[P align=left][FONT face=Times New Roman color=#000000 size=4]MEC CODE-A-PHONE UPDATE - [/FONT][FONT face=Times New Roman color=#000000 size=3]November 21, 2002[BR][/FONT][FONT face=Times New Roman size=3][BR]This is Roy Freundlich with a US Airways MEC update for Thursday, November 21, with two new items: [BR][BR]Item 1. The MEC convened its special meeting today in Herndon and received a report from the Negotiating Committee. The Committee reported that management terminated additional small jet relief negotiations with ALPA this afternoon after informing the Committee that management’s latest counterproposal was their final offer and asked that ALPA not present a counterproposal to it.[/FONT][BR][BR][FONT face=Times New Roman size=3]The Committee reported that ALPA’s small jet proposal to the Company gave management everything that they had requested, except the ability to put 70-seat small jets at US Airways’ current wholly-owned carriers. During negotiations, management refused to address most of the MEC’s small jet relief issues.[/FONT][BR][BR][FONT face=Times New Roman size=3]The MEC spent the remainder of the day in closed session receiving reports from the Retirement and Insurance Committee and advisors, and the Staffing Review Committee.[/FONT][BR][BR][FONT face=Times New Roman size=3]The Staffing Review Committee focused on the committee’s review of Resource Planning’s 2003 staffing plan. The Committee has serious concerns about the Company’s staffing levels, especially levels during summer of 2003, and about the assumptions that the
Company’s inputs into the staffing model.[/FONT][BR][BR][FONT face=Times New Roman size=3]The MEC also received a report from Captain Ed Bular, Vice President of Flight Operations, Captain Lyle Hogg, Senior Director of Flight Operations, and Captain Paul Morell, Director of Flight Training and Standards in closed session.[/FONT][BR][BR][FONT face=Times New Roman size=3]The meeting is scheduled to reconvene tomorrow morning at 9:30 a.m. The meeting is being held at the Days Inn Conference Center Dulles Airport. The telephone number for transportation information is 703-471-6700. Please be advised that portions of the meeting will be in closed session.[/FONT][BR][BR][FONT face=Times New Roman size=3]Item 2. The Company and ALPA have agreed to a memorandum of understanding that confirms the entitlement to retirement-related benefits for furloughees hired prior to January 1, 1998, and pilots on a leave of absence in lieu of furlough who were hired prior to January 1, 1998. These pilots are entitled to the same benefits upon reaching normal retirement age as any pilot who remains on active status and subsequently retires upon reaching normal retirement age.[/FONT][BR][BR][FONT face=Times New Roman size=3]Specifically, a furloughed pilot who was hired before January 1, 1998, is entitled to receive the following benefits, which may be amended from time to time, upon reaching normal retirement age regardless of whether s/he is recalled to active status, provided s/he accepts recall and returns to active status if a recall is offered prior to normal retirement age:[/FONT][BR][BR][FONT face=Times New Roman size=3]1. Retiree medical and dental benefits[BR]2. Retiree life insurance benefits[BR]3. Retiree pass benefits[BR]4. Credited service in the retirement income plan for all time of furlough or leave of absence in lieu of furlough.[/FONT][BR][BR][FONT face=Times New Roman size=3]Furloughed pilots must keep their current address on file with the Company. Ninety days prior to the furloughee’s benefit commencement date, the Company will forward a letter to the pilot stating a complete listing of benefits upon retirement and all forms necessary to commence receipt of those benefits.[/FONT][BR][BR][FONT face=Times New Roman size=3]Please remember we have 1,356 pilots on furlough, with 326 pilot furloughs scheduled for January 7, and 145 additional pilot furloughs anticipated through April 2003.[/FONT][BR][BR][FONT face=Times New Roman size=3]Thank you for listening.[/FONT][/P]
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The US Airways - ALPA restructuring agreement permitted 70-seaters to operate at MidAtlantic Airways. However, due to the 69-seat aircraft restriction in the previous contract, scope protection designed to protect former F-28 flying, Mesa CEO Jonathan Ornstein said he started Freedom Air.

This language prevented a company who operates aircraft larger than 69-seats from having a code share agreement with US Airways; therefore, if Mesa began flying 70-seaters they would have to pull down all of their US Airways Express flying and the 32 50-seat RJs.

