US Airways 2005 Annual Report Download - page 152

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
On October 7, 2005, 240 pilots employed by the MidAtlantic division of US Airways filed a complaint in the federal district court for the Eastern District
of New York against ALPA, US Airways, US Airways Group, Republic Airways Holdings, Inc., Wexford Capital LLC and AWA, alleging that defendants
conspired to deceive plaintiffs into believing that MidAtlantic was a separate entity from US Airways in order to deprive them of the benefits they are due as
US Airways pilots pursuant to the US Airways collective bargaining agreement. Plaintiffs' claims against the airline defendants include breach of collective
bargaining agreement, violation of the Railway Labor Act and racketeering under the Racketeering Influenced and Corrupt Organizations Act ("RICO").
Plaintiffs' complaint requests $2 billion in damages from the airline defendants and injunctive relief.
On February 8, 2006, 103 flight attendants employed by the MidAtlantic division of US Airways filed a complaint against AFA, AFA's international
president Pat Friend and US Airways, alleging that defendants conspired to deceive plaintiffs into believing that MidAtlantic was a separate entity from
US Airways in order to deprive them of the benefits they are due as US Airways flight attendants pursuant to the US Airways collective bargaining
agreement. Plaintiffs' claims against US Airways include breach of collective bargaining agreement, violation of the Railway Labor Act and racketeering
under RICO. Plaintiffs' complaint requests $400 million in damages from US Airways and injunctive relief. Because the complaint has not yet been served on
US Airways, no action is due on its part at this time.
On October 12, 2005, Bank of America, N.A., which is the issuing bank of the US Airways frequent flier program credit card and also acts as the
processing bank for most airline ticket purchases paid for with credit cards, filed suit in the Delaware Chancery Court in New Castle County, against
US Airways, US Airways Group and AWA, alleging that US Airways breached its frequent flier credit card contract with Bank of America by entering into a
similar, competing agreement with Juniper and allowing Juniper to issue a US Airways frequent flier credit card. Bank of America also alleges that
US Airways Group and AWA induced these breaches. Bank of America seeks an order requiring US Airways to market the Bank of America card and
prohibit Juniper from issuing a US Airways credit card, as well as unspecified damages. On October 27, 2005, Juniper, which was not originally a party to the
lawsuit, sought and later received court permission to intervene as a defendant in the case and has made counterclaims against Bank of America. Juniper seeks
an order declaring the validity of its new agreement to issue a US Airways frequent flier credit card. On November 3, 2005, Bank of America filed a motion
for partial summary judgment on the breach of contract claim against US Airways. After a series of procedural steps, Bank of America's motion, along with a
cross-motion for summary judgment filed by Juniper, was heard in the Bankruptcy Court, where the case is now pending as an adversary proceeding. On
January 30, 2006, the Bankruptcy Court ruled that Bank of America is equitably estopped from pursuing its claims that US Airways breached its agreement
with Bank of America by negotiating and entering into the agreement with Juniper. Bank of America is seeking appeal of that ruling while it continues to
pursue its claim that US Airways failed to fulfill contractual marketing obligations to Bank of America. The resolution of the final two claims that Bank of
America made in the lawsuit, which are (i) that AWA tortiously interfered with the contractual relationship between US Airways and Bank of America and
(ii) that US Airways Group and AWA tortiously interfered with Bank of America's right to future economic benefit under its agreement with US Airways, are
dependent on the outcome of the pending appeal. Bank of America will pursue those two claims only if its appeal of the January 30, 2006 order is successful.
The Company is unable to estimate at this time the amount of loss or probable losses, if any, that might result from an adverse resolution of the
proceedings discussed above, and currently is unable to predict whether the outcome of these proceedings will have a material adverse effect on its results of
operations or financial condition. The Company intends, however, to vigorously pursue all available defenses and claims in these matters.
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