Eline AFA US Airways

Tuesday, 6/25/02 - AFA Master Executive Council President Karen Lascoli, Boston LEC President and Negotiating Committee Chairperson Buddy Brannon and AFA attorney and negotiator Ben Elliott participated in a conference call with CEO Dave Siegel, yesterday, Monday afternoon, 6/24. The call was to give the leaders of each labor group a heads up concerning the press release (below) that was sent out by US Airways yesterday.

CEO Siegel told all labor groups on the call that this announcement is intended as part of its negotiations with its creditors for cost reductions (management is negotiating with all of its creditors for concessions, just like it is negotiating with all of its workers, in order to receive cost savings that could keep our carrier out of bankruptcy). Siegel also urged all labor groups to work faster towards resolution of negotiations over cost savings.

While Siegel tried to minimize the meaning of this announcement, we must read into it further. Here's what we think it means: negotiations with creditors are moving slowly and management needed to put on the pressure to get the talks jumpstarted.

This is important to our talks over concessions because, in order for US Airways to stay out of bankruptcy, all labor groups AND creditors must agree to concessions as part of the restructuring. If any piece fails to reach agreement with management over cost savings, bankruptcy is a probability. Bankruptcy is a probability if any of the negotiations fail because the Air Transportation Stabilization Board, the government organization that controls the loan guarantee US Airways is seeking, says our airline must cut all of its costs as part of its Restructuring Plan to receive the loan guarantee.

If US Airways reaches agreement with all labor groups and creditors, we have a good shot at getting the loan guarantee and avoiding bankruptcy. Getting the loan guarantee doesn't guarantee we won't go into bankruptcy, however it does significantly lessen the chances of management filing for bankruptcy.

If agreements aren't reached with everyone, management may also file for bankruptcy as part of the loan guarantee process, because in bankruptcy court, management will have more control over the cost cuts and restructuring of contracts. If management can get the cost cuts it needs in bankruptcy court that it couldn't negotiate outside of bankruptcy, Siegel says our airline will go into bankruptcy.

Based upon previous conversations with management, we believe that if we reach agreement on cost savings in time to allow the airline to finalize its application for a loan guarantee from the federal government, management will not seek any further cuts from our contract in the event that a bankruptcy filing becomes necessary.

This is significant because we have some control over what concessions get made now, prior to bankruptcy. Once in bankruptcy, the company will pick what it wants to cut. While we would get a chance to convince the bankruptcy judge that the cuts US Airways proposes to make during bankruptcy are drastic and unnecessary, it's a roll of the dice at that point. The judge will make the ultimate decision. If we make a deal prior to bankruptcy, all US Airways flight attendants in good standing will get a chance to vote on the changes to our contract.

With the final date approaching fast, your AFA Negotiating Committee is scheduled to meet with management today, 6/25, to resume talks. The pilots are not finished with their negotiations, but they continue to work for resolution. All other labor groups report that they will continue talks with management, as well.

We will report out to you again after we meet with management. Until then, keep flying and keep up to date with the Hotline - 800-654-3143, Website - www.afausairways.org , E-Line or Negotiations Info Telephone Line - 800-531-3242.

LINKED TO PROPOSED CONSENSUAL RESTRUCTURING PLAN

ARLINGTON, Va., June 24, 2002 - As it continues its voluntary restructuring efforts, US Airways said today that it is implementing a strategic initiative involving the deferrals of selected payments. The payment deferrals are focused principally on aircraft lessors and lenders, all of which have been notified, including aircraft that have already been grounded and selected older
Boeing aircraft in service that have been targeted as part of the restructuring plan. The Company is currently negotiating with various creditors, including these aircraft lessors and lenders, to reduce and restructure its costs and obligations under existing agreements. The Company said that the payment deferrals do not involve any public debt obligations or payments related to its Airbus aircraft fleet, all of which are current and which the Company presently intends to continue to pay in the ordinary course of business.

The Company said that it was otherwise paying its day-to-day obligations and did not anticipate any impact to its customers, employees, airports or other operations. The Company also said that the strategic lessor/lender and vendor payment deferral initiatives were not linked to the Company's current cash position.

"We have taken this step as a prudent course of action while we seek to successfully complete a consensual restructuring plan outside of Chapter 11 reorganization," said President and Chief Executive Officer Dave Siegel. "We anticipate that the lessors and lenders affected will voluntarily participate in our restructuring plan, when fully negotiated and implemented. The completion of a voluntary restructuring plan requires an agreement with our employees to reduce labor costs, agreements with key lenders, lessors and vendors to reduce costs, issuance of a federal loan guarantee, an international and domestic alliance agreement with other air carriers to improve our route network and enhance revenues, and the addition of a very substantial number of regional jets to become competitive in the industry."

As previously announced, US Airways has applied to the Air Transportation Stabilization Board (ATSB) for a federal loan guarantee of $900 million of a $1 billion loan to help finance its restructuring. Simultaneous to the loan guarantee request, it is in negotiations with its labor unions, creditors, lessors and vendors to reduce operating costs by up to $1.3 billion annually over the next seven years. The Company has stated its preferred course of action is to implement a voluntary restructuring program, but has also acknowledged that the Company intends to successfully restructure the airline under all circumstances which could also involve a judicial reorganization if the voluntary restructuring program is not achieved.

The Company acknowledged the possibility that it may receive notices of default which could eventually lead to cross-defaults under agreements with other lessors, vendors and creditors. Such cross-defaults could lead to an acceleration of payment demands by the Company's creditors, which if not rescinded, could require the Company to implement its restructuring plan through a Chapter 11 bankruptcy reorganization.

"All of our actions are designed to successfully restructure the airline and maintain our ability to protect our customers and the communities we serve," said Siegel. "We are an important carrier east of the Mississippi where more than 60 percent of the U.S. population resides, and we take very seriously our mission to serve our customers."

Certain of the information discussed above or enclosed herewith should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. A number of risks and uncertainties exist, which could cause the actual results to differ materially from the results projected in such forward-looking statements. Additional information concerning the factors, which could cause actual results to differ materially from the forward-looking statements, will be contained in a Form 8-K filed today with the Securities and Exchange Commission. US Airways assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates.

At this year's AFA Government Affairs Seminar, we had the privilege of hearing from Chairman John Mica (R-FL), Chairman of the House Aviation Subcommittee. During his presentation, Chairman Mica informed us that he was committed to providing flight attendants and pilots the tools necessary to help defend the aircraft cabin. AFA now has the opportunity to call on him for his help.

The House Transportation and Infrastructure Committee will consider legislation on Wednesday, June 26, that would allow airline pilots to arm themselves as defense against hijackers. Congressman Steve Horn (R-CA) will be offering an amendment to the bill, which would provide self defense training and other cabin security training for flight attendants.

Please call Chairman Mica now at 202- 225-4035 and urge him to support Congressman Horn's amendment. Let Chairman Mica know that flight attendants are the last line of defense in the cabin and need comprehensive and substantive training to protect ourselves and our passengers.

Since this is such an important issue it will also be helpful if you called House Transportation and Infrastructure Committee, Chairman Don Young (R-AK) at 202-225-5765,
Rep. James Oberstar (D-MN) at 202-225-6211 and
Rep. William Lipinski (D-IL) at 202-225-5701.

Please e-mail Shane Larson SLarson@flightattendant-afa.org to let us know you called.

Thank you.

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