I'll have to do a bit of digging, but I distinctly remember an AFA release stating that Wolf's compensation topped over $100 million annually at one point in the late 1990s when all bonuses, stock grants, stock options, etc. were fully valued...PITbull said:
Us Airways Chief's Pay Package $11 Million....
- Thread starter longing4piedmont
- Start date
PITbull
Veteran
Find it. B)
If that were true, he would have been the highest paid Exec in the US. Even higher than Eisner, CEO of Disney.
If that were true, he would have been the highest paid Exec in the US. Even higher than Eisner, CEO of Disney.
I can. It'd be zero. I'd love to know where I've used "we" or "us" (lower-case; I use US all the time to refer to the airline, because I prefer to use IATA abbreviations as shorthand). Feel free to post links to any of them.ktflyhome said:
I have not ever worked for any airline, though I have had my butt in airline seats for over a million miles, have had friends who work/have worked in the industry, and know many people at various levels of the industry, from ramper to government agent.
My interest in US (note the capitals) is mostly because that's where the action is right now.
PITbull
Veteran
Kt,
Mweiss is not affilaited with U in anyway, except a loyal passenger....these things I know...
Mweiss is not affilaited with U in anyway, except a loyal passenger....these things I know...
SpinDoc
Veteran
700UW:700UW said:
My, my. You sure are envious of Mr. Siegel and his negotiated compensation.
Surely you must recognize that he and other senior officers at all publicly
traded companies are paid based on what they or their attorney negotiates.
I agree that executive salaries are out of whack, but they represent what
is negotiated. Heck, if you or I had the experience and connections that
Mr. Siegel has, we could also command similar compensation. Envy will
get you nowhere. Maybe it's time for you to look for a job where you can
negotiate your own terms (ie., without union representation). By the way,
your "concession stand" picture may change with or without your
participation. It may look something like this by the beginning of June.
Believe it or not, your views may not be representative of your IAM
bretheren as a whole. Something to think about.
Attachments
PITbull
Veteran
Spin Doc,
Tell your "brethern" in CCY their concession stands are OPEN and their contracts NEED to be renegotiated ASAP for the good of the company.
Otherwise, you and they and we will be looking at no company, and you will need to dust of your resume and solicit a "head hunter". Let them know you and your "brethern" in CCY were THE MAJOR PART OF THE COMPANY'S DEMISE BY TAKING MILLIONS WHILE ELIMINATING EMPLOYEES AND THROWING THEM OUT ON THE STREET.
Tell your "brethern" in CCY their concession stands are OPEN and their contracts NEED to be renegotiated ASAP for the good of the company.
Otherwise, you and they and we will be looking at no company, and you will need to dust of your resume and solicit a "head hunter". Let them know you and your "brethern" in CCY were THE MAJOR PART OF THE COMPANY'S DEMISE BY TAKING MILLIONS WHILE ELIMINATING EMPLOYEES AND THROWING THEM OUT ON THE STREET.
SpinDoc
Veteran
PITBull and 700UW:700UW said:
F.Y.I., I am not a CCY employee (or a US employee as far
as anyone knows). I am only interested in seeing the
company obtain the necessary cost reductions to continue
operating and possibly making a profit. If the doors closed
tomorrow, I would be affected to a certain extent, but
dead in the water would not apply. I have skills that can
translate to any number of companies and a degree to
fall back on if I choose to change my chose skill. Frankly,
I have questioned the motives of senior management
on these boards in the past, but after careful and educated
review of the current situation, I have to say that market
forces have brought the company to the current position.
Since we all can't turn the clock back and change what has
happened in the past, it is pointless to blame the current
management and refuse to try and correct the problems
that are apparent. In a perfect world, status quo would
always be center stage and everyone would be fat and
happy. At this time, that is not possible and changes, no
matter how difficult, must occur.
ITRADE
Veteran
Isn't it amazing that if you "dare" to disagree with either PitBunk or 700, you are immediately cast as management. Talk about paranoia and an intellect level where one must immediately name call and post false information to attempt to discredit the standing of others.
