US Airways 2003 Annual Report Download - page 91

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Williard, Inc. (Williard) together with the joint venture of Williard and Len Parker Associates (Williard/Parker) was awarded construction contracts
with US Airways for work to be performed at the Philadelphia International Airport. On May 29, 2002, US Airways terminated the largest contract between
the parties. Williard and Williard/Parker sued US Airways in Pennsylvania state court for over $14 million in damages representing termination costs and lost
profits, along with other alleged contractual damage claims. Subsequently, Limbach Company LLC (Limbach) alleged that it purchased the claims of
Williard. Limbach and Limbach/Parker filed proofs of claim in the Bankruptcy Court, and those claims have not yet been resolved, although on October 23,
2003, the Bankruptcy Court granted US Airways' motion for partial summary judgment on more than $9 million of these claims. Limbach and Limbach/
Parker have filed an action in state court against the City of Philadelphia (the City) and the Philadelphia Authority for Industrial Development (PAID) and
received permission to include US Airways as a co-defendant, provided that Limbach and Limbach/Parker did not make any claims against US Airways in
that action. In the lawsuit against the City and PAID, Limbach and Limbach/Parker are seeking the same sums as in its earlier lawsuit and proofs of claim
against US Airways, but this time under the equitable theories of third party beneficiary, quantum meruit and constructive trust. The court in the Philadelphia
action dismissed US Airways from the lawsuit and dismissed the third party beneficiary claims against the City and PAID. These rulings are subject to appeal
at a later date. Should Limbach and/or Limbach/Parker recover in the Bankruptcy proceeding, those damages would be paid as pre-petition, unsecured claims.
Should Limbach and/or Limbach/Parker recover in the Philadelphia Action against the City and PAID, that award would be paid at 100 cents on the dollar.
US Airways may have an obligation to indemnify the City and PAID under its agreements related to the airport development, which US Airways assumed as
part of the bankruptcy process. Therefore, any recovery by Limbach and/or Limbach/Parker against the City and PAID could result in an indemnification
claim that US Airways may have to pay at full value.
The International Association of Machinists and Aerospace Workers and its District Lodge 141-M (IAM) filed a lawsuit in the United States District
Court for the Western District of Pennsylvania on October 7, 2003, seeking a temporary restraining order and preliminary injunction to enjoin US Airways'
use of an outside vendor for ten narrow-body Airbus aircraft "S"-Checks. The IAM contended that the US Airways-IAM collective bargaining agreement
obligates US Airways to use its own employees to perform the "S"-Checks, and that using an outside vendor constitutes a "major dispute" under the RLA
requiring maintenance of the status quo. Following briefing and oral argument, the District Court issued a preliminary injunction order and opinion on
October 21, 2003, in which it found the dispute between the parties to be a major dispute under the RLA and prohibited US Airways from using any outside
vendor for the narrow-body Airbus "S"-Checks. US Airways filed a Notice of Appeal to the Third Circuit and an Emergency Motion for Stay of Preliminary
Injunction Pending Appeal and Memorandum of Law in Support Thereof with the District Court on October 21, 2003. On October 24, 2003 the District Court
modified the injunction to permit US Airways to permit the outside vendor to complete work on one partially disassembled aircraft, but otherwise denied US
Airways' request for a stay pending appeal. On October 27, 2003, US Airways filed a motion for the expedited appeal to the Third Circuit. On November 5,
2003, the Court of Appeals for the Third Circuit granted US Airways' motion for an expedited appeal but denied US Airways' emergency motion for stay of
the preliminary injunction pending appeal. On February 3, 2004, the Third Circuit reversed the decision of the District Court and lifted the preliminary
injunction. The Third Circuit ruled that the dispute over US Airways' ability to use an outside vendor to perform "S"-Checks was a "minor" dispute, meaning
that it is subject to grievance arbitration under the parties' labor agreement, and that US Airways has no obligation to maintain the status quo pending
resolution of the dispute. This decision was upheld by the Third Circuit Court of Appeals on March 2, 2004, which ruled that this dispute must be resolved
through arbitration.
US Airways Group and US Airways have been named as defendants in two lawsuits filed in federal district court for the Eastern District of Michigan.
Delta Air Lines is also named as a defendant in both actions, while Northwest Airlines and the Airlines Reporting Corporation were
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