03/22/03 SPECIAL BULLETIN FOR 22 MAR 2003                     
SPECIAL BULLETIN FOR 22 MAR 2003

To All Employees ... Please Post ... Special Bulletin

US AIRWAYS AND ALPA REACH AGREEMENT ON PENSION PLAN

Deal Ratified by ALPA and Now Awaits PBGC Approval

US Airways and the Air Line Pilots Association (ALPA) have reached an agreement on a replacement pension plan that has been ratified by the ALPA Master

Executive Council at the airline and now awaits approval by the Pension Benefit Guaranty Corp. (PBGC).

The agreement follows a final round of intense negotiations in which both airline and union leadership committed to finding a solution to a critical hurdle that would allow US Airways to emerge from Chapter 11.  The U.S. Bankruptcy Court had issued a decision on March 1, 2003, which found that US Airways had met the standards and conditions for a distress termination of the existing defined benefit pension plan and authorized the company to implement a defined contribution plan.  Following the court's confirmation of US Airways' plan of reorganization on March 18, 2003, the resolution of the pension issue was one of the few remaining issues that needed to be completed.

"We are 10 days away from completing our Chapter 11 reorganization and the choices are rather stark: successfully complete the process and emerge from bankruptcy protection, or fail.  The management of the airline did not undertake this difficult process to fail, and neither did our pilots," said David Siegel, US Airways president and chief executive officer.  "I respect ALPA's leadership in working to shape a replacement plan that addresses concerns of its members.  Our pilots have made enormous sacrifices and led all other employee groups through this restructuring.  With the airline business only getting worse as the Iraqi War heightens public anxiety, it is critical that we complete our reorganization, exit from Chapter 11, and secure the $1.24 billion in new financing that awaits us."

Terms of the agreement have not been disclosed, pending review by the PBGC, which must approve the replacement pension plan and final Bankruptcy Court approval to complete the process of terminating the existing pension plan by March 31, 2003.

End of Special Bulletin for Saturday, March 22, 2003

Corporate Communications/Telex:HDQCYUS/COMAT:DCA-H85

THE RETIRED PILOTS ASSOCIATION OF US AIRWAYS

Below is an excerpt from a letter written to the Retired Pilot’s at US Airways (Soaring Eagles.)  This group joined forces with some active pilot’s in an attempt to save their DB pension.  US Airways pilots did not have an opportunity to vote, their  ALPA MEC ratified the deal without membership participation. 

March, 22, 2003

Dear Soaring Eagles Member,

An MEC Code-A-Phone message distributed this morning revealed that the MEC has agreed to terminate the defined benefit plan. The MEC-ratified Letters of Agreement are attached. This means that the plan will, in all likelihood be terminated as of March 31, 2003. We had held out hope that ALPA wouldn’t consent to termination and that another way would be worked out to resolve the funding deficiencies. It was not to be. As we previously reported to you, we filed a notice of appeal shortly after Judge Mitchell issued his ruling that US Airways had met the financial criteria for plan termination but that the plan could not be terminated if that was contrary to the Collective Bargaining Agreement, that is to say, without ALPA’s consent. We believe that we can prove definitively that all of the requisite conditions were not met. Principle among these is that there are no other ways to emerge from reorganization other than with a distress termination of the pilots’ retirement plan. Being the favorite way, or a good way or even the best way to emerge from bankruptcy is insufficient. It must be the only way or it may not be done. We are, of course, very disappointed by these developments but we will press on. Not only will we pursue the appeal zealously but we have several other initiatives undergoing evaluation. We will report in more detail as these become more fully developed.

We have been assured that you will continue to receive your retirement checks as usual. There will be a period of evaluation during which you might receive a slightly reduced benefit but you will continue to receive your retirement benefit. It is expected that the evaluation will determine that group three, which includes all of you, is about 90% funded. If that is so, you can expect to receive the greater of 90% of your current benefit or your current benefit up to the PBGC maximum guarantee, as depicted below. The monthly amounts for ages 70 and below is for 2003. Ages 71 and above are 2002 amounts that have not yet been adjusted for inflation. Also the age to be used is your age as of March 31, 2003. The amount is for single life annuity. If you currently have joint and survivor benefits the monthly amount will be adjusted for that. Widow’s benefits will be the appropriate percentage of the benefit described above. That is, if you have a 50% joint and survivor benefit you will receive the greater of 90% (assuming 90% funding) of your current benefit or your current benefit up to 50% of the PBGC maximum for your age as of March 31, 2003.

I am sorry we weren’t able to avert plan termination. We have believed all along, and continue to believe, that this is an extreme and permanent remedy for a temporary problem. The last eight days, alone, have seen a 12% increase in the Dow Jones 30 average and a 30% decrease in crude oil prices. Nevertheless, at least for now, this is the reality. The main thing now is not to let this disrupt your life and cause you to agonize about it to the point that it affects you health. Everything will be alright and we will work hard to reverse this ill conceived and unfair action.

God speed to our Commander in Chief and our men and women in the Persian Gulf. May a curse be upon Saddam’s mustache

Tom Davis