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DEFINED CONTRIBUTION PLAN

As you know, the East Defined Benefit (DB) plan was terminated in the 2004 bankruptcy case and the plan was turned over to the Pension Benefit Guarantee Corporation. The 2004 Flight Agreement provides for a Defined Contribution Plan (the "DC" Plan) to commence in January 2008.

Tom Antonielli, Director of Retirement Plans and International Benefits, has met several times over the past few months with myself and AFA Insurance and Benefits Chairperson, Paul Frishkorn to discuss the plan start up.

The Company will be sending out information in October regarding the DC Plan and the necessary documentation required to select distribution/investment options. The Company will be conducting Benefit Seminars in various locations this fall as well as other communication forums for our members. The Union will also be issuing further information regarding the DC plan.

This Eline serves only as an introduction to the DC Plan and will answer some of the more frequently asked questions about the DC Plan.

The DC Plan contract language is referenced below:

1. The Company shall replace the former Defined Benefit Plan with a Flight Attendant Defined Contribution Plan (the "DC Plan") with an Employer Contribution equal to 3% multiplied by such flight attendant's "eligible compensation as defined in the Company's 401(k) plan (i.e., base compensation including premiums, paid to a flight attendant for such period for services as an employee but determined prior to any exclusions for payroll contributions and other elective deferrals under Section 402(g)(3) of the Code, pre-tax contributions to any welfare benefit plan maintained by the Company or any Related Company, or pre-tax contributions for a qualified transportation fringe benefit under Section 132(f)(4) of the Code).

2. Company contributions are due and payable from the later of: (x) the day following the day on which the DB Plan is frozen or terminated (i.e., for eligible compensation earned beginning the day after the DB Plan is frozen or terminated), or (y) January 1, 2008 (i.e., for eligible compensation earned beginning January 1, 2008).

3. Flight attendants who are on the System Seniority List as of January 10, 2005 will be immediately 100% vested in the Employer Contributions. Newly hired flight attendants will be 100% vested one (1) year from date of hire.

4. Company contributions to the DC Plan will be deposited in each flight attendant's account consistent with the timing of contributions to the defined contributions plans for the Company's other employee groups.

Questions and Answers -

Q - Is the DC Plan the same as the 401(k) plan?

A - No. Although some of the same tax rules regarding loans, early withdrawals and eligible compensation are the same as those for the 401(k) plan, the two plans are separate.

Q - Do I have to participate in the 401(k) plan in order to receive the 3% percent DC Plan contribution from US Airways?

A - No. US Airways must contribute an amount equal to 3% multiplied by your eligible compensation. The Company is required to make the 3% contribution into every Flight Attendant's DC Plan account regardless of participation in the 401(k) plan.

Q - What is my account and how will it be set up?

A - Each Flight Attendant will have an account in the DC plan. The account will appear along with all other savings plans a Flight Attendant may have on the US Airways Fidelity account website. Each Flight Attendant will have the options of selecting various investment vehicles for their DC plan contributions similar to the 401(k) process. There will be a default investment option for those Flight Attendants who do not select their own investment plans. More detailed information regarding account set up will be provided by the Company.

Q - What is eligible compensation?

A - Eligible compensation is generally defined as taxable income determined prior to any exclusions for contributions into other savings plans or elective deferrals. In general, this means your wages not including non-taxable items such as per-diem. A complete discussion of what is included and what is excluded from eligible compensation will be included in further information distributed by the Company.

Q - When will the 3% contribution begin?

A - The Company will begin making the 3% contribution with the January 15, 2008 paycheck and will continue with each subsequent paycheck. The Company will make the 3% contribution with seven days of the pay date and will make every effort to have the contribution deposited by the Wednesday following the pay date.

Q - Our pensions were terminated. If the Company goes into bankruptcy or liquidates in the future will I lose the money that has been contributed and invested?

A - No. Once the money is deposited into your account it is yours. The money in the account can't be seized or lost if the Company files for bankruptcy or liquidates. Obviously if the Company goes out of business further contributions will not be made, but every penny that has previously been contributed and the assets in the plan remain at your disposal subject to IRS regulations governing DC plan rollovers.


These are just some of the questions that have been asked and we anticipate there will be more. The Union will be distributing more information in the next few weeks as it becomes available.
 

Thank you,

Mike Flores, President
The US Airways Master Executive Council
AFA-CWA

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AFA Local Numbers

Council 40 PIT 412-245-1214
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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