The funny thing is that I know EXACTLY who these two are..... heh heh heh
The funny thing is that I know EXACTLY who these two are..... heh heh heh
Itrade: Funny thing how you always no matter what side with management. I know who YOU are, but that doesn't fill me with glee like it does you thinking you know pitbull.ITRADE said:
Spin Doc: things must change you say, we heard that before, TWICE and change we did. When you have a CEO going around and screaming concessions and nothing more, no other business plan and at the same time we read that he stands to become very wealthy while he alienates the work force, well this is a perfect formula for total failure. Anyone can come on board and scream concessions, but to do this and become wealthy while people are becoming impoverished is not even moral let along good business practice. It amazes me we still have a FEW and only a few supporters of this sorry excuse for a management team. Giving the high five to this team shines a bright light on the people who would support them showing that they too are no better having as much respect for the human element.
Pineybob: I love it reading your posts. You are now on here telling 700 and others how this mess is not Dave's fault and to take personal responsibility, you are also on here blasting the IAM daily. I remember how bad you thought this management team was. At least you are consistent on the unions. But it seems to me that after this management team cast their magic spell on you in some sort of meeting you had with them, your entire attitude changed making the employees the bad guy and now management is doing everything they humanly can. There are people on here that are new and people who have short memories. Bob, I am here to paint the clear concise picture of your back and forth stance.
Happy Easter...
The employees of this company have given two and one group three rounds of concessions, to a tune of 20,000 less employees and concessions totaling over $1.1 Billion a year since the end of 2001, the vendors gave another $1 billion in concessions and over a $1 billion was wiped off in debt.SpinDoc said:
Obviously you can't fathom it is not labor costs!
And to this day NOT ONE Airline has ever been saved from the wallets of the employees.
It takes leadership, vision and a REAL business plan, all of these which dave does not have.
You sure say that an awful lot. Ever hear of HP? Not the manufacturer of printers, either.700UW said:
HP, went into bankruptcy, their employees were non-union, I don't call a company IMPOSING new wages, work rules and benefits upon them concessions.
And you might want to ask the FAA about the largest fine ever imposed on an airline due to the outsourcing that HP did.
Even the ATSB acknowldeged that the HP employees were underpaid and did not ask HP to IMPOSE lower wage rates on them.
Check your history.
Effects of bankruptcy
America West emerged from bankruptcy in 1994, but not before some difficult cost-cutting measures were implemented. The 747s were gone, and a disgruntled workforce had begun union-organizing activities.
The airline also struggled in the late 1990s with operational problems that Franke blamed on its failure to keep pace with radical changes in technology. The result was a series of flight cancellations that earned America West a reputation as one of the nation's most unreliable airlines.
A major operational turnaround plan was implemented in 2000, but it took nearly two years for the airline to reverse the problems.
To this day, there are airline employees, particularly pilots, who blame Franke for the airline's troubles and for what they consider hostile management-employee relations.
Franke said he was just doing his job and believes he left the airline in better shape than when he arrived.
"It was an emotional time, and I hated to see the problems with the employees," he said. "Did I have to make some hard decisions? Yes, I did. And at the end of the day, that's what you get paid for."
Franke left America West in August 2001, and Parker, then the airline's 39-year-old president and chief operating officer, stepped into the top management spot.
There was barely time to change the names on the corporate letterhead when terrorists struck on Sept. 11, 2001. Suddenly, America West went from a company on the rebound to one bound for Bankruptcy Court.
Parker said at the time that without financial assistance, the airline likely would go out of business. It was granted a federal loan guarantee at the end of 2001, allowing it to secure $429 million in private financing.
The money assured America West's short-term survival, but the airline continued to struggle because of the prolonged travel slump, low fares and higher fuel prices.
America West has been successfully meeting the conditions of the loan guarantee and is scheduled to begin repaying the loan on March 31 in 10 installments of $42.9 million each.
Another:
The house of cards was about to collapse. On top of high oil prices, high fuel consumption on the 747, low yields, a high debt load, and no improvement in sight, the airline filed for bankruptcy on June 27.
