LETTER OF AGREEMENT
Between
US AIRWAYS INC.
and
THE FLIGHT CREW TRAINING INSTRUCTORS
in the service of
US AIRWAYS, INC.
as represented by
THE TRANSPORT WORKERS UNION

SUPPLEMENTARY COST REDUCTIONS

THIS LETTER OF AGREEMENT is made and entered into in accordance with Title II of the Railway Labor Act, as amended, by and between US Airways, Inc. (hereinafter referred to as the "Company") and the Flight Crew Training Instructors in the service of US Airways, Inc. as represented by the Transport Workers Union (hereinafter referred to as "Union").

WHEREAS the Company and the Union have studied the current situation of US Airways and have concluded that additional cost reductions beyond those in the August 26, 2002 Restructuring Agreement ("Restructuring Agreement") are necessary to sustain the airline through bankruptcy and to achieve ATSB approval for a loan guarantee and,

WHEREAS the parties have agreed to enter negotiations to identify additional cost reductions including productivity and benefit modifications in order to ensure US Airways’ emergence from bankruptcy and approval of an ATSB guaranteed loan.

NOW THEREFORE the parties mutually agree to amend the Restructuring Agreement as specified in the following Attachments, contained below: (A) Revisions to Restructuring Agreement, and (B) Health and Welfare Benefit Changes.

Other than as specifically modified in these documents all terms and conditions of the TWU-US Airways Collective Bargaining Agreement effective May 3, 1999 as amended by the Restructuring Agreement (hereinafter referred to as the "Agreement") shall remain in full force and effect.

This Letter of Agreement shall become effective under the terms and conditions and on the date specified in Attachment A.

IN WITNESS WHEREOF, the parties hereto have signed this Letter of Agreement this ___ day of December 2002.

FOR THE TRANSPORT WORKERS UNION
Michael Bakalo--International Vice President
William E. Gray--President, Local 547

FOR US AIRWAYS, INC.
Jerrold A. Glass--Senior Vice President, Employee Relations
P. Douglas McKeen--Vice President, Labor Relations

WITNESS for the Transport Workers Union
John A. DeWitt--Negotiating Committee Chairman
L. Peter Ache--Negotiating Committee
Charles Davis--Negotiating Committee

WITNESS for US Airways, Inc.
Paul L. Morrell--Director, Flight Training and Standards
Anthony J. Bralich, Jr.--Managing Director, Labor Relations - Flight
John H. McFall--Manager, Labor Relations-Flight
Stewart A. Wright--Supervisor, Quality and Compliance - Airbus

Attachment A

EFFECTIVE DATE: January 1, 2003

PRODUCTIVITY:

  1. Amend the Agreement to permit the de-linking of uncovered events and the utilization of administrative days to cover such events before being required to use overtime. (See Attachment A-1)
  2. Amend the Agreement so that, for the purpose of covering open events, a paid day off shall not be considered a workday. (See Attachment A-1)

MINIMUM AIRCRAFT:

As a condition of implementing and maintaining any of the Productivity Improvements, the Minimum Active Fleet shall be increased to 279 aircraft (excluding SJs but including pilot permanent bid aircraft plus 8% for active spares) with daily utilization rate measured monthly of no less than 10 hours, whether or not the Company is in Chapter 11. The Minimum Active Fleet number may be reduced only as made necessary by a new force majeure event, which includes acts of terrorism with a material adverse impact on commercial aviation.

MDA Small Jets/Regional Jets:

  1. The Company will operate MidAtlantic (MDA) as a separate division within US Airways, Inc.
  2. MDA training shall be subject to Article 1 (Recognition/Scope) of the Agreement and other provisions of the Agreement, as amended by the Restructuring Agreement dated August 26, 2002 and by this Letter.
  3. The Company may elect to use FCTIs who perform MDA training to conduct training for non- wholly owned affiliates.
  4. The Company agrees to meet with the TWU no later than March 1, 2003 with the appropriate personnel to meet and discuss the economic and operational feasibility of FCTIs performing Small Jet work for the wholly-owned affiliates (Piedmont, Allegheny, and PSA).

