Kelleher says US Airways, AmWest merger not impossible
By Ed Taylor, Tribune
December 9, 2005
Southwest Airlines executive chairman Herb Kelleher believes managers of US Airways will have a tough time bringing the separate US Airways and America West Airlines organizations together as one company, but he added the task is not impossible for US Airways chief executive Doug Parker.
"I have a great deal of liking and respect for Doug Parker. If anybody can manage it successfully, I think Doug is the one," Kelleher said in an interview Thursday after receiving a customer service award from Arizona State University.
He added that the task will be easier because US Airways had been able to reduce its costs prior to the merger, the result of a Chapter 11 reorganization by US Airways.
As part of the restructuring, US Airways was acquired by Tempe-based America West, but the new carrier assumed the US Airways name.
Kelleher, one of the most respected executives in the airline industry, said the new US Airways appears to be making progress in amalgamating the two work forces, always a difficult task in an airline merger.
He also believe that most of the older legacy carriers such as United and Delta Airlines, which are in dire straits financially, will survive with the help of the Chapter 11 process, although some may emerge in different form from the bankruptcy proceedings.
"I think you’ll have legacy carriers with lower costs. I think you’ll still have legacy carriers operating with huband-spoke systems. They perform a very valuable service, and I expect them to continue," he said.
In addition to reducing their costs via Chapter 11, they have made their hub-andspoke operations more efficient by spreading out their flight schedules rather than having large numbers of flights arrive at the hub airport all at the same time, he said.
Southwest uses a point-topoint business model, flying directly between destinations rather than requiring passenger to make connections at a hub airport.
US Airways is a more typical hub-and-spoke carrier with hubs at Las Vegas and Phoenix Sky Harbor International Airport.
Kelleher said Southwest, which has been around since 1971, has avoided some of the cost problems affecting the legacy carriers by staying away from defined-benefit pension plans for employees that create long-term financial burdens for the company.
Instead Southwest offers profit sharing and 401 (k) investment programs to help employees prepare for retirement, he said.
The lack of a definedbenefits plan has been an issue during Southwest’s labor negotiations, but Kelleher believes the company’s position has been vindicated.
By Ed Taylor, Tribune
December 9, 2005
Southwest Airlines executive chairman Herb Kelleher believes managers of US Airways will have a tough time bringing the separate US Airways and America West Airlines organizations together as one company, but he added the task is not impossible for US Airways chief executive Doug Parker.
"I have a great deal of liking and respect for Doug Parker. If anybody can manage it successfully, I think Doug is the one," Kelleher said in an interview Thursday after receiving a customer service award from Arizona State University.
He added that the task will be easier because US Airways had been able to reduce its costs prior to the merger, the result of a Chapter 11 reorganization by US Airways.
As part of the restructuring, US Airways was acquired by Tempe-based America West, but the new carrier assumed the US Airways name.
Kelleher, one of the most respected executives in the airline industry, said the new US Airways appears to be making progress in amalgamating the two work forces, always a difficult task in an airline merger.
He also believe that most of the older legacy carriers such as United and Delta Airlines, which are in dire straits financially, will survive with the help of the Chapter 11 process, although some may emerge in different form from the bankruptcy proceedings.
"I think you’ll have legacy carriers with lower costs. I think you’ll still have legacy carriers operating with huband-spoke systems. They perform a very valuable service, and I expect them to continue," he said.
In addition to reducing their costs via Chapter 11, they have made their hub-andspoke operations more efficient by spreading out their flight schedules rather than having large numbers of flights arrive at the hub airport all at the same time, he said.
Southwest uses a point-topoint business model, flying directly between destinations rather than requiring passenger to make connections at a hub airport.
US Airways is a more typical hub-and-spoke carrier with hubs at Las Vegas and Phoenix Sky Harbor International Airport.
Kelleher said Southwest, which has been around since 1971, has avoided some of the cost problems affecting the legacy carriers by staying away from defined-benefit pension plans for employees that create long-term financial burdens for the company.
Instead Southwest offers profit sharing and 401 (k) investment programs to help employees prepare for retirement, he said.
The lack of a definedbenefits plan has been an issue during Southwest’s labor negotiations, but Kelleher believes the company’s position has been vindicated.
