HEADLINE NEWS.

The airline industry's poor financial health could get even worse and, unless fuel prices fall or airfares rise, more furloughs and wage concessions are likely, according to testimony airline executives plan to present to Congress on June 3 2004. Chief executives from six airlines will offer members of a House transportation committee the latest snapshot of the industry's woes. They are expected to reiterate concerns about the high costs of security, taxes and war risk insurance, and emphasize the threat that rising fuel poses to the industry's nascent recovery. Gordon Bethune, the CEO of Continental Airlines and one of the executives testifying on Thursday, will describe the industry's financial condition as "perilous, and the skies are only getting darker," according to prepared testimony obtained by The Associated Press. "All-time high oil prices and the ever-increasing burden of government taxes and fees are killing the industry." "Unless fuel prices abate, or the revenue environment improves, we will have to furlough employees and seek wage and benefit concessions," Bethune warns. "We may also have to reduce our pension funding." The run-up in oil prices has resulted in hundreds of millions of dollars of additional jet fuel costs for several carriers in 2004. In light of this fact, the industry has routinely criticized the Bush adminination's policy of filling the nation's Strategic Petroleum Reserve of oil at a time when each barrel costs nearly $40, saying that extra demand has helped keep fuel prices high.

Readers of Travel+Leisure magazine have recognized Milwaukee-based Midwest Airlines as "Top Domestic Airline for Service" for 2004. The magazine's subscribers annually select the world's best services and places, and have named Midwest Airlines the top service provider both years this award has been given. Midwest Airlines topped the domestic airline category with a score of 79.90. Runners-up were:

* JetBlue Airways (78.57)

* Alaska Airlines (67.33)

* Southwest Airlines (66.89)

* Hawaiian Airlines (64.79).

A list of the winners in the hotel, cruise line and international airline categories can be found at http://www.travelandleisure.com and in the June issue of Travel+Leisure, now available on newsstands. Rankings are based on reader evaluations collected in the 2003 World's Best Awards Survey. For airlines, scores are indexed averages of evaluations for the characteristics "customer service" and "inflight service." Scores were rounded to the nearest hundredth of a point.

The Travel Industry Association of America says the U.S. should be prepared for long lines, delays and gridlock this summer, when it expects leisure travel to rise by 3.2 percent from last summer. Suzanne Cook, TIA's senior vice president of research, says, "For the first time in years, the summer travel season will start off with a bang, and we expect it to stay strong through August." Consumers, however, are concerned with rising prices of travel. But Sandra Hughes, vice president of AAA Travel, believes rising fuel costs will not stop driving vacationers. AAA predicts a record number of Americans will travel for the Memorial Day holiday; its agents say they are seeing dramatic increases in travel interest for this spring.

America West Airlines announced on June 2 2004 that members of FlightFund, the airline's award-winning frequent flyer program, who fly two roundtrip nonstop flights from Los Angeles (LAX) to Boston, New York/JFK or Washington, D.C./Dulles can earn a companion pass to one of nine nonstop destinations originating from Los Angeles (LAX). The companion pass may be used to take a friend to any of the following America West destinations: Boston; Edmonton, Alberta; Las Vegas; Mazatlan, Mexico; New York/JFK; Phoenix; Puerto Vallarta, Mexico; Vancouver, British Columbia; and Washington, D.C. To qualify, the two roundtrip flights from Los Angeles must be completed by Nov. 15, 2004. The companion pass to any of the nine destinations from Los Angeles is good for travel from May 24, 2004 through Feb. 16, 2005. Blackout dates apply from Dec. 16, 2004 through Jan. 5, 2005. Customers must pre- register at www.FlightFund.com/lax for this promotion before booking travel. Tickets for Los Angeles to Boston, New York (JFK) or Washington, D.C. (IAD) can be purchased online at www.americawest.com or by calling 1-800-2-FLY-AWA. After the two qualifying roundtrip flights are complete, members will receive an e-mail containing a special "e- Certificate" and instructions on how to redeem their companion pass. Tickets from Los Angeles utilizing the companion pass to the nine specified destinations must be purchased online.

