To All Employees ... Please Post ... Special Bulletin
US Airways will file with the U.S. Bankruptcy Court today the details of
reductions in compensation, benefits and workforce for its management
and non-union employees as part of their participation in the company
Transformation Plan. In a letter to the affected employees, CEO Bruce
Lakefield said most employees and functions in these groups are paid near market
rates for their respective jobs and duties. Compared to the low-cost carriers,
however, US Airways has historically had a generous program in other parts of
our compensation package, including health care coverage, vacation/sick
leave policies, and pension and retirement programs that have been eclipsed
by market changes, he said.
The overall annual target for participation by management/non-union
employees, including all officers, is $45 million (or more than 20 percent of
total 2004 payroll costs). To meet the target, US Airways is taking the following
actions that will have a direct effect on all management and non-union
employees. These savings will be obtained through a combination of pay, pension and benefit changes that will be apportioned in the following way and are
consistent with our projected status as a successful low-cost carrier:
Senior Officer team (including the company's 10 most seniors officers
--executive vice presidents and senior vice presidents)
--The company?s senior officers will take the largest cuts in keeping
with the commitment to lead the way and transform the compensation of our
executives to be similar to that at the LCCs. Effective Oct. 11, additional cuts will
be made to the senior officers? cash compensation. The total cuts to these
senior officers? W-2s will range from 15 percent to 20 percent and average 17
percent, consisting of a 10 percent salary reduction and a 25 percent reduction
in the contributions to their existing retirement plans. Earlier this year,
all officers, including the senior officers, waived their rights to a pay
raise that had been approved in our previous plan of reorganization and was
consistent with pay raises that both union and non-contract employees received.
Along with cancelled pay raises, the total W-2 cuts for senior officers on average
will exceed 20 percent.
Vice Presidents and Managing Directors
--Effective October 11, all officers and managing directors will take a
pay cut of 7.5 percent. Vice presidents have also foregone their pay raise this year. In addition, the total number of company officers has been reduced by 25 percent, from 35 to 26.
All other management/non-union employees:
--Effective Oct. 11, other non-union employees will take a 5 percent
pay cut.
Modification to Pension Plans
--Effective with the payroll cycle beginning Oct. 11, US Airways will
modify its defined contribution retirement plans for non-contract and management
employees. Contributions to the Employee Pension Plan, known as the Base Account, will be set at 3 percent of salary for all employees regardless of age.
Employee contributions to the 401(k) plan will not be affected, but the company
match will be eliminated. Current vested balances will remain in place and
unvested balances will continue to vest according to the Plan schedule.
Investment options for both the 401(k) and Base Accounts will remain unchanged.
Workforce Reduction
--We will reduce headcount by more than 10 percent from the total
number of employees who were in place at the beginning of the year. Among the
ways we have and will continue to reduce the workforce are not filling open and
budgeted positions, outsourcing of work where appropriate, elimination and
consolidation of positions, and in certain cases, outright reorganization of entire
departments. We have already started this process and will have it
completed by the end of October.
Paid Time Off (PTO) system
--Effective Jan. 1, 2005, the current sick and vacation accrual system
for management and non-union employees, including all officers, will be
converted to a PTO system. All leave will be accrued under a single category and
the number of paid holidays will be reduced. A summary of the new PTO system is presented below.
Service Paid Time Off Holidays Total
1 ? 5 years 15 days 8 23
6 ? 11 years 20 days 8 28
12 plus years 25 days 8 33
Holidays observed will be New Year?s Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, Christmas Day and two floating holidays.
Additional details regarding the conversion from the current system to PTO will be
available on theHub shortly.
Modification to Retiree Benefits
--Effective Jan. 1, 2005, US Airways will make changes to retiree medical, dental, and life insurance benefits. Complete details regarding these
changes will be forwarded to those who could be impacted and will be available
on theHub.
Hiring Moratorium
--Effective immediately, we will implement a hiring moratorium covering
management, administrative, and crew scheduling employees. Only those
positions deemed critical to the success of the Transformation Plan will be
filled. All other open positions will be eliminated. Further replacements will be
considered for backfill only after a complete justification has been approved by
the senior officer team. No new positions will be created without an exception
from the Chief Executive Officer. If we need to fill an approved position, we
will focus our efforts on internal candidates. External hires will be permitted
only if there are no fully qualified internal candidates.
Profit sharing
--All employees will be offered an opportunity to participate in the
profit sharing plan previously announced, subject to various approvals
required by the bankruptcy process. We are also examining the possibility of providing some form of equity for employees who participate in the Transformation Plan. More details will become available as we move through the bankruptcy process and actively work toward emergence.
