Ah, what does Parker know:
US Airways' CEO: Merger Saved Jobs
Ted Reed, TheStreet.com Staff ReporterTheStreet.com
CHARLOTTE, N.C. -- Three years after the merger between US Airways(LCC:NYSE) and America West, it seems clear the deal was an overall success.
Still, the inability to reach an agreement on pilot seniority stands out as a glaring shortcoming.
Without a merger, "neither the standalone US Airways nor the standalone America West could have managed through," said CEO Doug Parker, in a recent interview. "Both these airlines would be nonexistent had they not merged. But merged, we saved 35,000 jobs."
At the same time, "pilot seniority is not something we contemplated we'd still be dealing with three years later", Parker admitted.
The bitter seniority conflict follows an arbitrator's ruling that was deemed unacceptable by most pilots from the former US Airways. It has been accompanied by an April election that ousted the Air Line Pilots Association after 57 years, and a series of lawsuits.
On the positive side, "our pilots are keeping this between themselves," Parker said. "We've had no customers see this affect them in the last three years. People read about it, but it hasn't affected our operations one bit."
Meanwhile, Charlotte and Philadelphia, the two hubs operated by the former US Airways, have been the strongest links in the new carrier. They have suffered minimal capacity reduction despite cuts of about 25% in Las Vegas and 10% in Phoenix, which has come as the industry moves to reduce total capacity by an unprecedented 10% in response to higher fuel prices.
"Charlotte has proven to be more resilient than other parts of the country," Parker said, even taking into account the merger of Wachovia(WB:NYSE) Charlotte's second-largest employer, into Wells Fargo(WFC:NYSE).
"US Airways' position in Charlotte is not dependent on Wachovia being as big as it is here," Parker said. "Charlotte is much bigger and stronger than that."
Philadelphia, long a trouble spot for the airline, has improved. In terms of departures within 14 minutes of the scheduled time, US Airways' Philadelphia operation showed a 25-point improvement, to 76.5%, from the first half of 2007 to the first half of 2008. "The turnaround in US Airways has been stunning within itself," Parker said. "The turnaround in Philadelphia is even more dramatic."
US Airways emerged from bankruptcy in September 2005 after a merger with America West. The new company quickly began to make money due to capacity declines throughout the industry and strong demand.
The merger's success led Parker to pursue both Delta(DAL:NYSE) and UAL(UAUA:NYSE). Those efforts failed, although some speculate that UAL, the parent of United, might become interested were US Airways to resolve its pilot seniority issues. Meanwhile, Delta plans to combine with Northwest(NWA:NYSE).
For its part, the US Airline Pilots Association, which replaced ALPA at US Airways, recently marked the third anniversary of the tie-up, saying in prepared statement that "the airline is entangled in labor disputes, lawsuits and customer service issues, and management so far seems incapable of getting the merger completed."
As for merging pilot groups, said USAPA president Stephen Bradford, "What the Delta and Northwest managements did in just a couple of months, US Airways management hasn't been able to do in over three years."
Aviation consultant George Hamlin says the carrier could gain efficiencies if pilot lists and contracts are merged. But, if unresolved, the pilot conflict could encumber US Airways to the extent that it comes to resemble Eastern Airlines in its final days, Hamlin says.
"If you put parochial interests first, last and only, you could destroy your employer," he says. "But so far, you have to count this as a success, because the airline is still here."