America West Airlines the nation's second largest low-fare carrier, announced on June 1 2004 that it initiated two daily nonstop transcontinental flights between Los Angeles and Washington, D.C. With the start of this service, America West is the only low-fare carrier to offer daily nonstop flights between Los Angeles International Airport (LAX) and Washington Dulles International Airport (IAD). Today the airline also began its third nonstop flight between Los Angeles International Airport (LAX) and Boston and New York/JFK. This additional daily nonstop flight operates between LAX and New York/JFK and Boston during the peak summer travel season through Sept. 7, 2004.

America West Airlines began operating on June 1 2004 a third daily nonstop, roundtrip flight today between its Phoenix hub and Ronald Reagan Washington National Airport (DCA). he airline also

America West Airlines initiated daily nonstop service between its Las Vegas hub and four new destinations on June 1 2004 . The new cities are: Fresno and San Luis Obispo, Calif.; Medford, Ore.; and Calgary, Alberta. Also on June 1, a second nonstop flight will be added between Las Vegas and Santa Barbara, Calif.

America West Airlines initiated new service on June 1 2004 between its Phoenix hub and Montana's Glacier Park International Airport providing the only daily, nonstop service between the two destinations. America West is bringing its low fares to the Flathead Valley aboard America West Express, operated by Mesa Airlines. This new flight utilizes the popular 50-seat Canadair Regional Jet.

America West Airlines initiated new service on June 1 2004 between Phoenix and Anchorage, Alaska providing the only daily, nonstop service between the two destinations. The new service is part of America West's 2004 growth plan to meet increased customer demand for the airline's extremely successful business-friendly fare structure and outstanding service.

American Airlines and Cinemark announced on June 1 2004 the launch of a unique summer promotion that offers Cinemark moviegoers AAdvantage miles with the purchase of Coca-Cola fountain beverages. The promotion offers Cinemark patrons 300 AAdvantage miles with the purchase of three large Coca-Cola fountain drinks at any of Cinemark's 188 U.S. theaters in 33 states. After earning 300 miles customers are automatically entered for a chance to win one of five 50,000 AAdvantage mile awards. Each subsequent purchase of a large Coca-Cola fountain drink also earns an additional 100 AAdvantage miles.

Since American Airlines became the first and only airline to offer the Bose Acoustic Noise Cancelling headphones in 1999, customers have raved about the service. Now American is pleased to offer the second- generation Bose headphones, the Bose QuietComfort 2 Acoustic Noise Cancelling headphones, to premium passengers in First Class and Business Class cabins; on long-haul flights to Europe, Asia, and deep South America; and on select First-Class transcon flights.

American Airlines through its AmericanAirlines Vacations program is offering 10,000 AAdvantage bonus miles per booking on vacations booked June 1 through July 31, 2004, for travel between July 1 and Dec. 15, 2004. Simply purchase a five-night or longer Mexico vacation at select hotels and resorts in Cancun/Riveria Maya, Cozumel, Ixtapa, Los Cabos or Puerto Vallarta and earn 10,000 AAdvantage bonus miles. In addition to accommodations at leading hotels, specially priced "tour" airfares in Coach and Business Class are available when booking AmericanAirlines Vacations packages to Mexico. Plus, Alamo(r) car rentals and optional sightseeing tours are available. For information and reservations on a vacation that is as individual as you are, contact your travel agent, call AmericanAirlines Vacations at 800-321-2121 or visit www.aavacations.com/miles

China Southern Airlines, www.cs-air.com/en, the largest airline in The People's Republic of China, is pleased to announce that it has signed a code share agreement with Korean Air for service between Incheon and Shenyang. The signing ceremony took place today at the Incheon Hyatt Regency Hotel with Mr. Young-Ho Kim, president of Korean Air Passenger Division, and Mr. Li Kun, Vice President of China Southern Airlines, representing their respective carriers. Effective August 8 2004, Korean Air and China Southern Airlines will be able to provide the flexible flight schedules to their loyal customers. Currently, Korean Air is operating total 70 weekly flights to China and 11 weekly flights between Incheon and Shenyang while China Southern Airlines is operating total 12 weekly flights between these markets. The code share agreement practically enables both carriers to ensure a total of 23 weekly flights between these two cities, respectively.