End of Special Bulletin for Monday, Oct. 4, 2004
US Airways will file with the U.S. Bankruptcy Court today the details of
reductions in compensation, benefits and workforce for its management
and non-union employees as part of their participation in the company
Transformation Plan. In a letter to the affected employees, CEO Bruce
Lakefield said most employees and functions in these groups are paid near market
rates for their respective jobs and duties. Compared to the low-cost carriers,
however, US Airways has historically had a generous program in other parts of
our compensation package, including health care coverage, vacation/sick
leave policies, and pension and retirement programs that have been eclipsed
by market changes, he said.
The overall annual target for participation by management/non-union
employees, including all officers, is $45 million (or more than 20 percent of
total 2004 payroll costs). To meet the target, US Airways is taking the following
actions that will have a direct effect on all management and non-union
employees. These savings will be obtained through a combination of pay, pension and benefit changes that will be apportioned in the following way and are
consistent with our projected status as a successful low-cost carrier:
Senior Officer team (including the company's 10 most seniors officers
--executive vice presidents and senior vice presidents)
--The company?s senior officers will take the largest cuts in keeping
with the commitment to lead the way and transform the compensation of our
executives to be similar to that at the LCCs. Effective Oct. 11, additional cuts will
be made to the senior officers? cash compensation. The total cuts to these
senior officers? W-2s will range from 15 percent to 20 percent and average 17
percent, consisting of a 10 percent salary reduction and a 25 percent reduction
in the contributions to their existing retirement plans. Earlier this year,
all officers, including the senior officers, waived their rights to a pay
raise that had been approved in our previous plan of reorganization and was
consistent with pay raises that both union and non-contract employees received.
Along with cancelled pay raises, the total W-2 cuts for senior officers on average
will exceed 20 percent.
Vice Presidents and Managing Directors
--Effective October 11, all officers and managing directors will take a
pay cut of 7.5 percent. Vice presidents have also foregone their pay raise this year. In addition, the total number of company officers has been reduced by 25 percent, from 35 to 26.
All other management/non-union employees:
--Effective Oct. 11, other non-union employees will take a 5 percent
pay cut.
Modification to Pension Plans
--Effective with the payroll cycle beginning Oct. 11, US Airways will
modify its defined contribution retirement plans for non-contract and management
employees. Contributions to the Employee Pension Plan, known as the Base Account, will be set at 3 percent of salary for all employees regardless of age.
Employee contributions to the 401(k) plan will not be affected, but the company
match will be eliminated. Current vested balances will remain in place and
unvested balances will continue to vest according to the Plan schedule.
Investment options for both the 401(k) and Base Accounts will remain unchanged.
Workforce Reduction
--We will reduce headcount by more than 10 percent from the total
number of employees who were in place at the beginning of the year. Among the
ways we have and will continue to reduce the workforce are not filling open and
budgeted positions, outsourcing of work where appropriate, elimination and
consolidation of positions, and in certain cases, outright reorganization of entire
departments. We have already started this process and will have it
completed by the end of October.
Paid Time Off (PTO) system
--Effective Jan. 1, 2005, the current sick and vacation accrual system
for management and non-union employees, including all officers, will be
converted to a PTO system. All leave will be accrued under a single category and
the number of paid holidays will be reduced. A summary of the new PTO system is presented below.
Service Paid Time Off Holidays Total
1 ? 5 years 15 days 8 23
6 ? 11 years 20 days 8 28
12 plus years 25 days 8 33
Holidays observed will be New Year?s Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, Christmas Day and two floating holidays.
Additional details regarding the conversion from the current system to PTO will be
available on theHub shortly.
Modification to Retiree Benefits
--Effective Jan. 1, 2005, US Airways will make changes to retiree medical, dental, and life insurance benefits. Complete details regarding these
changes will be forwarded to those who could be impacted and will be available
on theHub.
Hiring Moratorium
--Effective immediately, we will implement a hiring moratorium covering
management, administrative, and crew scheduling employees. Only those
positions deemed critical to the success of the Transformation Plan will be
filled. All other open positions will be eliminated. Further replacements will be
considered for backfill only after a complete justification has been approved by
the senior officer team. No new positions will be created without an exception
from the Chief Executive Officer. If we need to fill an approved position, we
will focus our efforts on internal candidates. External hires will be permitted
only if there are no fully qualified internal candidates.
Profit sharing
--All employees will be offered an opportunity to participate in the
profit sharing plan previously announced, subject to various approvals
required by the bankruptcy process. We are also examining the possibility of providing some form of equity for employees who participate in the Transformation Plan. More details will become available as we move through the bankruptcy process and actively work toward emergence.
End of Special Bulletin for Monday, Oct. 4, 2004