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LETTER OF AGREEMENT

between

US AIRWAYS, INC. and AMERICA WEST AIRLINES, INC.

and the

FLEET SERVICE EMPLOYEES

in the service of

AMERICA WEST AIRLINES, INC. and US AIRWAYS, INC.

as represented by

INTERNATIONAL ASSOCIATION OF MACHINISTS  AND AEROSPACE WORKERS

________________________________________________________________________________

FINAL TRANSITION AGREEMENT

________________________________________________________________________________

THIS LETTER OF AGREEMENT is made and entered into in accordance with the provisions of the Railway Labor Act, as amended (the “Act”), by and between America West Airlines, Inc. (“America West”), US Airways, Inc. (“US Airways”) and, together with America West, the “Airline Parties”), and the FLEET SERVICE EMPLOYEES in the service of US Airways and America West, as represented by the INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS (the “Union”).  All parties are collectively referred to as the “Parties”.

WHEREAS, effective September 27, 2005, America West Holdings Corporation became a subsidiary of US Airways Group Inc.; and

WHEREAS, effective May 11, 2006, the National Mediation Board found that the International Association of Machinists and Aerospace Workers is the sole certified representative of the fleet service employees of both America West, Inc. and US Airways, Inc.; and extinguished the Transport Workers Union (“TWU”) certification; and

WHEREAS, the Airline Parties intend that, America West Airlines Inc. (America West) and US Airways Inc. (US Airways) will continue to operate with separate fleet service work groups until the two fleet service workforces are integrated under the provisions herein; and

THEREFORE, the following applies: 

I.                    Transition Dates.  In general, providing that the union has submitted to the Company and the Company has accepted the combined seniority list, the America West employees in the Fleet Service craft or class (“West Employees”) will transition to the existing US Airways/IAM collective bargaining agreement, as amended (the “CBA”) effective the first day of the first pay period following January 1, 2007 (the “Transition Date”), except where transition dates for specific CBA articles are otherwise set forth in Attachment A hereto.

II.                 Interim Operating Period 

A.     The Interim Operating Period is defined as the period beginning immediately following the effective date of this Agreement and ending upon Operational Employee Integration.  Terms of the Interim Operating Period are those as provided for herein as defined in paragraph C below.

B.      The respective Fleet Service employees of America West Airlines and US Airways will remain separate during the Interim Operating  period, except as provided for herein, and the US Airways employees will continue to be employed by US Airways and governed by the terms of the IAM Fleet Service collective bargaining agreement and the America West employees will continue to be employed by America West and continue to be governed by the terms of the America West Fleet Service TWU collective bargaining agreement. 

C.     At airport locations where America West and US Airways have flight operations and Fleet Service employees, the following Interim Operating provisions may apply: 

1.  Employees of each respective carrier will continue to perform normal covered work under the terms of their CBA for all work associated at their respective carrier except that employees of either carrier may, at the direction of the Airline Parties, assist employees of the opposite carrier as needed.   

2.      There shall be no reduction in force of Fleet Service employees directly as a result of implementation of the above provisions. This provision does not restrict the Company from implementing a reduction due to any other reasons, including but not limited to, flight schedule changes, force majeure, technology or any other reasons beyond the Company’s control.  

D.     During the term of Interim Operating Period and prior to Operational Employee Integration, should America West Airlines have Fleet Service vacancies, then prior to hiring new hire employees, the Company will cause America West to make such vacancies available to US Airways furloughed Fleet Service employees as follows: 

1.  Furloughed US Airways Fleet Service employees interested in filling an America West Fleet Service vacancy, must submit to US Airways a PE-66 transfer request indicating the America West location and classification for which they are applying.   Available vacancies will be offered to the senior employee (based on Fleet Service Seniority) with a PE-66 transfer request on file at the time the vacancy is filled , in the following order:  

·        First, to furloughed employee(s) from the same location as the vacant position; 

·        Second,  to furloughed employee(s) from a different location;

              2.  The offer extended pursuant to paragraph D.1 above will be a contingent offer subject to satisfying the following criteria:  the employee must satisfy all America West new hire provisions, including functional capacity screening, background checks, drug/alcohol testing and other new hire training and security screening requirements.  

