US Airways 2003 Annual Report Download - page 90

Table of Contents
On January 30, 2003, the Filing Entities filed a motion requesting (i) a determination from the Bankruptcy Court that the Filing Entities satisfy the
financial requirements for a "distress termination" of the defined benefit Retirement Income Plan for Pilots of US Airways, Inc. (Pilots Retirement Plan) under
section 4041(c)(2)(B)(ii)(IV) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and approval of such pension plan's
termination and (ii) authorization to implement a defined contribution retirement plan for its pilots (Distress Termination Motion). On March 2, 2003, the
Bankruptcy Court entered an order (March 2 Order) finding that the financial requirements under section 4041(c)(2)(B)(ii)(IV) of ERISA for a distress
termination of the Pilots Retirement Plan had been met and approving termination of the Pilots Retirement Plan subject to a determination, under the
arbitration procedures established by the collective bargaining agreement and the Railway Labor Act (RLA), that the proposed termination did not violate the
collective bargaining agreement between US Airways and the Air Line Pilots Association (ALPA). The Bankruptcy Court authorized US Airways to
establish, effective as of the date of termination, a follow-on defined contribution retirement plan for the pilots of US Airways, on terms consistent with the
letter agreement of December 13, 2002, between US Airways and ALPA. On March 21, 2003, the Company and ALPA reached agreement on a defined
contribution plan to be effective April 1, 2003 in accordance with the terms and conditions set forth in Letter of Agreement #85, which resolved all disputes
between the Company and ALPA regarding the distress termination of the Pilots Retirement Plan (including the grievance filed by ALPA on February 3,
2003). The agreement was ratified by the ALPA Master Executive Council, approved by the PBGC and was granted final approval by the Bankruptcy Court
at a hearing on March 28, 2003. The Pilots Retirement Plan was terminated by agreement between the PBGC and the Company effective as of March 31,
2003, and the PBGC was appointed trustee of the Pilots Retirement Plan.
On March 6, 2003, the Retired Pilots Association of US Airways (known as the "Soaring Eagles") filed a Notice of Appeal from the Bankruptcy Court's
March 2 Order. Subsequently, three additional Notices of Appeal were filed from the March 2 Order on behalf of ALPA, a group of eighteen pilots
collectively referred to as the "Lump Sum Eligible Pilots," and a group of forty-nine active pilots collectively referred to as the "Menear Claimants Pilot
Group." ALPA withdrew its Notice of Appeal at a hearing on March 28, 2003. Also at the March 28 hearing, the Company's settlement with the Lump Sum
Eligible Pilots concerning Pilots Retirement Plan benefits was read into the record. On June 11, 2003, the Menear Claimants Pilot Group withdrew their
appeal. Pursuant to their settlement with the Company, the Lump Sum Eligible Pilots dismissed their appeal. On May 28, 2003, the federal district court
denied the Soaring Eagles' Notice of Appeal. On June 26, 2003, the Soaring Eagles appealed the district court's decision to the Court of Appeals in the Fourth
Circuit While the Company believes strongly that it ultimately will prevail on the Soaring Eagles appeal, there can be no guarantee of such an outcome.
US Airways is named as a defendant along with most of the major domestic airlines, several national carriers and a number of international carriers, in a
class action lawsuit on behalf of all United States-based travel agents filed in federal court in North Carolina. The complaint alleges violation of the federal
antitrust laws with respect to commission rate reductions and/or commission cap reductions implemented by various airlines in 1997, 1998, 1999, 2001 and
2002. Plaintiffs seek unspecified damages for lost commissions as well as injunctive relief. On October 30, 2003, the federal court granted a motion for
summary judgment dismissing all claims against airline defendants other than the carriers then in bankruptcy, including US Airways, because proceedings had
been stayed against those bankrupt defendants. Plaintiffs have filed a notice of appeal to the Fourth Circuit Court of Appeals. Subsequently, on January 28,
2004, the federal court in North Carolina dismissed all claims against US Airways. The plaintiffs in this proceeding had also filed a claim in Bankruptcy Court
for pre-petition and continuing post-petition damages. The Bankruptcy Court determined that the entire claim was pre-petition and unsecured, and the
plaintiffs appealed this decision to the Bankruptcy Court. The parties agreed to stay this appeal pending the outcome of the plaintiffs' appeal of the grant of
summary judgment in the North Carolina action. If the Fourth Circuit affirms the summary judgment ruling, plaintiffs will dismiss the appeal of the
Bankruptcy Court ruling. If not, the appeal of the Bankruptcy Court ruling will be reinstated.
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