Appendix G

Letter of Understanding - Fees

January 7, 2005

Mr. Gregory E. Davidowitch, President
United Master Executive Council
Association of Flight Attendants-CWA, AFL-CIO
6250 N. River Road, Suite 4020
Rosemont, IL 60018

Re: Fees

Dear Greg:

This Letter confirms the parties agreement regarding the AFA-CWA's fees in the recent Section 1113(c) negotiations:

1. The Company shall reimburse the AFA-CWA for the reasonable, actual fees and out-of-pocket expenses incurred by the AFA-CWA in connection with the review, design, negotiation, approval and ratification of this Letter of Agreement (its "Expenses") including: the reasonable, actual fees and expenses of the AFA-CWA's outside legal, pension, and other professional advisors (in each case based on normal hourly rates for actual time expended) up to a maximum, aggregate total of $1,000,000. Of the total reimbursement for Expenses, $500,000 shall be paid on the Effective Date, and the remaining amount up to $500,000 will be paid on the Exit Date.
2. The Company shall seek judicial approval for its obligations under this Fee Letter at the same time that it seeks judicial approval of this Letter of Agreement.
3. The parties acknowledge and agree that the Company's agreement to reimburse the AFA-CWA for fees and expenses under this Letter of Agreement is a result of the special collective bargaining circumstances created by the parties' desire to negotiate modifications to the Flight Attendants' collective bargaining agreement as part of the Company's bankruptcy reorganization.
   

Sincerely,

Frank Colosi
Director Labor Relations
Onboard Service

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