China Southern Airlines www.cs-air.com/en, the largest airline in The People's Republic of China, is pleased to announce on June 1 2004 that it will be launching new service from Shanghai to Amsterdam via Beijing. The new Boeing 777 Shanghai-Beijing-Amsterdam service, slated to begin June 28 2004, is timed to begin on the official opening day of the new Baiyun International Airport in Guangzhou and will be operated under a code-share agreement with KLM Royal Dutch Airlines, www.klm.com. Effective May 1, 2004, 12 nations of the European Union were formally opened to the Chinese citizens as new overseas tourist destinations. In addition, the recent successful visit of Premier Wen Jiabao to Europe illustrates that both China and Europe are dedicated to establishing important strategic partnership relationships.

Delta Air Lines dances the "merengue" as it launches new service on June 1 2004 from New York's John F. Kennedy International Airport (JFK) to Santo Domingo, Dominican Republic. To celebrate its first entry into the Caribbean nation, Delta is offering double miles to SkyMiles customers who purchase and fly qualifying segments on Delta-operated flights from JFK to Santo Domingo between June 1 and Aug. 31, 2004. Delta will operate two nonstop flights daily between JFK and Santo Domingo using Boeing 757-200 aircraft, with the capacity to carry up to 183 passengers in a two-class configuration.

Delta Air Lines on June 1 2004 launched its new nonstop service between New York and Charleston, S.C., and Savannah, Ga. Delta now offers customers one daily, round-trip, nonstop flight each between New York's John F. Kennedy International Airport (JFK) and the two southern cities using 50-seat regional jet aircraft flown by Delta Connection carrier Comair.

Delta Air Lines announced on June 1 2004 the launch of SkyMiles Cruises, a program that enables SkyMiles program members to earn up to 10,000 miles when booking a cruise online at http://SkyMilesCruises.com or by calling 1-800-571-4965. The program offers cruise packages from the World's Leading Cruise Lines(SM), including Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America Line, Princess Cruises, The Yachts of Seabourn and Windstar Cruises.

Delta Connection carriers Atlantic Southeast Airlines (ASA) and Comair are increasing summer travel options for customers by adding new nonstop jet flights between Delta's Atlanta and Cincinnati hubs and five popular regional destinations. By July 7 2004, Comair will add one additional daily round-trip jet flight between Cincinnati and Akron/Canton, Ohio; Greensboro/High Point/Winston-Salem, N.C.; Portland, Maine; and Savannah, Ga. Effective July 1, ASA will add an additional round-trip flight (operating Sundays through Thursdays) between Atlanta and Chattanooga, Tenn. All new service will be operated with Bombardier CRJ regional jets.

Delta Connection carrier Chautauqua launched on June 1 2004 four new daily flights between Tallahassee, Fla., and Tampa, Fla. To celebrate, Delta is offering customers a $49 each-way sale fare for travel through July 31 on the new flights. Chautauqua flies customers between the two cities on 37-seat Embraer 135 aircraft. Customers should act fast, as tickets must be purchased by June 15, 2004. Fares can be purchased one- way, and require a 14-day advance purchase. Some blackout dates apply. See below for details and other important restrictions.

Irish no-frills airline Ryanair said on June 1 2004 its passenger load factor, an industry measure of how many seats were sold, was 81 percent in May, up from 77 percent a year ago. Ryanair Chief Executive Michael O'Leary released the load factor details at a news conference in London, ahead of the release of May traffic data later in the day.

Southwest Airlines is celebrating ten years of service in both Seattle/Tacoma and Spokane this week! Festivities will kick off Thursday, June 3 2004, in Spokane and Friday, June 4, in Seattle/Tacoma. "Our Employees have made both Seattle/Tacoma and Spokane key players in Southwest's Northwest market," said Dave Ridley, Southwest's vice president of ground operations. "We are pleased to bring our legendary low fares and our great Customer service to our Washington Customers year after year."

Swiss International has decided not to proceed with the envisaged integration of its Swiss TravelClub frequent flyer programme into the Executive Club, its counterpart at British Airways, under the present conditions. The sizeable costs of such an integration and the drawbacks it would bring currently outweigh its projected mid- to long-term benefits. As the abandonment of the proposed integration also means that the bilateral agreement between SWISS and British Airways cannot be put into practice, Swiss is unable to join the oneworld alliance at the present time. Swiss and British Airways have reached an amicable agreement on how they now intend to proceed. Swiss's bilateral commercial agreements with other oneworld members remain unaffected by these developments.