America West Applies For Federal Loan

Wed Nov 14, 2001 7:50 am

November 13, 2001

Dear fellow employees:

Today, we filed an application for $400 million of federal loan guarantees. The loan guarantee program is provided for in the Air Transportation Safety and Stabilization Act. President Bush signed the Act in September to help stabilize the U.S. airline industry in the aftermath of the September 11 tragedies. Our application is thorough and well thought out. It clearly demonstrates that America West:

was in the process of solidifying its financial position before September 11
is an integral component of the U.S. commercial aviation industry
has a business plan in place that will allow us to comfortably repay the loans over time.
Among the more compelling components of the application is the significant amount of assistance that we have received from our constituents. Our aircraft lessors and manufacturers, bank lenders, state and local governments, and other interested parties have combined to contribute nearly $600 million of value in support of our application. These concessions and contributions are almost entirely contingent upon our receipt of federal loan guarantees. In other words, a $400 million loan guarantee would be the catalyst for more than $1 billion of financial support for America West over the next seven years. This incredible support is testimony to the importance of America West Airlines to the commercial aviation industry and to the communities we serve. We should all be thankful for this support in difficult times.

You should note that one set of our constituents that has not been asked for concessions is our employee group. This is despite the fact that the Air Carrier Loan Guarantee criteria explicitly states applications will be looked upon more favorably if they include concessions from employees. We have chosen not to ask for concessions from our employees because we think you’ve given enough. We recognize what an outstanding job you all have done to correct our airline’s operations and win back our customers. We understand that eliminating 2,000 positions means more work for fewer people and a reduced quality of work life for our pilots and flight attendants. We understand that you do your jobs as well or better than your colleagues at other airlines, many of whom are paid more.

Indeed, we believe this provision was written into the loan criteria for higher-cost airlines that, over time, found themselves paying above market rates (the amount it takes to attract and retain qualified professionals). While we believe this to be the case and will defend our position vehemently, there is no guarantee that this argument will prevail. Rest assured, though, that this is our view and we will not approach any of you or your union leadership for concessions unless it is an absolute last resort to America West’s long-term viability. I do not believe this will be the case.

In summary, we filed a very important application today. If approved, it will assure the viability of America West for years to come. As we await approval, I ask two things of each of you:

Keep doing your jobs as professionally and exceptionally as you have since September 11. No amount of government assistance can save America West or any other airline if people are afraid to fly or perceive flying to be unpleasant. Let’s keep flying safe, and let’s work to make our customers’ experiences pleasant ones.

Don’t listen to our detractors. Since September 11, much has been said about America West’s viability. Understand that much of this rhetoric emanates from our high-cost competitors who would like nothing more than to see America West fail. Let’s not let them win.
As always, thanks for your support. I’ll keep you apprised as the situation unfolds.

I am just glad that so far HP has not asked for pay cuts. As we are the lowest paid of the majors.

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