Important Message from Doug Parker

[Jetsetter2Ord]

From: Corporate Communications
Sent: Wednesday, April 16, 2008 8:36 AM
To: Corporate Communications
Subject: USNews Now: An Important Message from CEO Doug Parker
Importance: High





An Important Message from CEO Doug Parker


April 16, 2008



Dear Fellow Employees,



With the recent news of a potential Delta/Northwest merger, analysts and media are speculating about the next potential combination. While we had hoped to remain on the sidelines of this speculation, today’s Wall Street Journal suggests we may be in merger talks with United and another article in the Dallas Morning News suggests we might make a good merger partner for American.



While I can’t comment on any specific discussions or transaction I certainly didn’t want you to hear this speculation without hearing directly from me about what this might mean for US Airways.



Most of you know my views on consolidation and those have not changed. Our industry is far too fragmented and consolidation, if done properly, could result in a much healthier industry which would be good for our employees, our customers and the communities we serve. Rest assured if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline.



Despite all of the challenges of merging two airlines, we are a much stronger company today as a result of the merger of US Airways and America West. We posted the highest pre-tax margin of the big six airlines in 2006 and even with our operational challenges we posted the second highest pre-tax margin in 2007.



And we have an improving airline. We’ve made great strides with our operational improvement plan, including top three performances in on-time arrivals for three consecutive months. As we continue through 2008, we feel extremely good about our ability to continue to improve our operational performance relative to the industry.



But we can't ignore what's happening in the world around us. Oil has risen to over $113 per barrel and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues. And the DL/NW combination potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable.



I know airline merger speculation can be distracting so for now, I encourage all of us to remain focused on running a great airline. Our work on the reliability, convenience and appearance initiatives continues and we are running an extremely reliable airline as a result. Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provides long-term stability for our employees.



Thanks for all you do for our customers and keep up the great work.

 

[N965VJ]

Thanx for thinking of us, Doug.

Meanwhile, take a look at how a real airline (CO) communicates with its employees. Seems they’ve issued several bulletins so far and have a special area on the employee website:

April 15, 2008

EMPLOYEE BULLETIN NO. 4
This Q and A will be updated online as more information becomes available.


EMPLOYEE Q AND A ON DL/NW MERGER

1. What does the DL/NW merger mean to CO?
As we have said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. As always, our goal is to do what we determine is best for you, our co-workers, and our shareholders, customers and the communities we serve.

2. Is CO talking with other airlines?
Before today, we have had talks with other airlines, so we could be more prepared if the then-rumored DL/NW transaction were to occur. But before today, we hadn’t even signed a confidentiality agreement with another airline, which is usually the first step in formal merger negotiations. As a result of last night’s announcement of a DL/NW merger, we will be carefully reviewing all of our strategic options and will proceed on the path that we determine is best for you, our co-workers, and our shareholders, customers and the communities we serve.

3. How long will it be before we hear about CO's response?
We issued an employee bulletin today outlining our immediate reaction to the DL/NW announcement. In light of the changing industry landscape, we will review our strategic alternatives and make sure we remain a strong long-term competitor. As soon as we have something that we can report, we will communicate with you.

4. What should CO employees do to stay informed?
As always, you will get the facts directly from us. We have created a special location on the home page of coair.com or Insidecoair named Industry Consolidation, which will be the primary location for all industry consolidation information from CO, including employee bulletins, news releases and voicemail transcripts.

5. How do I log onto coair.com? What if I can’t find my password?
To log on go to coair.com or Insidecoair and enter your Continental employee number and password. If you cannot remember your password, please follow the directions under the link “Forgot Your Password?†located on the main page of the site.

6. Will this merger impact SkyTeam?
At this time, it is business as usual at CO, and our alliance agreements with NW, DL and SkyTeam are still in place.

However, in light of the DL/NW announcement, we are reviewing our continued participation in the alliance with NW, DL and SkyTeam, and we are evaluating what course of action would be best for you, our co-workers, and our shareholders, customers and the communities we serve. We are committed to being an important player in one of the three global alliances, so that we can offer a broad, global network to our customers. We will communicate any changes that result from that review.

7. Will there be any changes to the existing pass policies with DL and/or NW?
Nothing changes for now; it is business as usual. However, in light of the DL/NW announcement, we are reviewing our continued participation in the alliance with NW, DL and SkyTeam, and we are evaluating what course of action would be best for you, our co-workers, and our shareholders, customers and the communities we serve. We will communicate any changes that result from that review.

