U. S. Pension Update Inter-Alliance Meeting April 7, 2005

1. U. S. Pension UpdateInter-Alliance MeetingApril 7, 2005 Seth Rosen, Industrial Advisor

2. Pilot Pensions Update • Current Environment • Retirement Plan Comparisons • Airline Summaries • Pension Legislation

3. The Current Environment • Attacks on Health Care • Erosion of Benefits • Cost Sharing • Decline in Defined Benefits • Growth in Defined Contributions • Pension Plans Under Duress • Restructuring, Waivers, Terminations, etc. • Legislative Changes Required

4. US-ALPA Response and Strategy • US-ALPA Pursuing Legislative Remedies • Bargaining After Educating Membership • Reviewing Plan Design Changes • Protesting Waiver Applications

5. Update – Pension Plan Comparables

6. Pension Update - AAA • USAirways Retirement Plan has now gone to its fourth iteration : • Modified pay first • Modified benefit formula (65% to 50% FAE) • Targeted DC Approach (avg 38% DC rate) • Now @ flat 10% DC Plan • Plus remains of DB Plan paid by PBGC

7. Pension Update - DAL • Delta Pilot Defined Benefit Plan “soft frozen” ( FAE component can increase but not decrease) • Associated DC Plan frozen, no further 5% Company Contribution • Company Contribution to 401(k) Plan reduced from 3% to 2% • New DC Plan established, 9% of pay spread on a targeted basis, 0 – 19.2% is the range of contributions, new hire DC rate is 10%

8. Pension Update - UAL • Pilots agree not to contest termination of the Defined Benefit Plan and replace it with additional 6% DC contribution (existing B Plan is now 9% of pay) • Company agrees to 90 day period to explore alternative solution to the A Plan termination (including legislative solutions) • PBGC filed for involuntary termination of Pilot Plan in December 2004 • Judge reverses Company attempt to stop paying non-qualified payments

9. Pension Update - CAL • Agreement will hard freeze DB Plan and provide DC Plan contributions to a new DC Plan and Variable contributions based on profits to the 401(k) Plan • 7/05 -- 6.75% of pay, 7/06 -- 10% of pay, 6/07 --12.75% of pay • Based on Profit: 9/06 -- 0 to 6% of pay, 9/07 -- 0 to 2.75% of pay, 9/08-- 0 to 2% of pay

10. Pension Update - Legislation • Permanent solution required • Legislative Outlook (current relief for 2004 and 2005 only). Passenger airlines only. • Depends on your perspective (funding relief vs tougher funding requirements) • ALPA/NWA/DAL legislative outlook • AMR aligned with US ALPA

11. Pension Update – Legislation • US ALPA proposed legislation would provide funding relief for single employer plans maintained by commercial passenger airlines if plan were “frozen” (hard or soft) • Relief would come in the form of : • Use of higher interest rate used in valuing plan’s unfunded past service liability • Use of a longer amortization period to fund the plan’s unfunded past service accrued liability (up to 25 yrs)

12. Pension Update – Legislative • PBGC liability limited to amount as if Plan was terminated as of the first day of plan year where relief is given • Any benefit increases would need to be funded immediately • Allows follow on DC Plans – not DB Plans