3.  An employee placed in an America West position pursuant to paragraphs D.1 and D.2 above will be an America West new hire employee subject to all America West employment policies and will be paid the America West entry rate, but will be immediately eligible for participation in the America West health and welfare and benefit plans.   

4.  US Airways employees accepting positions with America West will remain on furlough from US Airways for the duration of their remaining US Airways recall period and during such time will continue to be eligible for recall to US Airways, as provided for under the US Airways CBA, except that: 

a.       Should the employee forfeit recall to US Airways and continue to be employed by America West on the date of Operational Employee Integration, their previous US Airways service will apply as described under paragraph D-6 below;   

b.      Should the employee be in line for recall to US Airways within the first six months of employment at America West, then US Airways may bypass the employee for recall to US Airways.  Should this occur and the employee continue to be employed by America West on the date of Operational Employee Integration, their previous US Airways service will apply as described under paragraph D-6 below;  

c.       Should an employee’s US Airways recall rights expire while working for America West, such employee will forfeit all rights under the US Airways CBA, except that should the employee continue to be employed by America West on the date of Operational Employee Integration, their previous US Airways service will apply as described under paragraph D-6 below. 

5.  Following Operational Employee Integration, US Airways Fleet Service employees who are employed at America West Airlines pursuant to this Agreement will receive the Fleet Service (Classification) Seniority as indicated on the combined Fleet Service seniority list as submitted by the Union and accepted by the Company.  

6.  Following Operational Employee Integration, US Airways employees who have accepted work with America West under these provisions and who were furloughed in calendar year 2005 from stations where Fleet Service work was outsourced, or who prior to accepting work with America West under these provisions had been on furlough from US Airways for less than sixty (60) days, will receive applicable seniority for vacation accrual and pay seniority equal to the combination of their America West and US Airways service.  All other employees will receive pay seniority credit for any service with America West and credit for vacation accrual equal to the combination of their America West and US Airways service. 

7.  Employees who resign from America West Airlines will forfeit all seniority rights for time worked at America West as described in paragraph D-6 above, however such employee will retain any remaining recall rights to US Airways.  Employees who are terminated for cause from America West will be considered terminated from both Companies and forfeit all rights.   

8.  Employees accepting positions at America West are not eligible for system transfer under the US Airways CBA for a one (1) year period from their start date at America West. 

9.  Employees refusing an America West job offer will not be considered for any other America West Fleet Service positions under these provisions and will not be eligible for system transfer to US Airways positions for a six month period as outlined in Article  8.F.3 of the IAM CBA. 

III.       Operational Employee Integration

Operational Employee Integration (“OEI”) is defined as the time the fleet service employees of America West and US Airways are integrated into a combined fleet service workforce, with the application of the combined fleet service seniority list.  The Company will make every effort to accomplish OEI no later than the first day of the first pay period following January 1, 2007. 

IV.       Seniority Lists

            The seniority lists of America West fleet service employees and US Airways fleet service employees will be integrated by the Union and submitted to the Airline Parties for acceptance by no later than October 1, 2006.  Such list must comply with the following criteria:

1.      furloughed and/or active fleet service employees may not bump/displace other active fleet service employees other than through any normal reduction in force procedures; and

2.      the list will not cause or contribute to the incurring of back pay, increased costs associated with training or company paid moves, or payment of premiums for duties not actually performed; and

3.      the list will not consist of merely listing all the employees of one Airline Party to the bottom of the seniority list of the other Airline Party.

IN WITNESS WHEREOF, the parties hereto have executed this Letter of Agreement effective this ____ day of _____________, 2006.

AMERICA WEST AIRLINES, INC.:

By:__________________________________

US AIRWAYS, INC.:

By:________________________________ 

INTERNATIONAL ASSOCIATION OF MACHINISTS  AND AEROSPACE WORKERS:

By:________________________________
 

ATTACHMENT A

Below are the dates and terms for the transition of West Employees to specific CBA Articles.  Where the transition date specified herein is prior to Operational Employee Integration (“OEI”), the application of such provision will be separate between East and West until OEI.