8. What happens to me? My work group? My location? Will there be furloughs?
Nothing changes for now; it is business as usual. Despite last night’s news, and the speculation about our future that it will provoke, we all need to remain focused on what we do best every day: running a clean, safe and reliable airline with the best customer service provided by the best co-workers in the business. When we know more, and how any actions we take will affect CO, we will communicate with you as we have always done: openly, honestly and directly. We are absolutely committed to taking actions that we determine are in the best interests of you, our co-workers, and our shareholders, customers and the communities we serve.

9. What do I say to our customers when I’m asked about this?
Soon we will post answers to some possible customer questions in the Industry Consolidation section on the home page of coair.com or Insidecoair. It is important to note that, for now, nothing changes; it is business as usual.

10. What is NW’s “Golden Share†in CO and how is it affected by last night’s announcement?
NW holds a special share of stock (often referred to as the “Golden Shareâ€) in CO, which effectively prevented CO from engaging in certain types of business combinations without NW’s consent. For example, any transaction involving a merger where CO’s shareholders would be entitled to vote would have required NW’s approval.

NW’s “Golden Share†rights generally continued until the expiration of the Alliance Agreement between CO and NW. However, as a result of last night’s announcement of a merger agreement between NW and DL, CO can redeem NW’s “Golden Share†so that it goes away. We will do so.

11. How will CO remain competitive once DL and NW merge?
CO is an industry-leading airline. We have an enviable position in the New York market, along with established hubs in Houston, Cleveland and Guam. Our newly acquired access to Heathrow improves our standing in the trans-Atlantic sector, and we have a comprehensive Latin America network and a growing portfolio of routes to India and Asia, including the major Japan and China markets. We have the youngest, most fuel-efficient fleet and best new aircraft order book among the major network carriers. And most importantly, we deliver award-winning service to our customers thanks to your great work every day.

As you know, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. As always, our goal is to do what is best for you, our co-workers, and our shareholders, customers and the communities we serve. A combined DL and NW would make a formidable competitor and could impact us in SkyTeam, and we have to take that into account in our decision making.

12. How will you protect the interests of CO employees if we decide to merge with another airline?
We understand the importance of our co-workers and the culture of CO in delivering outstanding customer service. We are absolutely committed to taking actions that we determine are in the best interests of you, our co-workers, and our shareholders, customers and the communities we serve. If we merge with another airline, our workgroup seniority lists, non-union or union, would be combined in a fair and equitable manner.

13. If CO merges with another airline, will you be offering job protection, stock or other equity in the combined company?
It would be premature for us to comment on what might happen. At this time, it is business as usual for CO. We are carefully evaluating the DL/NW merger and examining all of our strategic options, and will do what we determine is the best course of action to protect our long-term competitiveness and what is best for you, our co-workers, and our shareholders, customers and the communities we serve.

14. If CO merges with another airline, won’t there be significant job overlap in certain areas?
It would be premature for us to comment on what might happen. At this time, it is business as usual for us. We are carefully reviewing our options to determine what is best for you, our co-workers, and our shareholders, customers and the communities we serve.

15. Do you have a plan for merging seniority lists if CO merges with another carrier?
If we were to merge, workgroup seniority lists, non-union or union, would be combined in a fair and equitable manner.

16. Does CO believe a DL/NW transaction can pass Department of Justice review?
That decision is up to the Department of Justice. The proposed DL/NW transaction is complex, and will be subject to a lengthy and rigorous regulatory approval process before the transaction could close.

17. Will CO try to fight the government approval of the DL/NW merger?
We are in the process of carefully evaluating the impact of a merger between DL and NW.

18. Can Congress stop the DL/NW merger? Will it?
Airline mergers are largely the purview of the Department of Justice and the Department of Transportation rather than Congress, but we expect Congress to hold hearings on this merger.

19. What does this mean for CO re SkyTeam? If applicable, what's the timing?
We are currently evaluating the impact of a merger between DL and NW, and reviewing our options. We will make decisions that we determine are best for you, our co-workers, and our shareholders, customers and the communities we serve. Under the terms of our alliance agreement with NW, we have a period of time during which we will decide whether we want to terminate or continue our alliance with them. We will also analyze whether we wish to remain in an alliance with DL and SkyTeam. We will communicate any changes that result from that review.

