The Financial Picture
From the evidence, it is clear enough that the merger with AWA was a meaningful factor in U.S. Airway’s emergence from bankruptcy. Together, the two companies were able to attract investments that, operating alone, they might not have secured. However, West’s claim that U.S. Airways emerged from bankruptcy "only because it [was] acquired by a stronger enterprise"
10 is reflected neither in the KPMG audit report (cited by West)11 nor in any other portion of the evidence. Instead, each carrier had something to contribute. Airways, for example, was much larger. It served almost twice as many destinations as AWA and carried twice the number of passengers.12 Airways has substantially more cash on hand, following the merger agreement. AWA, for its part, brought relative success as a low cost carrier operation with a meaningful presence in the Western United States.
Airways’ "fresh start"13 included a series of steps designed to strengthen Airways’ financial situation. Among other things, it entered into concessionary bargaining with its unions, ultimately securing some $1 billion dollars per year in cost reductions. 14 Termination of certain existing defined benefit and other post-retirement benefit plans generated substantial savings.15 A 35 percent decrease in labor cost16 taken together with other cost saving measures, resulted in a positive net operating income for the second and third quarters of 2005, prior to approval of the merger agreement in September of 2005. 17 AWA, for its part, while not in bankruptcy, was attempting to confront what it regarded as a troubled and potentially perilous future, absent the merger, in the face of rising fuel costs and depressed unit revenues as a result of over capacity, among other things. It, too, needed cash.
West characterizes the merger decision on AWA’s part as a one-way economic bailout. But there is no support for this in the record; surely, the respective companies did not endorse that view. AWA concluded, according to the statements of its CEO, that "…when we looked out at our future, what we sawwasn’t good…. Assuming we couldn’t go out and restructure or raise cash, it is possible that AWA would have been facing its own Chapter 11 at some point. Employees may like to think we "saved" US but the fact is we saved each other
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