AFA Recovery Plan Tentative Agreement

Page updated: November 11, 2002

Dear AFA Member,

For the past year, the leadership of AFA has worked with our financial analysts and legal advisors, who have reviewed the financial status of UAL. As a result of our findings, the Master Executive Council has concluded that in order to stabilize United Airlines and provide job security for you, concessions to our current Contract are needed to prevent a bankruptcy filing. All the Unions at United joined together to form the Union Coalition to create a framework that would provide $5.8 billion to assist United Airlines in securing the loan guarantee from the Airline Transportation Stabilization Board (ATSB).

AFA’s portion of the Coalition’s framework is 7.1% of the $5.8 billion amounting to $412 million for 5 ½ years. Cuts to wages and the cancellation of future pay increases were necessary to reach that target. Our concessions take into account our industry average wages and the length of our current Contract. The tentative agreement is designed to minimize impact on your wages today. All efforts have been made to lessen the impact on the Members who could least afford pay cuts.

This tentative agreement includes an initial pay cut of 3.95%, cancellation of the 5% lump sum payment for 2003 and 2005 and the cancellation of the 2% book rate increase in 2004. This package keeps in tact our work rules and other contractual protections such as our legalities. The concessions for hotel location, E/Y understaffing, COLA, “me too” vacation, LQ/LIP and narrowbody purser pay increases, are not permanent changes to our Contract but will provide relief for the Recovery Period.

In order for Flight Attendants to participate, we demanded significant protection in case of the sale of United and/or a merger/acquisition with any other airline (successorship and consolidation language). Flight Attendants will receive profit sharing and equity (stock options) in the same manner as the other labor groups. All employees in the Union Coalition will have the same bankruptcy protection (Section 1113/1114 Bankruptcy Protection Letter).

This concessionary bargaining process has been extremely difficult for both the Members and leadership of AFA. The uncertainty of our airline’s viability along with the proposed cuts to our hard fought for wages and working conditions, has made all of us question what the future may bring. We hope that with new management, an infusion of credit to repay debts and a common strategy -- United Airlines will once again be a formidable airline and provide us with job security.

On the next page of this booklet, you will find information regarding the electronic voting process. In addition, there is a schedule of the meetings and webcast that will provide you with additional information. A video will also be available. Prior to casting your vote, we encourage you to read this booklet carefully, attend a roadshow, view the video and webcast. Videos will be available at your Local Council. You will also have the ability to view the video and the webcast by logging on to www.unitedafa.org.

After hours of deliberation, we have determined that this tentative agreement achieves our objectives of allowing United Airlines to secure the ATSB loan guarantees and avoid a bankruptcy filing. We unanimously recommend that you vote FOR this tentative agreement.

In Solidarity,

The Association of Flight Attendants United Airlines Master Executive Council:

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