Earlier today, Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the eastern district of Virginia ruled in favor of the company's request to reject the IAM's current collective bargaining agreements and to permit termination of the company's three mainline defined benefit plans.

US Airways will delay implementation of the court ruling as applied to the IAM collective bargaining agreements until after the ratification process has been completed, in the hope that all proposals will be ratified. The company will, however, proceed with respect to the court's granted relief that involves termination of the three mainline defined benefit pension plans, and will start working with the Pension Benefit Guarantee Corp. to begin the orderly transfer of the plans.

The company had pending before the court a motion for permanent relief from the existing labor agreements with the IAM, as well as for relief with respect to retiree medical benefits and termination of the mainline defined benefit plans. All other US Airways workgroups -- the Air Line Pilots Association (ALPA), the Association of Flight Attendants (AFA), the Communications Workers of America (CWA), and three units of the Transport Workers Union (TWU) -- had ratified new labor agreements and were no longer included in the company's request. In addition, the company reached settlements with current retirees and the IAM concerning the relief it had sought for retiree medical benefits.

The company said that it was hopeful of ratification of all three IAM proposals.

"We have worked very hard to craft alternative proposals that still meet the company's cost savings targets, but preserve jobs and pay as much as possible," said Jerrold A. Glass, US Airways senior vice president - employee relations. "Regrettably, we cannot save every job and every function, and these employees, like all other workgroups, must share in the changes that the company needs to make. But we are quite hopeful that our employees will see these proposals as viable alternatives, and they will quickly be ratified."

Glass said that the IAM will be providing its members a detailed analysis of the proposals, but among the key provisions:

    Mechanics & Related workgroup:

      * Pay rates for mechanics would be significantly better than the current
        pay that reflects a 21 percent temporary cut
      * Heavy maintenance on Airbus narrowbody aircraft will be brought in-
        house and certain Boeing 737 work will continue to be done in-house.
        Widebody heavy maintenance and other work to be specified, including
        some Boeing 737 inspection activity, will be done using outside
        maintenance vendors
      * Base maintenance will continue to be performed in Charlotte, N.C., and
        Pittsburgh
      * Line maintenance positions will increase with anticipated schedule
        changes in 2005
      * Utility classification and certain utility positions will be preserved
        at base maintenance facilities only, with other utility and cleaning
        services to be outsourced
      * IAM employees displaced by outsourcing will be offered existing and
        future fleet service positions

    Fleet Service workgroup:

      * Pay rates for fleet service employees at hubs and major stations would
        be significantly better than the current pay that reflects a 21
        percent temporary pay reduction
      * Most existing fleet service work will be preserved
      * A majority of scope provisions will remain unchanged except the right
        to outsource fleet work at the smaller cities and a second-tier pay
        scale for medium-sized cities
      * Continuation in the pre-existing IAM multi-employer national pension
        plan at unreduced levels

Overall, these three workgroups include approximately 8,500 employees. If the agreements are ratified and implemented, the company said that the majority of IAM jobs will be preserved.

"We need the support and participation of our employees to complete our transformation into a competitive airline," said Glass. "The announcements by other airlines this week further underscore the rapid changes that are taking place. I believe our employees understand the gravity of the situation, and will support these proposals as the best way to send a message to our customers and the financial community that we are united in our efforts to be successful."