Note: The Transition dates are a comprehensive single package.

1.            Preamble.  Will apply to West employees on the Transition Date.

2.            Article 1 (Purpose of Agreement).  Will apply to West employees on the Transition Date.

3.            Article 2 (Status of Agreement).  Will apply to West employees on the Transition Date.

4.            Article 3 (Recognition and Scope).  Will apply to West employees on the Transition Date.

5.            Article 4 (Classifications). West employees in the positions listed below (as of the Transition Date) will convert to Article 4 classifications on the Transition Date, as follows:

A.       West Fleet Service Lead Agents will be assigned to the US Airways Fleet Service Lead Agent classification under Article 4 of the existing IAM CBA.

 B.     West Fleet Service Employees other than Lead Agents, will be assigned to the US Airways Fleet Service Agent classification under Article 4 of the existing CBA.

6.            Article 5 (Hours of Service).   Will apply to West employees on the Transition Date. 

7.            Article 6 (Overtime).  Will apply to West employees on the Transition Date.

8.            Article 7 (Seniority).  Will apply to West employees on the Transition Date.

9.            Article 8 (Filling of Vacancies).  Will apply to West employees for West vacancies on the Transition Date

10.        Article 9 (Reduction in Force). Will apply to West employees in West locations on the Transition Date.

11.        Article 10 (Voluntary Furlough). Will apply to West employees in West locations on the Transition Date.

12.        Article 11 (Medical Examinations). Will apply to West employees on the Transition Date.

13.        Article 12 (Leaves of Absence).  Will become applicable to all requests for leave and for any extensions or alterations to leaves that become effective on or after the Transition Date.  The terms and conditions approved for leaves prior to the Transition Date will remain in effect until the termination of those terms and conditions. 

14.        Article 13 (Sick Leave).  Will apply to West employees on January 1, 2007.  All unused sick days accrued in 2005 and 2006 will be placed into the employee’s sick leave bank on this date.

15.        Article 14 (Holidays).  Will apply to West employees on January 1, 2007.  

16.        Article 15 (Vacation).  Will apply to West employees beginning on January 1, 2007.  Note: When West employees bid vacation for calendar year 2007, it will be based on the accruals and provisions of Article 15. 

17.        Article 16 (Limited Duty).  Will apply to West employees on the Transition Date. 

18.        Article 17 (Probation).  Will apply to West employees on the Transition Date.  Any West Employee with an effective date of hire before the Transition Date will serve a one-hundred-eighty (180) day probation period pursuant to current TWU contract.  

19.        Article 18 (Uniforms). Will apply to West employees on January 1, 2007. 

20.        Article 19 (Shift Definition). Will apply to West employees on the Transition Date. 

21.        Article 20 (Grievance Procedure).  Will apply to West employees on the Transition Date. 

22.        Article 21 (System Board of Arbitration).  Will apply to West employees on the Transition Date. 

23.        Article 22 (Insurance).  West employees will transition to health and welfare benefits under Article 22 on January 1, 2007, and will no longer be eligible for Company paid STD or LTD on that date. 

24.        Article 23 (Pension). Will apply to West employees on the Transition Date and on that date the current West 401k plan for Fleet employees, including Company match, is eliminated. 

25.        Article 24 (Training and Travel). Will apply to West employees on the Transition Date.

26.        Article 25 (Safety and Health). Will apply to West employees on the Transition Date. 

27.        Article 26 (Part-Time Employees). Will apply to West employees on the Transition Date. 

28.    Article 27 (Union Security).  Will apply to West employees on the Transition Date.  

29.        Article 28 (General and Miscellaneous). Will apply to West employees on the Transition Date. 

30.    Article 29 (Amendments to the Agreement). Will apply to West employees on the Transition Date. 

31.    Article 30 (Compensation).  West employees will transition into the pay scale under the CBA on the Transition Date.  Pay date seniority for West employees will be the existing pay seniority date.