The signs had been obvious. Pay and hiring freezes were first established, followed by a 10% pay cut for all employees, and the elimination of free cocktails, newspapers, and free flights for employees. Service to 10 cities had been cut before the filing. Morale came crashing down, as high-flying America West, the darling of deregulation, fell to earth. Bankruptcy would prove to be a long, turbulent process, costing Beauvais and Conway their leadership roles in the airline, as well as all employee-owned stock. Many employees found themselves in the unenviable position of having to pay back loans on worthless stock to the company if they left.
The first major cutback occurred in September, when the fleet was reduced to 103 aircraft (from 126). Debtor In Possession (DIP) financing was obtained from lessors G.P.A. and Kawasaki, in return for Airbus 320 lease options. Northwest Airlines also contributed $15 million in financing, secured by the Honolulu-Nagoya route authority.
Beauvais was removed from day-to-day operating affairs as part of the DIP package, but remained Chairman of the Board while Conway assumed the role of CEO in the first of many power struggles. One of Conway's first moves was to attempt to attract high-yield Fortune 100 traffic, which was the rationale for opening a new hub in Columbus, Ohio on December 15. Contrary to popular belief, it was not because Bank One (Columbus-based) contributed money to the struggling airline - Bank One did not contribute any money to the airline until 1992. The Baltimore reservations center was moved to Kansas City as well.
Four new cities were added in the first half of 1992, including Mexico City on June 1. America West resumed their international service with this route. Northwest's financing was repaid with the sale of Nagoya rights to Northwest for $15 million. However, America West's cash burn rate had not improved, and more money was needed. Shutdown was imminent when the September 1992 DIP package arrived, with financing from Ansett and a consortium of Phoenix-based companies. This final, small package ($8 million) would lead to the most drastic changes in the airline during bankruptcy; changes that would alter the course of the airline forever.
Arizona governor Fife Symington started a business roundtable, and asked William A. Franke to chair the roundtable. Franke was a prominent Phoenix businessman, who had led turnarounds of Phoenix-based Circle K and Valley Independent Bank. His purpose was to raise money from local businesses to support America West, the largest employer in Arizona. Franke was successful, and became Chairman of the Board as part of the deal, replacing Beauvais, bringing in five new board members. Other conditions of the package were the reduction of the fleet from five aircraft types to three, reducing the fleet to 87 aircraft, and restructuring existing aircraft orders.
Dash 8 service ended on November 30, 1992, made possible through a new code-share agreement with Mesa Airlines. Mesa assumed the name "America West Express", taking it from the original cargo service started in 1985, and brought their existing Phoenix Essential Air Service routes into the America West system. America West's intrastate system was drastically increased through this code-share. On the other side, 747-200 Bird of Paradise service ended on September 9, taken over by a wet-leased ATA L-1011 on September 10. One requirement of the DIP financing was met with these two changes. On the positive side, America West Arena opened in 1992, conveniently visible to passengers on final approach to Runway 8L at Sky Harbor.
The forced discipline was what America West needed to prepare to emerge from bankruptcy. However, this forced discipline led to clashes between Franke and Conway. Conway would be ousted from the airline on December 31, 1993, replaced by A. Maurice Myers. Don Monteath, another founder, would leave the airline on December 31 as well.
Proving that the airline is a survivor, America West celebrated their 10th anniversary on August 1, 1993. Despite being in bankruptcy with an uncertain future, a look back was warranted. With the anniversary, new uniforms were unveiled on December 14. These uniforms were in place until 2003, when new uniforms were slowly introduced.
The DIP financing was extended several times, but America West was turning the corner to operating profits through the cutbacks. No new cities were added until December, when America West Express service was brought to Columbus. Mesa was operating an existing commuter division (Skyway Airlines) out of Milwaukee for Midwest Express, and America West placed their code on the flights, leading to some interesting routes - particularly Detroit-Rockford. The Columbus express operation would be restructured significantly in 1994, as Skyway was re-formed as a wholly-owned subsidiary of Midwest Express.
Another sacrifice of bankruptcy was the non-union workforce. America West's inflight CSRs first had a union election in 1989. That election failed, but it was contested by AFA for a number of years. The pilots certified ALPA as their bargaining agent in 1993.
