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AFA US Airways MEC E-Line for May 11, 2004

In this E-Line

Retirement Notice
US Airways pilots OK regional jet agreement
Accessing The Hub
AFA Local Numbers

Important Information to Consider as you Plan for your Retirement

Effective June 1, 2004, you must provide US Airways Benefits Administration with at least 90 days notice of your intent to retire if you are eligible for a benefit under the Retirement Plan for Certain Employees of US Airways, Inc.; the Retirement Plan for Flight Attendants in the Service of US Airways, Inc.; or the Pension Plan for Employees of US Airways, Inc. Represented by the IAM (collectively the "Defined Benefit Plans"). Newly issued IRS regulations, which took effect January 1, 2004, have prompted this requirement.

Under the newly issued IRS regulations relating to the provision of retroactive annuities (i.e., benefits provided after your requested retirement starting date), US Airways must provide you with a written explanation of your benefit options before your retirement starting date to avoid being subject to additional requirements imposed by these regulations. In order to provide you with the required explanation in a timely manner, US Airways will now require that employees eligible for a benefit under the Defined Benefit Plans notify US Airways Benefits Administration 90 days before the preferred retirement date.

The IRS has a number of guidelines regarding information an employer must provide to you, all aimed at helping you make certain decisions when you retire. Prior to your retirement date, you must make choices about your benefit options under the Defined Benefit Plans, particularly if you are married. To that end, the IRS requires that US Airways, as the plan sponsor, provide you with a written explanation of the benefit options available to you no more than 90 days before your requested date of retirement (also known as your annuity starting date) and no less than 30 days before your annuity starting date.

For example, if you want to retire on September 1, you must notify US Airways Benefits Administration in writing no later than June 1 in order for your annuity starting date to commence on September 1. US Airways will not make exceptions to this rule. If your written request for a retirement packet is received in Benefits Administration less than 90 days from your preferred retirement date, you will not be able to retire until the first of the month following the 90-day period. This means that you will not be able to commence your pension benefit on the date requested, and you will not receive retroactive payment of your retirement benefit.

You should note that the new regulations might affect more than your pension benefit. The US Airways benefit plan provides for health coverage in retirement only if coverage continues uninterrupted from active employment. If you notify US Airways of your intent to retire in less than 90 days from the date of retirement and actually terminate employment, you will not be eligible for medical benefits as a retiree. In addition, you would not be eligible for retiree travel benefits. For example, if you notify Benefits Administration on June 15, 2004, the soonest you will be eligible to commence your pension benefit is October 1, 2004. If for some reason you need to terminate your employment in August 2004, you would lose your eligibility for retiree medical and travel benefits.

What's the bottom line? We want you to have a smooth transition to retirement. You must plan ahead and notify US Airways at least 90 days prior to the date you plan to retire.

To obtain a Retirement Notification and Request form or if you have any questions regarding your retirement, please contact Benefits Administration at 1-800-872-4780, option 2. Your completed Retirement Notification and Request form can be mailed to US Airways Benefits Administration, 2345 Crystal Drive, Crystal Park Four, Arlington, Virginia 22227 or faxed to (703) 872-7498 or (703) 872-7099.

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US Airways pilots OK regional jet agreement

By Thomas Olson
TRIBUNE-REVIEW
Tuesday, May 11, 2004

In a critical vote that helps US Airways regain financial footing, the troubled airline's pilots union on Monday accepted a money-saving agreement that allows the carrier to reassign regional jet leases to its express-carrier affiliates.
The flexibility to transfer the leases to express partners frees US Airways from paying for those regional jets, while keeping the modern aircraft in the US Airways Express family and feeding mainline flights with passengers.

Three-quarters of the 3,200 active US Airways pilots voted, with 76 percent in favor and 24 percent against, or 1,790 votes versus 580.

The vote was important for US Airways financially after Standard & Poor's Wednesday downgraded US Airways corporate debt to "CCC+,' or junk status. On Friday, the airline's parent warned in a securities filing that without cutting costs, US Airways might sell assets or file bankruptcy again.

"This is positive. It's a start," said Michael Boyd, head of The Boyd Group, an airline consultant in Evergreen, Colo. "The only cost savings left are things like work rules and scope clauses. It's up to management now to make it work."

The vote was also a difficult one for pilots. Their passage gives some comfort to US Airways' creditors, especially General Electric Capital, which is financing US Airways regional jets. But the so-called "scope relief" pact hurts prospects for rehiring laid off pilots.

Under the union's "jets-for-jobs" contract language, newly acquired jets must be flown 100 percent by pilots called back to active duty. But scope relief would transfer regional jets to non-wholly-owned express affiliates, which only have to hire 50 percent of the pilots needed from the lay-off rolls.

US Airways pilots have already given up $565 million in annual wage and benefit concessions since 2002. The pilots also have lost 1,879 jobs since late 2001, including more than 600 in Pittsburgh

The acquisition of regional jets is one of the key planks in US Airways' transformation plan, which management presented to labor chiefs Wednesday.

"Going forward, the pilots recognized the reality of the situation and voted accordingly," said Jack Stephan, spokesman for the Air Line Pilots Association's US Airways unit. "Given the facts, they made the appropriate decision."

In May 2003, US Airways placed about $4.3 billion in orders for regional jets to be flown by its express affiliates.

MidAtlantic Airways, US Airways' new division based in Pittsburgh, is leasing Embraer EMB 170 regional jets with 70 to 78 seats. PSA, US Airways express subsidiary based in Dayton, Ohio, plans to fly Canadair 50- and 75-seaters.

"This favorable vote is a clear indication our pilots do understand the challenges the company faces, and again are taking the necessary steps to help us during this extremely difficult time," said US Airways spokesman David Castelveter.

General Electric Capital provided the financing for US Airways regional-jet plans. The Stamford, Conn.-based company declined to comment.

Regional-jet financing, however, "certainly will go a lot farther than if we hadn't ratified" the agreement, said Stephan. "There are still important, difficult issues ahead, but this isn't one of them."

Negotiators for the pilots and for management expect to begin broad contract talks later this week, said Stephan. They are expected to address productivity issues related to routes and work rules mostly.

Separately, US Airways said nearly 3.8 million passengers boarded its planes in April, a 7.3 percent increase from the year earlier. Year-to-date through April, the airline reported a 5.4 percent increase in passengers.

The airline also reported the load factor, or percentage of seats filled, increased 5.7 points to 79.8 percent last month, a record for April performance. The performance shows US Airways bookings more closely matched seat capacity, which rose 1.9 percent over April 2003.

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Accessing The Hub:

http://thehub.usairways.com
Logging in the first time your user name is u0(zero) and your five digit employee number. Your initial password is the first five digits of your social security number. Questions about the Hub? Call 800-327-0117 and listen for the catcrew help desk prompts. More information can also be found HERE.

AFA Local Numbers
Council 40 PIT 724-695-3329
Council 41 DCA 703-690-6859
Council 69 BOS 978-352-7401
Council 70 PHL 215-492-0840
Council 82 LGA 201-803-6141
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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