20. Will customers still have access to WorldClubs and Crown Rooms?
Yes, at this time, it is business as usual. Our club and frequent flyer agreements with NW, DL and SkyTeam remain in place. However, we intend to review our continued participation in the alliance with NW, DL and SkyTeam as we evaluate what course of action would be in the best interest of CO. We will communicate any changes that result from this review.

21. Will our customers still be able to earn and burn OnePass miles on NW and DL?
Yes, at this time, it is business as usual. Our club and frequent flyer agreements with NW, DL and SkyTeam remain in place. However, we intend to review our continued participation in the alliance with NW, DL and SkyTeam as we evaluate what course of action would be in the best interest of CO. We will communicate any changes that result from this review.

22. Will NW and DL still recognize our customers’ elite status?
Yes, at this time, it is business as usual. Our club and frequent flyer agreements with NW, DL and SkyTeam remain in place. However, we intend to review our continued participation in the alliance with NW, DL and SkyTeam as we evaluate what course of action would be in the best interest of CO. We will communicate any changes that result from this review.

23. If our customers have reward travel booked on NW and/or DL, will they need to rebook on CO or another partner?
No, at this time, it is business as usual.

24. Will NW still provide our customers with free upgrades based on their CO elite status?
Yes, at this time, it is business as usual. Our club and frequent flyer agreements with NW, DL and SkyTeam remain in place. However, we intend to review our continued participation in the alliance with NW, DL and SkyTeam as we evaluate what course of action would be in the best interest of CO. We will communicate any changes that result from that review.

 

[USA320Pilot]

There have been news reports indicating that United & Continental have been in advanced merger negotiations, but yesterday in an employee Q&A newsletter Continental said:

Is CO talking with other airlines?

Before today, we have had talks with other airlines, so we could be more prepared if the then-rumored DL/NW transaction were to occur. But before today, we hadn’t even signed a confidentiality agreement with another airline, which is usually the first step in formal merger negotiations. As a result of last night’s announcement of a DL/NW merger, we will be carefully reviewing all of our strategic options and will proceed on the path that we determine is best for you, our co-workers, and our shareholders, customers and the communities we serve.

Regards,

USA320Pilot

 

[back2CLT]

Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provides long-term stability for our employees.

I enjoyed this last bit....whose #1

 

[hp_fa]

There have been news reports indicating that United & Continental have been in advanced merger negotiations, but yesterday in an employee Q&A newsletter Continental said:

Is CO talking with other airlines?

Before today, we have had talks with other airlines, so we could be more prepared if the then-rumored DL/NW transaction were to occur. But before today, we hadn’t even signed a confidentiality agreement with another airline, which is usually the first step in formal merger negotiations. As a result of last night’s announcement of a DL/NW merger, we will be carefully reviewing all of our strategic options and will proceed on the path that we determine is best for you, our co-workers, and our shareholders, customers and the communities we serve.

Regards,

USA320Pilot

So, has CO now signed a confidentiality agreement with anyone?

 

[DesertFA66]

I think they are certainly talking to someone :huh: , but i'm worried about our pilots and how that will play itself out :blink:

 

[Travelpro72]

I think it's only a matter of time before we hear the fate of US. I guess we WILL have involvement after all. Hmmmm. Oh and yeah I do like who #1 is. You mean you don't feel valued and an important part of Usairways as an employee? It's $$$ first (more for them and less for you and I).

 

[cageyjames]

You mean you don't feel valued and an important part of Usairways as an employee?

To be fair shareholders own the company so they are the most important part. You have to give them something for sticking with this POS airline.

 

[robbedagain]

I have to wonder what does US have that AA doesnt? Wondering if a UA US would be a good combo but AA and US?

 

[X-U]

To be fair shareholders own the company so they are the most important part. You have to give them something for sticking with this POS airline.

Apparently they haven't stuck with it since the share price is down to $7 bucks and change. The only ones buyong the stock now are speculators who think the company will be sold, and they will profit from it. Many of the FFs report they haven't stuck with it, so that leaves only the emloyees on the property now who are sticking with the company.

 

[kicked2curb]

To be fair shareholders own the company so they are the most important part. You have to give them something for sticking with this POS airline.

When reference is made to the shareholders, you have to remember who controls the largest amount of the stock, it's not the everyday investor- its the BOD, private equity/hedge funds and the institutional investors. They benefit if a good or bad deal is struck.