HEALTH AND WELFARE:

See Attachments (Health and Welfare Benefit Changes TWU (FCTIs) dated December 16, 2002, pages 1 – 2; Exhibit A dated December 10, 2002; Attachments B1 – B6 dated December 18, 2002)

ENHANCED PROFIT SHARING:

Enhanced profit sharing returns in exchange for participation in $200 million "Modified Restructuring Program" as follows:

Any year in which pre-tax profits exceed 7%, 50% of such profits in excess of 7% will be distributed to participating employees.
Capped at $100 million annually
Program continues through status quo period
100% paid as lump sum payments
Pre-tax defined as excluding unusual items

EQUITY PARTICIPATION:

In the event that the TWU elects to take the stock option plan in lieu of profit sharing from the previous Restructuring Agreement dated August 2002, the Accelerated vesting program in the ALPA Restructuring Agreement dated January 1, 2003 will apply.

WAR CONTINGENCY:

In the event that (a) the U.S. invades Iraq (meaning that the U.S. initiates a sustained aerial bombardment of those parts of Iraq that are not within the current no fly zone or introduces substantial numbers of ground troops into the territory of Iraq), or (b) there is an act of terrorism which in either event has a material adverse impact on commercial aviation, there will be an immediate 5% pay deferral for up to 18 months. The deferral will begin to be repaid starting in the first month following the end of the deferral and will continue to be repaid in as many monthly installments as were covered by the deferral. In the event that US Airways Group reports a pretax profit with respect to any quarter during which the pay deferral is in effect, the deferral will immediately stop and repayment will begin in the next month to continue for the same number of months as were included in the deferral.

TWU FEES AND EXPENSES:

In addition to the unpaid fees and expenses specified under the Restructuring Agreement, the Company shall pay reasonable and necessary TWU fees and expenses incurred through December 19, 2002 in connection with the negotiation of this Letter of Agreement, up to a maximum of $TBD.

RATIFICATION:

This Letter of Agreement must be ratified by the TWU Local 547 membership no later than December 31, 2002.

Attachment A-1
EFFECTIVE DATE: January 1, 2003

ARTICLE 4 Hours of Service/Scheduling

Paragraph G

Events not covered by the initial bid process:

Will first be assigned to Reserve instructors if no premium pay will be incurred.

Will then be assigned to an employee on an Administrative Day with the lowest amount of Instructional time if no premium pay will be incurred. The instructional time computation for this procedure will include instructional time credit (Six hours) for paid days off.

Then the Company may de-link events to meet its needs and assign the work to the employee on an Administrative Day with the lowest Instructional time. The instructional time computation for this procedure will include instructional time credit (Six hours) for paid days off.

If premium pay will be incurred, the work will be offered by the premium time list.

Paragraph I

An employee shall not bid more than five consecutive workdays (excluding Company established premium time events). Paid days off are not included when determining consecutive workdays.

Attachment
on   
Health & Welfare Benefit Changes TWU (FCTIs)
December 16, 2002 (with revision of December 20, 2002)

Health & Welfare Benefit Changes

Medical/Dental Plan

Retiree Life Insurance

Pre-65 retirees life insurance

Employee Group

Current

Proposed

Basic Life Employee Paid – amount of insurance in effect at retirement may be continued by retiree Continue voluntary benefit: eliminate subsidy
Dependent Life Employee Paid – amount in effect at retirement may be continued by retiree Continue voluntary benefit: eliminate subsidy
  1. Active premiums currently subsidize retiree rates

Post-65 retiree death benefit

Current

Proposed

Uninsured death benefit equal to:
Class 1 (FT) – if retirement date is from 10/01/79 through 06/30/89 benefit amount is $5,000; if retirement date is on or after 07/01/89 benefit amount is $7,000
Class 2 (PT) - $3,500
Eliminate benefit for all post-65 retirees