The long road was starting to pay off, as AmWest partners announced their package for emergence from bankruptcy. The partners would control the airline through a new set of Class A stock, controlling 75.9% of the voting rights and 35% of the equity. AmWest partners consisted of Air Partners II (led by David Bonderman), Continental Airlines, Mesa Airlines, and Fidelity Management.
In February, the board unanimously endorsed AmWest Partners to lead the company out of bankruptcy, setting into motion the emergence of the company. Negotiations with lessors finalized the company's fleet plan for the rest of the decade. All Boeing orders were cancelled, and the 118 aircraft Airbus order was reduced to 24 firm aircraft, to be delivered between 1998 and 2000. GPA and Kawasaki ended up with 'put' options, where America West would be forced to take various aircraft at certain times until the A320 deliveries started. All of the growth in the fleet from 1995-98 came through these 'put' options.
The restructuring agreements included code-sharing agreements with Mesa and Continental. In Mesa's case, the 1993 agreement was amended to include Fokker 70 jet aircraft, and Embraer 120 aircraft were added for certain Express markets. Mesa also increased their gate usage at Phoenix to include B-5, with B-7 added after the Fokker aircraft came online in 1995. Continental's agreement was the first domestic major airline code-share, with joint ground handling in certain cities, and code-share flights. The first Continental code-share flights commenced October 1, 1994.
August 25, 1994 was emergence day for America West. The airline left bankruptcy a new company, with reduced debt, a focused management, and new hope. It was not the same company, though. Unions were coming in, with AFA certified as the bargaining agent for Inflight CSRs in September. It marked the official end of fully-cross utilized CSRs. As growth at Phoenix occurred, it reached the point where most people just stayed in their own work area in the hub. Field stations remained cross-utilized. CSRs had to choose whether to work as full-time flight attendants or full-time ground operations.
While free drinks were eliminated in the bankruptcy, America West still offered free Wall Street Journal newspapers to passengers. Fast Check survived until 1994. Flightlink II, a new digital in-flight phone and entertainment system, was installed fleet-wide starting in January. Flightlink included video games, audio entertainment, and advertisements (until the passenger removed the handset, turning the ads off.)
The beginning of 1995 brought major changes to the airline. Franke continued the cost-cutting that he started during the bankruptcy, with aircraft catering completely outsourced on January 17 - along with the closure of the Colorado Springs reservations center. Before this time, food preparation and hot meal delivery were outsourced, and cold snacks, beverages, and sandwiches were provisioned by America West personnel. Maintenance was the next to go, with heavy maintenance (C-check and above) outsourced on December 2.
The relationship with Mesa had become strained. After proving to be unprofitable, the Fokker 70 aircraft were removed in 1997, and replaced by new Canadair Regional Jet aircraft. Mesa had severe operational problems in late 1997 through January 1998, leading to America West canceling their contract. Negotiations came rapidly, for this would have been a fatal blow to Mesa, and a new contract was announced in September 1998. This contract would allow replacement of most of the Beech 1900s with Dash 8 aircraft, and growth in the RJ fleet.
New schedules were put into place in April for the Las Vegas night operation, and in May for the Phoenix hub. The strains were becoming evident, and by summer, the operation had taken an ugly turn.
Operational problems reared their ugly head throughout the summer. Mechanical problems increased, unfavorable press ensued, and employee stress reached a breaking point. Union issues were becoming more and more common, for the flight attendant contract was still open. Mechanics elected the Teamsters as their representative, and were negotiating their first contract. Dispatchers had just concluded their first contract on April 13.
A well-publicized FAA fine was imposed on the airline in June. The record $5 million fine was imposed over maintenance issues, primarily oversight and changes in recommended procedures. America West admitted no wrongdoing, and half the fine was forgiven after a restructuring of the maintenance oversight procedures. Eventually, this would lead to yet another change in heavy maintenance contractors.