A couple of weeks ago management asked for relief from the 69-seat restriction and to permit Freedom Air 70-seat CRJs to fly under US Airways Express. Per last weeks MEC resolution, the ALPA MEC was willingly to discuss this issue to permit additional large RJs into the US Airways network; however, this relief could jeopardize MDA start up. Management assured the MEC MDA was on track to commence operations and the MEC charged the Negotiating Committee to begin affiliate carrier 70-seat RJ discussions.

MDA is important to ALPA because both pilot seats are J4J opportunities or 100 percent of the so called “soft landingâ€￾ jobs, whereas other wholly owned or affiliate carrier J4J RJ flying is only 50 percent of the jobs for furloughed mainline pilots.

It is important to note ALPA said, The Committee reported that ALPA’s small jet proposal to the Company gave management everything that they had requested, except the ability to put 70-seat small jets at US Airways’ current wholly-owned carriers. During negotiations, management refused to address most of the MEC’s small jet relief issues.â€￾

In my opinion, ALPA provided relief on the 69-seat clause, reached agreement on Freedom Air deployment, but would not permit other wholly owned 70-seat flying because the belief may be management will never start MDA. It's important to note management is permitted to place 50-seat and below RJs at the current wholly owneds whenever they can complete non-labor agreements.

This is a developing story and the US Airways MEC is in Special Session discussing this issue.

[BLOCKQUOTE][FONT class=Highlight][/FONT][BR]----------------[BR][FONT face='Times' color=#000000 size=4 Roman" New]MEC CODE-A-PHONE UPDATE - [/FONT][FONT face='Times' color=#000000 size=3 Roman" New]November 21, 2002[BR][/FONT][FONT face='Times' size=3 Roman" New][BR][/FONT][FONT face='Times' size=3 Roman" New]The Committee reported that ALPA’s small jet proposal to the Company gave management everything that they had requested, [STRONG]except the ability to put 70-seat small jets at US Airways’ current wholly-owned carriers[/STRONG]. During negotiations, management refused to address most of the MEC’s small jet relief issues.[BR]--------------------[BR][BR][/FONT]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman color=#000000][FONT class=Highlight]Previously, I have only heard of the company attempting to put the 70-seaters at the affiliate carriers, not the current wholley-owneds. Is this something new or a misprint? Does this statement mean that ALPA agreed to allow the large SJ’s at the contract carriers, but not he wholley-owneds? Seems there would be more control of them at our own carriers.[BR] [BR]Strange……..[/FONT][/FONT][/P][BR][/BLOCKQUOTE]
The most important issue is that all flying sooner or later stays within the US Air Group.

If the AAA MEC thinks it is preferable to allow 70 seaters to be placed at Freedom rather than at the current wholly-owneds, in some shortsighted attempt at protecting the start-up of MDA, then the MEC is indeed as foolish and self-protecting as many suspect.

NO MORE OUTSOURCING. Wholly-Owned flying is not outsourced flying, it is US Air Group flying. Keep the flying in the Group at any cost, or we will all surely fade away as MESA/Freedom, CHQ etc, become the new US Airways.
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Reports indicate the new business plan will include:

MidAtlantic start up date delayed until Decmeber 31, 2004 (two years from now).

70-seat RJs placed at the current wholly owneds.

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The ALPA MEC understands your point and is working on an acceptable solution. It is time for cooler heads to prevail and to let the process work out.


Did I read you correctly? a MDA operational start-up date of December, 2004???? Wow. A lot can happen between now and then. If you ask me, that's simply too long to wait for something US Airways needs.
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I believe the intent is to put the 70-seaters at both Freedom Air and the current wholly owneds because the RJs can be deployed sooner than at MDA.

Freedom is taking delivery of its 4th, 5th, and 6th 70-seat CRJ in December and the wholly owneds do not need an operating certificate/DOT new carrier approval. Instead of starting a new airline, the company could simply introduce a new fleet type to the current three regional airlines, who all have agreed to J4J, with the entire airline infrastructure in place. However, ALPA MEC prefers MDA because it provides for both pilot seats to be J4J.

In my opinion, with the three wholly owneds having a joint pilot seniority list and the mainline ALPA agreement having a flow through clause, in 24 months the three wholly owneds could be combined and merged into MDA, providing ample time for an interated Express network similar in scope to Comair.

From a corporate perspective these transactions would increase revenue faster, require less employee cuts to meet the loan guarantee 7 percent profit margin requirement, and provide a stronger ATSB application. I suspect we will hear more about this and pending employee contract changes on Tuesday.