 

Medical Attachment A  [Deductibles, Co-Pays & Out-of-Pocket Maximums (Table 1 of 2)]

Year

2003

2004

2005

Deductible

Single

Family

Single

Family

Single

Family

80/60 PPO Plan
In-network

$300

$600

$300

$600

$300

$600

Out-of-network

$600

$1,200

$600

$1,200

$600

$1,200

90/70 PPO Plan
In-network

$150

$300

$150

$300

$150

$300

Out-of-network

$300

$600

$300

$600

$300

$600

100/800 PPO Plan
In-network

$150

$300

$150

$300

$150

$300

Out-of-network

$300

$600

$300

$600

$300

$600

OOP Maximum

Single

Family

Single

Family

Single

Family

80/60 PPO Plan
In-network

$2,000

$4,000

$2,000

$4,000

$2,000

$4,000

Out-of-network

$4,000

$8,000

$4,000

$8,000

$4,000

$8,000

90/70 PPO Plan
In-network

$1,000

$2,000

$1,000

$2,000

$1,000

$2,000

Out-of-network

$2,000

$4,000

$2,000

$4,000

$2,000

$4,000

100/800 PPO Plan
In-network

N/A

N/A

N/A

N/A

N/A

N/A

Out-of-network

$2,000

$4,000

$2,000

$4,000

$2,000

$4,000

Office Copays
Primary Care Physician

$15

$15

$15

Specialist

$25

$25

$25

Prescription Drug Copay
Retail
Generic

$10

$10

$10

Formulary Brand

$20

$20

$20

Nonformulary Brand

$35

$35

$35

Mail Order
Generic

$20

$20

$20

Formulary Brand

$40

$40

$40

Nonformulary Brand

$70

$70

$70

Medical Attachment A  [Deductibles, Co-Pays & Out-of-Pocket Maximums (Table 2 of 2)]

Year

2006

2007

2008

Deductible (single/family)

Single

Family

Single

Family

Single

Family

80/60 PPO Plan
In-network

$450

$900

$450

$900

$450

$900

Out-of-network

$900

$1,800

$900

$1,800

$900

$1,800

90/70 PPO Plan
In-network

$225

$450

$225

$450

$225

$450

Out-of-network

$450

$900

$450

$900

$450

$900

100/800 PPO Plan
In-network

$225

$450

$225

$450

$225

$450

Out-of-network

$450

$900

$450

$900

$450

$900

OOP Maximum (single/family)

Single

Family

Single

Family

Single

Family

80/60 PPO Plan
In-network

$3,000

$6,000

$3,000

$6,000

$3,000

$6,000

Out-of-network

$6,000

$12,000

$6,000

$12,000

$6,000

$12,000

90/70 PPO Plan
In-network

$1,500

$3,000

$1,500

$3,000

$1,500

$3,000

Out-of-network

$3,000

$6,000

$3,000

$6,000

$3,000

$6,000

100/800 PPO Plan
In-network

N/A

N/A

N/A

N/A

N/A

N/A

Out-of-network

$3,000

$6,000

$3,000

$6,000

$3,000

$6,000

Office Copays

Primary Care Physician

$25

$25

$25

Specialist

$40

$40

$40

Prescription Drug Copay
Retail
Generic

$15

$15

$15

Formulary Brand

$30

$30

$30

Nonformulary Brand

$50

$50

$50

Mail Order
Generic

$30

$30

$30

Formulary Brand

$60

$60

$60

Nonformulary Brand

$100

$100

$100

Medical Attachment B1 Option 1  [Eligible Actives, Inactives & Pre-65 Retirees TWU FCTI (rev 12/20/02)]