1999 brought two major union issues to the forefront. The Fleet Service Agents (ramp CSRs) voted to unionize in December 1998, and the flight attendant contract - now 10 years after the initial unionization attempt - was still open. In February, the National Mediation Board released the flight attendants into a 30-day cooling off period, threatening America West with the airline's first employee strike. An agreement was reached on March 20, narrowly averting a strike.
Hopes were high for a better summer for the weary employees. It was not to be. Another summer of operational problems, high cancellation rates, and poor on-time performance led to soaring customer complaints. America West was clearly not the same motivated airline it was during the 1980's. While net profits were up through sales of businesses such as America West Golf Vacations, operating profits started to slip.
The relationship with the FAA was poor, leading to further restrictions on growth until the FAA was assured maintenance could handle the extra aircraft. The airline was not in good shape.
Changes needed to happen, and fast. Doug Parker was elected president of the airline in May, replacing Mook, and given the mandate to fix the airline. Immediate changes were put into place, focusing again on maintenance. The line maintenance staff was doubled, flight schedules were reduced to allow additional spare aircraft and more time to maintain the fleet, new systems installed, and new maintenance bases established in San Diego and Baltimore. Management began looking at the causes of problems and trying to solve them at the root, rather than fix the problems after they happened.
On the labor side, the Fleet Service Agents ratified their contract on June 12. Shortly thereafter, additional fleet service employees were hired in Phoenix, to support the initiatives designed to reduce delays at the hub.
Franke was taking a hands-off approach to the airline, and took over all corporate duties in August. Parker was given total control of the airline, and named CEO in December. Franke did keep the financial side of the airline in excellent shape, reducing long-term debt to $145 million in 2000.
The initiatives helped restore America West's relationship with the FAA. America West's Internal Evaluation Program was named a best practice by the FAA, and Maintenance would continue to win awards from the FAA during 2001 and 2002.
Profits were dramatically affected by the summer of 2000, and years of operational problems. America West Holdings made $7 million, but had a $12 million operating loss. America West would enter 2001 with hope for improvement, despite the open pilot contract which became amendable on June 12, 2000.
The industry entered a recession, and average fares began dropping dramatically. Airlines were losing money, but holding their own. America West was no exception, but they were also trying to restructure their operation. The TWA alliance ended before it really could start, with TWA's bankruptcy and subsequent purchase by American Airlines.
With the Air Transport Stabilization Act, America West was first in line for a government guaranteed loan. While the loan was provided by banks, the government would back it in case of default - something nobody wanted to see happen. The first two loan applications were rejected, and Doug Parker was living out of a borrowed conference room (borrowed from GE), making the changes necessary to ensure the loan went through.
America West was literally days from bankruptcy when the Loan Guarantee was approved on January 18, 2002. The process was a long one, but triggered rent reductions on the aircraft fleet, return of 11 aircraft, deferral of deliveries from Airbus, and rent credits from the city of Phoenix. The price was high, with the government obtaining warrants to purchase up to one-third of America West's equity at $3.00 per share. Employees were not required to take pay cuts, but labor costs had to be controlled under the agreement.
With the economic environment not improving in 2003, and the SARS threat, America West took some painful steps to ensure survival. 250 management-level employees were laid off on April 14. The airline announced the closure of the Columbus mini-hub on February 18, with a reduction from 49 flights/day to four flights/day by June 15. Coach food service on all flights was eliminated on May 13.
In June, America West ended their 14 year sponsorship of the Phoenix Suns, due to the economic environment - leading to an interesting situation when arch-rival Southwest Airlines became the official airline of the Phoenix Suns - who still play in America West Arena.
And you might want to ask the FAA about the largest fine ever imposed on an airline due to the outsourcing that HP did.
Even the ATSB acknowldeged that the HP employees were underpaid and did not ask HP to IMPOSE lower wage rates on them.
Check your history.
Effects of bankruptcy
America West emerged from bankruptcy in 1994, but not before some difficult cost-cutting measures were implemented. The 747s were gone, and a disgruntled workforce had begun union-organizing activities.
The airline also struggled in the late 1990s with operational problems that Franke blamed on its failure to keep pace with radical changes in technology. The result was a series of flight cancellations that earned America West a reputation as one of the nation's most unreliable airlines.
