• US AIRWAYS ACCELERATES BUSINESS MODEL TRANSFORMATION
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US AIRWAYS ACCELERATES BUSINESS MODEL TRANSFORMATION

- US Airways Action Plan General FAQs - http://www.afausairways.org/Eline/employ_faq.pdf
- US Airways Action Plan At-A-Glance - http://www.afausairways.org/Eline/at_a_glance.pdf

This afternoon US Airways announced a three pronged approach to help stem the losses the Company is incurring as the result of high fuel costs. The business plan includes the following three components:

1 - Capacity Reduction

2 - Employee Furloughs

3 - "Fees for Services"

Capacity Reductions -

Legacy carriers have responded to high fuel costs by announcing capacity reductions between 10-16 percent. US Airways today announced a fourth quarter capacity reduction of between 6 to 8 percent. The fleet will be reduced by returning 6 Boeing 737 aircraft to lessors by the end of 2008 and 4 Airbus 320 aircraft in the first half of 2009. The airline also announced the cancellation of leases of two Airbus 330-200 that had been scheduled for delivery in the second quarter of 2009.

The industry trend of reducing capacity is predicted to lead to an increase in fares. The Union has long advocated that fare increases are a necessity for this, or any airline, faced with the current economic environment. Most airlines claim they simply can't raise fares with the number of seats currently available for sale.

Employee Furloughs -

As a result of the announced capacity cuts, the company announced plans to reduce staffing across the airlines' system by approximately 1700 employees, including 200 West Flight Attendants and 200 East Flight Attendants. The reductions are anticipated to begin in or around September of 2008.

Both East and West Contracts provide Flight Attendant protections from forced furloughs and require the company offer certain voluntary furlough programs prior to involuntarily furloughing Flight Attendants. Both MECs will continue to have discussions with management and explore possible early outs in order to mitigate potential involuntary furloughs.

Among certain other labor protections, The Transition Agreement requires the company to maintain a minimum number of aircraft and utilization rate of both the former America West fleet and the former US Airways fleet during the period of separate operations. The Agreement also restricts the company from transferring aircraft between fleets. The minimum fleet count for former West is 120 aircraft and for the East, 202 aircraft. As of June 2008, current East fleet is 208 and current West fleet count is 130. Because of the terms of the Transition Agreement and the announced 10 aircraft reduction the Company is limited to any significant further reductions.

"Fees for Services" -

US Airways announced what President Scott Kirby termed, the "pay for what you use" model. This ala carte pricing will now include a $15 charge for the first checked bag. This charge, in addition to the current $25 charge for the second checked bag, will become effective with tickets bought and flown on or after July 9. The Company said that in 2007 37 million bags were checked by our passengers. The charge will no doubt change passenger behavior and the Union is extremely concerned that carry on bags will dramatically increase as will the number of bags forced to be checked at the gate. In a meeting with the Company prior to today's announcement we adamantly reinforced this concern to the Company. The Company has indicated they will increase the presence of customer service agents in the airport to monitor check-in kiosks and ticket counters. In addition agents will also monitor airport security lines to minimize gate-checked items.

The Union's position is to make sure that the carry on limits are enforced by the gate agents and that passengers aren't permitted to enter the jetway with more than the legally allowed items.

The Company announced that beginning on August 1, 2008 there will be a $2.00 charge for soft drinks, coffee and bottled water and the charge for alcoholic beverages will increase to $7.00. Initially the charges will be cash-only. Obviously both MECs have serious concerns over the so called "In-Flight Beverage Programs. The Union was informed on May 1 the Company was considering selling concessions onboard the aircraft and there have been extensive talks with the Company regarding the potential problems associated with this program.

Now that program appears to be a reality the Union will have more detailed comments regarding the onboard sales of concessions in the net few days as we learn more details of the Company's plan.

In closing, there is no doubt the high cost of fuel has wrecked havoc with the industry. The economics of any business is really very simple-if you don't charge what it costs to produce a product you lose money. If you lose money long enough you go out of business. Today's announcement by the Company is simply an attempt to lose less money. The real problem won't be solved until fares rise to the level necessary to transport passengers from point A to point B.

The Union will be issuing further comments addressing the specifics of the Company's new business model as we assess its viability and long term effect on our members.

Thank you,

Mike Flores, MEC President US Airways
Gary Richardson, MEC President America West/US Airways

- US Airways Action Plan General FAQs - http://www.afausairways.org/Eline/employ_faq.pdf
- US Airways Action Plan At-A-Glance - http://www.afausairways.org/Eline/at_a_glance.pdf

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AFA Local Numbers
 
Council 41 DCA 703-212-8090
Council 69 BOS 781-289-8454
Council 70 PHL 215-492-0840
Council 82 LGA 315-736-3483
Council 89 CLT 704-527-0325

New Hotline Number Toll Free: 866-USA-AFA2
US AIRWAYS Benefits Information 800-872-4780

Reply to Inflight: askinflight@usairways.com

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