Productivity improvements:
If this tentative is ratified, the Company and the union will negotiate cost-saving productivity improvements in areas such as scheduling and reserve. Any cost savings that result from these productivity improvements will be returned to the flight attendants in additional wage increases during the term of the agreement.

Modification of no-furlough clause and minimum fleet size guarantee:  
The current no-furlough clause in Section 1.E of the contract will be deleted and replaced with a guaranteed minimum fleet size of 275, provided the carrier stays out of bankruptcy. If the Company goes into bankruptcy, the fleet size could be reduced to 245.
 
Note: Although management has stated that it intends to downsize the airline as part of the restructuring plan, it has not yet determined what the aircraft mix will be. Nor has it set a timetable for reducing the fleet.

Furlough protections:
Prior to implementing an involuntary furlough, the Company must offer a Voluntary Separation Incentive Package. If an insufficient number of flight attendants take a voluntary separation, the Company must then offer additional voluntary furloughs, which will include 24-month passes and eligibility for unemployment compensation.

If after voluntary separations and voluntary furloughs there is still a need to involuntarily furlough, the furloughed flight attendants will be offered bumping rights into jobs at MidAtlantic Airways in seniority order. Involuntary furloughees will also be given passes for one year.
 
Note: The benefits provided to furloughees in Section 19 of the current contract will remain in effect and are not modified by this tentative.

MidAtlantic Airways:
US Airways is establishing a new wholly-owned subsidiary, MidAtlantic Airways, which will operate regional jets. All flight attendant jobs at Mid-Atlantic will be reserved for furloughed mainline flight attendants. A “flow-through” procedure will allow MidAtlantic flight attendants to move into vacancies at US Airways in seniority order. Flight attendants at MidAtlantic will be represented by AFA, which will negotiate pay, benefits and work rules covering MidAtlantic.
 
Note: Furloughed flight attendants employed at MidAtlantic will retain the same contractual rights and benefits as all other furloughed flight attendants. (See Section 19.H of our current contract.)

Health insurance:
Effective January 1, 2003, all flight attendants (and all other Company employees) will be covered by a single, national Preferred Provider Organization (PPO). Under the new plan, which also covers prescription drugs and dental care, most flight attendants will pay greater premiums and have larger out-of-pocket costs. The new plan will have three options: option 1 (low), option 2 (medium), and option 3 (high). There will be four, instead of the current two, premium classifications: 1) single, 2) employee and spouse, 3) employee and children, and 4) family, each with a different cost structure.

Flight attendants who select option 1 will pay 7% of the Company’s premium equivalent. For example, in 2003 an employee and spouse with no children would pay $27 per month. That same employee selecting option 2 would pay 13% of the Company’s cost, or $55 per month. Option 3 would cost that employee $72 per month, or 16% of the Company’s cost.

   All rates will increase by the following percentages through 2009:

     2004   –   13%
     2005   –   13%
     2006   –   11%
     2007   –   9%
     2008   –   6%
     2009   –   5%

For example, an employee paying $14 per month in 2003 for single, option 1 coverage will pay $22 per month in 2008.

The details of the PPO plan, including premiums, annual deductibles, payments for in-network vs. out-of-network care, etc., are contained in the “PPO Plan Design Summary” at the end of this summary.

Profit-sharing:
Flight attendants will participate in a profit-sharing plan similar to the Southwest Airlines profit-sharing plan. The plan will distribute 15% of pre-tax earnings to employee groups based on the proportion of their concession package. (The pilots are not participating in this plan; they are receiving some form of equity.)

Equity:
In addition to profit-sharing, AFA and the company are designing an equity-related investment vehicle which can provide returns to flight attendants if the company’s stock shows sustained returns as a result of this restructuring. In other words, flight attendants will get cash if the stock goes up and stays up.

 
DEVELOPMENT OF EQUITY
 
Bankruptcy protection (Section 1113 Letter):
The Company has issued AFA a “Section 1113 Letter”, which provides that in the event US Airways files for bankruptcy, the Company will not ask the bankruptcy court for further cuts in flight attendant pay and benefits than we have already agreed to in the tentative agreement. This protection is in effect during the ratification period. If the agreement fails, this protection goes away. If US Airways files for bankruptcy prior to the voting period for this tentative agreement, flight attendants must still ratify the agreement for the protection to remain. (See Section 1113 Letter on next page.)
 
Note: Under bankruptcy law, a company can ask the court for “relief” from its labor contracts and, as a general rule, will be granted the right to make drastic changes to pay, benefits and work rules. The Section 1113 Letter protects us from that scenario. (Each labor group that negotiates and ratifies a “restructuring” agreement will receive a Section 1113 Letter.)

Section 1113 Letter