A major operational turnaround plan was implemented in 2000, but it took nearly two years for the airline to reverse the problems.
To this day, there are airline employees, particularly pilots, who blame Franke for the airline's troubles and for what they consider hostile management-employee relations.
Franke said he was just doing his job and believes he left the airline in better shape than when he arrived.
"It was an emotional time, and I hated to see the problems with the employees," he said. "Did I have to make some hard decisions? Yes, I did. And at the end of the day, that's what you get paid for."
Franke left America West in August 2001, and Parker, then the airline's 39-year-old president and chief operating officer, stepped into the top management spot.
There was barely time to change the names on the corporate letterhead when terrorists struck on Sept. 11, 2001. Suddenly, America West went from a company on the rebound to one bound for Bankruptcy Court.
Parker said at the time that without financial assistance, the airline likely would go out of business. It was granted a federal loan guarantee at the end of 2001, allowing it to secure $429 million in private financing.
The money assured America West's short-term survival, but the airline continued to struggle because of the prolonged travel slump, low fares and higher fuel prices.
America West has been successfully meeting the conditions of the loan guarantee and is scheduled to begin repaying the loan on March 31 in 10 installments of $42.9 million each.
Another:
The house of cards was about to collapse. On top of high oil prices, high fuel consumption on the 747, low yields, a high debt load, and no improvement in sight, the airline filed for bankruptcy on June 27.
The signs had been obvious. Pay and hiring freezes were first established, followed by a 10% pay cut for all employees, and the elimination of free cocktails, newspapers, and free flights for employees. Service to 10 cities had been cut before the filing. Morale came crashing down, as high-flying America West, the darling of deregulation, fell to earth. Bankruptcy would prove to be a long, turbulent process, costing Beauvais and Conway their leadership roles in the airline, as well as all employee-owned stock. Many employees found themselves in the unenviable position of having to pay back loans on worthless stock to the company if they left.
The first major cutback occurred in September, when the fleet was reduced to 103 aircraft (from 126). Debtor In Possession (DIP) financing was obtained from lessors G.P.A. and Kawasaki, in return for Airbus 320 lease options. Northwest Airlines also contributed $15 million in financing, secured by the Honolulu-Nagoya route authority.
Beauvais was removed from day-to-day operating affairs as part of the DIP package, but remained Chairman of the Board while Conway assumed the role of CEO in the first of many power struggles. One of Conway's first moves was to attempt to attract high-yield Fortune 100 traffic, which was the rationale for opening a new hub in Columbus, Ohio on December 15. Contrary to popular belief, it was not because Bank One (Columbus-based) contributed money to the struggling airline - Bank One did not contribute any money to the airline until 1992. The Baltimore reservations center was moved to Kansas City as well.
Four new cities were added in the first half of 1992, including Mexico City on June 1. America West resumed their international service with this route. Northwest's financing was repaid with the sale of Nagoya rights to Northwest for $15 million. However, America West's cash burn rate had not improved, and more money was needed. Shutdown was imminent when the September 1992 DIP package arrived, with financing from Ansett and a consortium of Phoenix-based companies. This final, small package ($8 million) would lead to the most drastic changes in the airline during bankruptcy; changes that would alter the course of the airline forever.
Arizona governor Fife Symington started a business roundtable, and asked William A. Franke to chair the roundtable. Franke was a prominent Phoenix businessman, who had led turnarounds of Phoenix-based Circle K and Valley Independent Bank. His purpose was to raise money from local businesses to support America West, the largest employer in Arizona. Franke was successful, and became Chairman of the Board as part of the deal, replacing Beauvais, bringing in five new board members. Other conditions of the package were the reduction of the fleet from five aircraft types to three, reducing the fleet to 87 aircraft, and restructuring existing aircraft orders.
Dash 8 service ended on November 30, 1992, made possible through a new code-share agreement with Mesa Airlines. Mesa assumed the name "America West Express", taking it from the original cargo service started in 1985, and brought their existing Phoenix Essential Air Service routes into the America West system. America West's intrastate system was drastically increased through this code-share. On the other side, 747-200 Bird of Paradise service ended on September 9, taken over by a wet-leased ATA L-1011 on September 10. One requirement of the DIP financing was met with these two changes. On the positive side, America West Arena opened in 1992, conveniently visible to passengers on final approach to Runway 8L at Sky Harbor.
