Late yesterday, the Transport Workers Union (TWU), Allied Pilots Association (APA), and the Association of Professional Flight Attendants (APFA), filed separate presidential grievances in response to the AMR Executive bonus plan. The 2003-2005 Performance Unit Plan (PUP), as I mentioned in previous correspondence, will be extended to approximately 1000 management personnel. As part of our submission, we have requested that the grievances be combined and expedited.

The basis for our grievance is as follows:

A key element to the restructuring agreement in 2003 was the Annual Incentive Program (AIP) – The purpose of AIP was to align compensation of both management and line employees.  The TWU agreement 47-1 specifically states:

Any “cash bonus” compensation plans for management employees shall be based primarily on criteria and thresholds contained in the Annual Incentive Formula.  Any cash compensation program for management not based on such criteria and thresholds may pay no more than 20% of the maximum possible cash that was or could have been earned by the individual management employee under the Annual Incentive Formula.

The TWU, APFA, APA believes that the announced cash payments from the Performance Unit Plan clearly fall outside both the contractual letter and spirit of the AIP.

Our Local leadership and members are already committed to the “working together” program, and have made a substantial investment to the survival of the Company. We still believe that the best solution is one that is mutually achieved by the parties.

I am hopeful that we can resolve the bonus issue to our mutual satisfaction in an expeditious manner, and that we renew the challenges facing our industry and our respective carriers. As always, we will keep you informed of the grievance status.

Copies of all correspondence is available on our website at www.TWUATD.org.

Fraternally,

James C. Little

Director Air Transport Division

Intl. Executive Vice President