CHARLOTTE CREW NEWS
FLIGHT ATTENDANTS
20 SEPTEMBER 2011(excerpt)
WHO BOUGHT WHOM?
SPEAKER: Thank you. Just a quick question.
Going back five years ago, I'm a West coast guy, and I do a lot of commuting in and out of the West. And
I'm just misled constantly from the West and the East. I mean, we are definitely two separate airlines,
still.
Now, I hear a lot of the West people talking five years ago during this merger, so they say, was there
money exchanged? Did -- US Airways and America West, who bought who? Who merged?
Because I hear it constantly from the West, Well, we bought you, so we should control you.
So who owns who?
MR. PARKER: Who says that to you?
SPEAKER: I hear it constantly from the West crews.
MR. PARKER: All right. Well, tell them to call me.
Let me tell you, look -- that's not accurate.
SPEAKER: Was there money exchanged? I thought it was just a simple merger.
MR. PARKER: I'm happy to explain it. I was -- I would like to hope we were past this, but since it --
SPEAKER: (Unintelligible.)
MR. PARKER: Yeah, no, I know. This is not meant to be negative on your question. I just wish we still
weren't having to go through this because I don't think it matters is the real answer.
But I'm happy to go through what did happen if it helps.
What happened is in 2005, first off, at the risk of offending people, US Airways was on the verge of
liquidation, not bankruptcy. We were already in bankruptcy. We were going, I believe without a merger,
would have liquidated. So be it.
I think that's where this some of this comes from with the "we saved you" stuff. But you got to finish
the story.
USAir -- America West was not in dramatically better shape. While we weren't on the verge of, you know,
going away liquidating, as I have said a number of times, I believe without a merger -- well, let me tell
you. By putting the two companies together, a lot of new money came in is the answer to your question.
America West did not have the money to go fund the merger or anything close to it. And, indeed, I think
America West standalone -- this is -- this gets some America West people upset because, you know, they --
anyway, whatever reason.
But my view is, and a highly educated view on this point, is that America West would have been bankrupt
by the end of 2005.
If you recall, by the end of 2005, Delta and Northwest both filed, and I don't think America West could
have -- I'm pretty sure -- I'm actually, virtually certain that America West would have filed bankruptcy
because we didn't have enough cash to make it through the winter in that environment.
So -- and then more importantly, as it relates to America West, the reason the merger was so important to
America West is America West was an airline that lived off a cost structure advantage.
Much like I describe to US Airways employees now, how we don't have the same revenue generating
capabilities as American, Delta, and United, who are bigger than us. America West had that in spades.
A Phoenix hub never had the ability to generate the kind of revenues US Airways did, for example. But the
airline survived 25 years by having much lower costs, and those lower costs almost entirely labor based.
So what had happened is, is you, you know, looking around the world, here at US Airways, for example, had
gotten its labor costs through two bankruptcies and a lot of pain down to matching America West.
That did not look like a good formula for the America West -- for America West Airlines. You have an
airline now that has, not the same ability to generate revenues, and the same costs as the guys who can
generate a lot more revenues than you. Those airlines go away.
So whether or not America West would have filed, you know, in late 2005, like I believe, that airline,
I'm certain, wouldn't have been able to stand alone on its own in today's environment. You know, much
like Frontier, was very -- it's very similar I think to America West.
You know, small West Coast, whole -- entirely labor-cost-based cost advantage. And, you know, Frontier
went bankrupt. They are still floating around somewhere, but, you know, they are a fifth of the size they
used to be. And I think that's the best I think America West could have done on its own.
So the merger helped both of us, and in a huge way. I don't think America West would have made it on its
own. I'm certain US Airways wouldn't have. And with the merger, what we were able to do -- you know,
which, again, I -- I think we should all feel good about -- we were able to go convince people that,
while these two airlines on their own are having trouble, we can put them together and build a real
airline, and all we need is cash.
And so will you, Mr. Investor, invest in this?
Now, we found some people who wanted to do that because they didn't want us to go away, like GE, who had
a lot of airplanes leased to us, and Airbus, who had a lot of airplanes on order to both companies. So
they put in monies because they didn't want to see us go away.
But we found some other, you know, just true equity investors, you know, stockholders that said, yeah,
that looks like something that will work. I'll invest in that.
So the money that came to fund the merger didn't exist, and neither airline could have raised it on their
own. It only came from the power of the merger.
So the merger saved both of us. So if anybody tells you, We saved you, vice versa, they are wrong. We
saved each other. And we saved each other by merging the two companies and building a stronger airline.
And, again, I haven't had to say this in a few years, but I have said it a lot. And the story has been
entirely consistent. So it's a little frustrating to me to have to keep saying it because I, like you,
get tired of hearing this stuff.
It's just absolutely.
SPEAKER: That's exactly what it was.
MR. PARKER: It's just absolutely inaccurate.
So, anyway, hopefully this will help. We have filmed it. People can watch it, but that's what happened.
SPEAKER: (Unintelligible).
MR. PARKER: But, anyway, but that's the point. But, anyway, the answer is, you know, we -- we needed each
other. And I know we still got a lot of work to do. As Eddie says, we haven't quite gotten the marriage
completed.
But, you know, if we hadn't gotten the engagement done, we wouldn't be here.
SPEAKER: (Inaudible).
MR. PARKER: So -- all right. Anyway, thanks for asking.
SPEAKER: Thank you.