The forced discipline was what America West needed to prepare to emerge from bankruptcy. However, this forced discipline led to clashes between Franke and Conway. Conway would be ousted from the airline on December 31, 1993, replaced by A. Maurice Myers. Don Monteath, another founder, would leave the airline on December 31 as well.
Proving that the airline is a survivor, America West celebrated their 10th anniversary on August 1, 1993. Despite being in bankruptcy with an uncertain future, a look back was warranted. With the anniversary, new uniforms were unveiled on December 14. These uniforms were in place until 2003, when new uniforms were slowly introduced.
The DIP financing was extended several times, but America West was turning the corner to operating profits through the cutbacks. No new cities were added until December, when America West Express service was brought to Columbus. Mesa was operating an existing commuter division (Skyway Airlines) out of Milwaukee for Midwest Express, and America West placed their code on the flights, leading to some interesting routes - particularly Detroit-Rockford. The Columbus express operation would be restructured significantly in 1994, as Skyway was re-formed as a wholly-owned subsidiary of Midwest Express.
Another sacrifice of bankruptcy was the non-union workforce. America West's inflight CSRs first had a union election in 1989. That election failed, but it was contested by AFA for a number of years. The pilots certified ALPA as their bargaining agent in 1993.
The long road was starting to pay off, as AmWest partners announced their package for emergence from bankruptcy. The partners would control the airline through a new set of Class A stock, controlling 75.9% of the voting rights and 35% of the equity. AmWest partners consisted of Air Partners II (led by David Bonderman), Continental Airlines, Mesa Airlines, and Fidelity Management.
In February, the board unanimously endorsed AmWest Partners to lead the company out of bankruptcy, setting into motion the emergence of the company. Negotiations with lessors finalized the company's fleet plan for the rest of the decade. All Boeing orders were cancelled, and the 118 aircraft Airbus order was reduced to 24 firm aircraft, to be delivered between 1998 and 2000. GPA and Kawasaki ended up with 'put' options, where America West would be forced to take various aircraft at certain times until the A320 deliveries started. All of the growth in the fleet from 1995-98 came through these 'put' options.
The restructuring agreements included code-sharing agreements with Mesa and Continental. In Mesa's case, the 1993 agreement was amended to include Fokker 70 jet aircraft, and Embraer 120 aircraft were added for certain Express markets. Mesa also increased their gate usage at Phoenix to include B-5, with B-7 added after the Fokker aircraft came online in 1995. Continental's agreement was the first domestic major airline code-share, with joint ground handling in certain cities, and code-share flights. The first Continental code-share flights commenced October 1, 1994.
August 25, 1994 was emergence day for America West. The airline left bankruptcy a new company, with reduced debt, a focused management, and new hope. It was not the same company, though. Unions were coming in, with AFA certified as the bargaining agent for Inflight CSRs in September. It marked the official end of fully-cross utilized CSRs. As growth at Phoenix occurred, it reached the point where most people just stayed in their own work area in the hub. Field stations remained cross-utilized. CSRs had to choose whether to work as full-time flight attendants or full-time ground operations.
While free drinks were eliminated in the bankruptcy, America West still offered free Wall Street Journal newspapers to passengers. Fast Check survived until 1994. Flightlink II, a new digital in-flight phone and entertainment system, was installed fleet-wide starting in January. Flightlink included video games, audio entertainment, and advertisements (until the passenger removed the handset, turning the ads off.)
The beginning of 1995 brought major changes to the airline. Franke continued the cost-cutting that he started during the bankruptcy, with aircraft catering completely outsourced on January 17 - along with the closure of the Colorado Springs reservations center. Before this time, food preparation and hot meal delivery were outsourced, and cold snacks, beverages, and sandwiches were provisioned by America West personnel. Maintenance was the next to go, with heavy maintenance (C-check and above) outsourced on December 2.
