As a result of the downturn in the airline industry following September 11 and past management’s inability to change our airline to compete in the industry today, our carrier is in a severe financial crisis. To fix this crisis, management has initiated a Restructuring Plan. The Plan includes negotiations with all of US Airways’ labor groups, lessors and vendors to achieve cost savings that will enable the airline to survive and become profitable in the long-term.

Management says it cannot even survive the short-term unless it secures a loan guarantee from the federal government’s Air Transportation Stabilization Board. The ATSB has conditionally approved a $900 million loan to US Airways. The conditions US Airways must meet before it gets the loan guarantee are: 1. The government wants a greater equity stake in our airline than had originally been offered. 2. All agreements on concessions with labor groups must be either ratified or finalized.

Here’s what that means for us (and all of the other labor groups): If agreements aren’t reached with each work group, or if a work group turns down a tentative agreement, management may be forced to file for bankruptcy restructuring to finalize agreements and achieve the cost savings the airline needs to satisfy the conditions of the loan guarantee.

Management is going to do whatever it has to in order to get the savings from each labor group, because that is the only way US Airways will get the final loan guarantee. If the company can’t achieve the savings it needs through direct negotiations with the work groups, management has made it clear that it will take what it wants in bankruptcy proceedings.

Our tentative agreement achieves a cost savings for our airline of $75.8 million per year. Initially, our agreement provided $77 million per year in savings. However, after the pilots reached a tentative agreement on the overall value of their concession package, management owed us money to make our deal equal in proportion to the pilots’ deal. Simply put, approximately $1.2 million per year was returned to us in our tentative agreement to ensure we aren’t paying more than our share, based upon what the pilots are paying.

This tentative agreement calls for an 8.4% pay cut, a change in our health care, reductions in some supplemental pay, and vacation cuts. Wages, premium pay and vacation changes snap back to today’s levels by the end of the agreement.

This tentative agreement contains provisions for us to participate in the benefits of economic recovery through profit-sharing and an equity-based cash award (tied to the performance of the stock). These are provisions we won’t have if the agreement is not ratified.

This tentative agreement also provides some protection for flight attendants if our airline goes into bankruptcy. In our agreement (“Section 1113 Letter”), management has committed to not seek more in concessions from us than those contained in this agreement, if it ratifies. If our deal fails to ratify and the airline enters into bankruptcy proceedings, management has said that it will seek at least the cuts from us that were outlined in its first negotiating proposal. That first proposal called for 15.5% wage cuts, a 380% increase in our out-of-pocket health care costs over four years, reductions in our pension formula and many more cuts much greater than those in our tentative agreement. We calculated the company’s initial proposal to equal $108 million per year in cuts.

This booklet details the tentative agreement we have reached with US Airways management to achieve the concessions the airline needs from us to become profitable in the future, satisfy the conditions of the ATSB’s loan guarantee of $900 million, and hopefully, stay out of bankruptcy.

Soon, you will be asked to vote on this agreement. Instructions for casting your ballot are included in this mailing. All votes will be cast electronically, beginning July 28 and ending August 9 at 5 p.m. (Eastern Standard Time). Ballots will be counted electronically after 5 p.m. on August 9.

Your options are to vote “FOR” or “AGAINST” the tentative agreement.

A vote “FOR” means you believe the terms of the tentative agreement are better than taking your chances if the airline enters bankruptcy and you do not have an agreement.

A vote “AGAINST” means you are willing to take your chances that a bankruptcy judge will make better decisions about your future than what’s provided for in the tentative agreement.

Please read all of the enclosed information carefully. Come to one of the road shows listed on the back of this booklet to have your questions answered by the Negotiating Committee, our financial experts and an attorney with experience in airline bankruptcies. You can also call 800/531-3242 toll-free, or visit www.afausairways.org to submit questions or look for information.

This is a very important decision for you, your job and the future of our carrier. Not a single flight attendant will look at this tentative agreement and prefer it to the contract terms we work under today. However, our carrier is going to make changes whether we like it or not. And by voting “FOR” this agreement, we are controlling, as much as possible, the changes that will affect our jobs and our future.

Flight attendants always unify and rise to the occasion in a time of crisis. Today, we must stand together once again to face our future.

In Solidarity,

Your AFA US Airways Negotiating Committee

Karen Lascoli, MEC President
Buddy Brannon, LEC President, Boston
Terry Graf, LEC Vice President, Philadelphia