PPO 80/60 - Flat 7.0%

2003

Trend

Ee

Ee + Sp

Ee+ Ch

Ee + Fam

Contribution Base

230.06

460.12

437.59

760.15

Employee Contribution

16.00

32.00

31.00

53.00

2004
Contribution Base

15%

264.57

529.14

503.23

874.17

Employee Contribution

19.00

37.00

35.00

61.00

2005
Contribution Base

15%

304.26

608.51

578.71

1,005.30

Employee Contribution

21.00

43.00

41.00

70.00

2006
Contribution Base

14%

337.73

675.45

642.37

1,115.88

Employee Contribution

24.00

47.00

45.00

78.00

2007
Contribution Base

13%

381.63

763.26

725.88

1,260.94

Employee Contribution

27.00

53.00

51.00

88.00

2008
Contribution Base

12%

427.43

854.85

812.99

1,412.25

Employee Contribution

30.00

60.00

57.00

99.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.
2) Trends in 2006 were reduced by 3% to avoid double counting due to the indexing of Co-Pays, Deductibles, and OOP maximums.

Medical Attachment B1 Option 2  [Eligible Actives, Inactives & Pre-65 Retirees TWU FCTI (rev 12/20/02)]

PPO 90/70 - Flat 14.0%

2003

Trend

Ee

Ee + Sp

Ee+ Ch

Ee + Fam

Contribution Base

249.03

498.07

473.16

823.00

Employee Contribution

35.00

70.00

66.00

116.00

2004
Contribution Base

15%

286.39

572.78

544.14

946.45

Employee Contribution

40.00

80.00

76.00

133.00

2005
Contribution Base

15%

329.35

658.70

625.76

1,088.42

Employee Contribution

46.00

93.00

88.00

153.00

2006
Contribution Base

14%

365.58

731.16

694.59

1,208.15

Employee Contribution

51.00

103.00

98.00

170.00

2007
Contribution Base

13%

413.11

826.21

784.89

1,365.21

Employee Contribution

58.00

116.00

110.00

192.00

2008
Contribution Base

12%

462.68

925.36

879.08

1,529.04

Employee Contribution

65.00

130.00

123.00

215.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.
2) Trends in 2006 were reduced by 3% to avoid double counting due to the indexing of Co-Pays, Deductibles, and OOP maximums.

Medical Attachment B1 Option 3  [Eligible Actives, Inactives & Pre-65 Retirees TWU FCTI (rev 12/20/02)]

PPO 100/80 - Flat 19.4%

2003

Trend

Ee

Ee + Sp

Ee+ Ch

Ee + Fam

Contribution Base

265.64

530.09

504.00

876.36

Employee Contribution

52.00

103.00

98.00

170.00

2004
Contribution Base

15%

305.48

609.60

579.60

1,007.81

Employee Contribution

59.00

118.00

113.00

196.00

2005
Contribution Base

15%

351.30

701.04

666.54

1,158.98

Employee Contribution

68.00

136.00

129.00

225.00

2006
Contribution Base

14%

389.94

778.15

739.86

1,286.47

Employee Contribution

76.00

151.00

144.00

250.00

2007
Contribution Base

13%

440.63

879.31

836.04

1,453.71

Employee Contribution

86.00

171.00

162.00

282.00

2008
Contribution Base

12%

493.51

984.83

936.36

1,628.16

Employee Contribution

96.00

191.00

182.00

316.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.
2) Trends in 2006 were reduced by 3% to avoid double counting due to the indexing of Co-Pays, Deductibles, and OOP maximums.

 

 

Medical Attachment B2 Option 1  [Eligible Current & Future Post-65 Retirees- Full Time- TWU FCTI (rev 12/20/02)]

80% Indemnity

Contribution = flat 10.0%

2003

Trend

Ee

Ee + Fam

Contribution Base

182.00

364.00

Employee Contribution

18.00

36.00

2004
Contribution Base

19%

216.58

433.16

Employee Contribution

22.00

43.00

2005
Contribution Base

19%

257.73

515.46

Employee Contribution

26.00

52.00

2006
Contribution Base

16%

298.97

597.93

Employee Contribution

30.00

60.00

2007
Contribution Base

13%

337.84

675.66

Employee Contribution

34.00

68.00

2008
Contribution Base

10%

371.62

743.23

Employee Contribution

37.00

74.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

Medical Attachment B2 Option 2  [Eligible Current & Future Post-65 Retirees- Full Time- TWU FCTI (rev 12/20/02)]

