since deregulation in 1978, including TWA three times. 

Associated Press News Service Copyright 2002 

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United Airlines' Employee/Management Cooperation Remains Strong

Working Together Key to Successful Bankruptcy Restructuring & Strong Future

CHICAGO - Association of Flight Attendants, AFL-CIO, United Airlines Master Executive Council President Greg Davidowitch made this statement after the airline announced it would file for bankruptcy to continue operating as a result of the federal Air Transportation Stabilization Board denying its application for a loan guarantee:

"It wasn't long ago that United Airlines was the biggest, best airline in the world. But a number of very poor decisions by recent CEO's, the loss of $20 billion in revenue among the major network carriers in our industry and the unethical collaboration between the Air Transportation Stabilization Board and some other airlines who stand to gain if United fails, combined to result in our carrier's bankruptcy filing. 

"Those outside forces will not succeed in grounding United. The coming months will be difficult and painful for flight attendants as we work through the bankruptcy process. But we are committed to continuing the unprecedented cooperation between employees and management that will be necessary to turn United around and successfully shepherd it through reorganization.

"This process will mean further cuts to our contract and a bigger strain on our families. But we will face these challenges head on. We know and management knows what happens when a carrier fights with its workers in bankruptcy. There are enough former Eastern Airlines employees in our ranks to remind us of that.

"Many cowardly airline CEO's, in their lobbying to get our ATSB application denied, questioned our resolve and the sacrifices we've made. The average United flight attendant has provided 12 years of dedication and earns an average of $32,000 a year. These dedicated workers voluntarily decided to take painful pay and benefit cuts to keep their carrier afloat. What flight attendants have been willing to offer United thus far has been awe-inspiring. And we will not let those who doubt us from the comfortable confines of their executive suites and six and seven figure salaries in the White House and Wall Street diminish our sacrifices or resolve to see this carrier succeed. 

"We will not be deterred from our goal of restoring United to the premiere airline in the world. We will continue to work with our United Airlines Union Coalition partners and airline management to position the carrier so that we can emerge as the preeminent airline in the industry once again. Those who doubt us will lose. They will not be able to compete with the new United."

More than 50,000 Flight Attendants, including the 24,000 Flight Attendants at United, join together to form AFA, the world's largest Flight Attendant union. Visit us at www.unitedafa.org.

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