90% Indemnity

Contribution = 10% of Option 1 ( 80%) plan + full incremental cost

2003

Trend

Ee

Ee + Fam

Contribution Base

202.00

404.00

Employee Contribution

38.00

76.00

2004
Contribution Base

19%

240.38

480.76

Employee Contribution

45.00

90.00

2005
Contribution Base

19%

286.05

572.10

Employee Contribution

54.00

108.00

2006
Contribution Base

16%

331.82

663.64

Employee Contribution

62.00

125.00

2007
Contribution Base

13%

374.96

749.91

Employee Contribution

71.00

141.00

2008
Contribution Base

10%

412.46

824.90

Employee Contribution

78.00

155.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

Medical Attachment B2 Option 3  [Eligible Current & Future Post-65 Retirees- Full Time- TWU FCTI (rev 12/20/02)]

100% Indemnity

Contribution = 10% of Option 1 ( 80%) plan + full incremental cost

2003

Trend

Ee

Ee + Fam

Contribution Base

244.00

488.00

Employee Contribution

80.00

160.00

2004
Contribution Base

19%

290.36

580.72

Employee Contribution

95.00

190.00

2005
Contribution Base

19%

345.53

691.08

Employee Contribution

113.00

227.00

2006
Contribution Base

16%

400.81

801.63

Employee Contribution

131.00

263.00

2007
Contribution Base

13%

452.92

905.84

Employee Contribution

148.00

297.00

2008
Contribution Base

10%

498.21

996.42

Employee Contribution

163.00

327.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

 

 

Medical Attachment B3 Option 1  [Split Families- Eligible Retirees- Full Time- TWU FCTI (rev 12/20/02)]

80% Plan

Single Coverage

E+S Coverage

E+C Coverage

Family Coverage

Ret 65+

Ret 65+

Ret <65

Ret <65

Year

Ret 65+

Ret <65

Ret 65+

Ret <65

Ret 65+

Ret <65

Sps <65

Sps 65+

Sps <65

Sps 65+

2003

18.00

16.00

34.00

34.00

34.00

31.00

49.00

52.00

53.00

49.00

2004

22.00

19.00

41.00

41.00

41.00

35.00

57.00

62.00

61.00

57.00

2005

26.00

21.00

47.00

47.00

47.00

41.00

67.00

73.00

70.00

67.00

2006

30.00

24.00

54.00

54.00

54.00

45.00

75.00

84.00

78.00

75.00

2007

34.00

27.00

61.00

61.00

61.00

51.00

85.00

95.00

88.00

85.00

2008

37.00

30.00

67.00

67.00

67.00

57.00

94.00

104.00

99.00

94.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

Medical Attachment B3 Option 2  [Split Families- Eligible Retirees- Full Time- TWU FCTI (rev 12/20/02)]

90% Plan

Single Coverage

E+S Coverage

E+C Coverage

Family Coverage

Ret 65+

Ret 65+

Ret <65

Ret <65

Year

Ret 65+

Ret <65

Ret 65+

Ret <65

Ret 65+

Ret <65

Sps <65

Sps 65+

Sps <65

Sps 65+

2003

38.00

35.00

73.00

73.00

73.00

66.00

104.00

111.00

116.00

104.00

2004

45.00

40.00

85.00

85.00

85.00

76.00

121.00

130.00

133.00

121.00

2005

54.00

46.00

100.00

100.00

100.00

88.00

142.00

154.00

153.00

142.00

2006

62.00

51.00

113.00

113.00

113.00

98.00

160.00

176.00

170.00

160.00

2007

71.00

58.00

129.00

129.00

129.00

110.00

181.00

199.00

192.00

181.00

2008

78.00

65.00

143.00

143.00

143.00

123.00

201.00

220.00

215.00

201.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

Medical Attachment B3 Option 3  [Split Families- Eligible Retirees- Full Time- TWU FCTI (rev 12/20/02)]

100% Plan

Single Coverage

E+S Coverage

E+C Coverage

Family Coverage

Ret 65+

Ret 65+

Ret <65

Ret <65

Year

Ret 65+

Ret <65

Ret 65+

Ret <65

Ret 65+

Ret <65

Sps <65

Sps 65+

Sps <65

Sps 65+

2003

80.00

52.00

132.00

132.00

132.00

98.00

178.00

212.00

170.00

178.00

2004

95.00

59.00

154.00

154.00

154.00

113.00

208.00

249.00

196.00

208.00

2005

113.00

68.00

181.00

181.00

181.00

129.00

242.00

295.00

225.00

242.00

2006

131.00

76.00

207.00

207.00

207.00

144.00

275.00

339.00

250.00

275.00

2007

148.00

86.00

234.00

234.00

234.00

162.00

310.00

383.00

282.00

310.00

2008

1163.00

96.00

259.00

259.00

259.00

182.00

345.00

423.00

316.00

345.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

 

 

Medical Attachment B4  [Managed Dental Plan-TWU FCTI (rev 12/20/02)]

Eligible Full-time Actives, Inactives
Current & Future Pre-65 Retirees
Flat 10% Employee Contribution

Eligible
Current & Future
Post-65
Retirees
 100% Contribution

2003

Trend

Ee

Ee + Sp

Ee+ Ch

Ee + Fam

Ee

Ee + Sp

Contribution Base

26.00

52.00

49.00

86.00

26.00

52.00

Employee Contribution

2.60

5.20

4.90

8.60

26.00

52.00

2004
Contribution Base

6%

28.00

55.00

52.00

91.00

28.00

55.00

Employee Contribution

2.80

5.50

5.20

9.10

28.00

55.00

2005
Contribution Base

6%

30.00

58.00

55.00

96.00

30.00

58.00

Employee Contribution

3.00

5.80

5.50

9.60

30.00

58.00

2006
Contribution Base

6%

32.00

61.00

58.00

102.00

32.00

61.00

Employee Contribution

3.20

6.10

5.80

10.20

32.00

61.00

2007
Contribution Base

6%

34.00

65.00

61.00

108.00

34.00

65.00

Employee Contribution

3.40

6.50

6.10

10.80

34.00

65.00

2008
Contribution Base

6%

36.00

69.00

65.00

114.00

36.00

69.00

Employee Contribution

3.60

6.90

6.50

11.40

36.00

69.00

Notes:
1) Eligible Part Time rates are two times Full Time rates.

 

 

Medical Attachment B5  [Managed Dental Plan- Split Family Rates- TWU FCTI (rev 12/20/02)]

Single Coverage

E+S Coverage

E+C Coverage

Family Coverage

Ret 65+

Ret 65+

Ret <65

Ret <65

Year

Ret 65+

Ret <65

Ret 65+

Ret <65

Ret 65+

Ret <65

Sps <65

Sps 65+

Sps <65

Sps 65+

2003

26.00

2.60

28.60

28.60

28.60

4.90

30.90

54.60

8.60

30.90

2004

28.00

2.80

30.80

30.80

30.80

5.20

33.20

58.80

9.10

33.20

2005

30.00

3.00

33.00

33.00

33.00

5.50

35.50

63.00

9.60

35.50

2006

32.00

3.20

35.20

35.20

35.20

5.80

37.80

67.20

10.20

37.80

2007

34.00

3.40

37.40

37.40

37.40

6.10

40.10

71.40

10.80

40.10

2008

36.00

3.60

39.60

39.60

39.60

6.50

42.50

75.60

11.40

42.50

Notes:
1) Eligible Part Time rates are two times Full Time rates