The relationship with Mesa had become strained. After proving to be unprofitable, the Fokker 70 aircraft were removed in 1997, and replaced by new Canadair Regional Jet aircraft. Mesa had severe operational problems in late 1997 through January 1998, leading to America West canceling their contract. Negotiations came rapidly, for this would have been a fatal blow to Mesa, and a new contract was announced in September 1998. This contract would allow replacement of most of the Beech 1900s with Dash 8 aircraft, and growth in the RJ fleet.
New schedules were put into place in April for the Las Vegas night operation, and in May for the Phoenix hub. The strains were becoming evident, and by summer, the operation had taken an ugly turn.
Operational problems reared their ugly head throughout the summer. Mechanical problems increased, unfavorable press ensued, and employee stress reached a breaking point. Union issues were becoming more and more common, for the flight attendant contract was still open. Mechanics elected the Teamsters as their representative, and were negotiating their first contract. Dispatchers had just concluded their first contract on April 13.
A well-publicized FAA fine was imposed on the airline in June. The record $5 million fine was imposed over maintenance issues, primarily oversight and changes in recommended procedures. America West admitted no wrongdoing, and half the fine was forgiven after a restructuring of the maintenance oversight procedures. Eventually, this would lead to yet another change in heavy maintenance contractors.
1999 brought two major union issues to the forefront. The Fleet Service Agents (ramp CSRs) voted to unionize in December 1998, and the flight attendant contract - now 10 years after the initial unionization attempt - was still open. In February, the National Mediation Board released the flight attendants into a 30-day cooling off period, threatening America West with the airline's first employee strike. An agreement was reached on March 20, narrowly averting a strike.
Hopes were high for a better summer for the weary employees. It was not to be. Another summer of operational problems, high cancellation rates, and poor on-time performance led to soaring customer complaints. America West was clearly not the same motivated airline it was during the 1980's. While net profits were up through sales of businesses such as America West Golf Vacations, operating profits started to slip.
The relationship with the FAA was poor, leading to further restrictions on growth until the FAA was assured maintenance could handle the extra aircraft. The airline was not in good shape.
Changes needed to happen, and fast. Doug Parker was elected president of the airline in May, replacing Mook, and given the mandate to fix the airline. Immediate changes were put into place, focusing again on maintenance. The line maintenance staff was doubled, flight schedules were reduced to allow additional spare aircraft and more time to maintain the fleet, new systems installed, and new maintenance bases established in San Diego and Baltimore. Management began looking at the causes of problems and trying to solve them at the root, rather than fix the problems after they happened.
On the labor side, the Fleet Service Agents ratified their contract on June 12. Shortly thereafter, additional fleet service employees were hired in Phoenix, to support the initiatives designed to reduce delays at the hub.
Franke was taking a hands-off approach to the airline, and took over all corporate duties in August. Parker was given total control of the airline, and named CEO in December. Franke did keep the financial side of the airline in excellent shape, reducing long-term debt to $145 million in 2000.
The initiatives helped restore America West's relationship with the FAA. America West's Internal Evaluation Program was named a best practice by the FAA, and Maintenance would continue to win awards from the FAA during 2001 and 2002.
Profits were dramatically affected by the summer of 2000, and years of operational problems. America West Holdings made $7 million, but had a $12 million operating loss. America West would enter 2001 with hope for improvement, despite the open pilot contract which became amendable on June 12, 2000.
The industry entered a recession, and average fares began dropping dramatically. Airlines were losing money, but holding their own. America West was no exception, but they were also trying to restructure their operation. The TWA alliance ended before it really could start, with TWA's bankruptcy and subsequent purchase by American Airlines.
With the Air Transport Stabilization Act, America West was first in line for a government guaranteed loan. While the loan was provided by banks, the government would back it in case of default - something nobody wanted to see happen. The first two loan applications were rejected, and Doug Parker was living out of a borrowed conference room (borrowed from GE), making the changes necessary to ensure the loan went through.
America West was literally days from bankruptcy when the Loan Guarantee was approved on January 18, 2002. The process was a long one, but triggered rent reductions on the aircraft fleet, return of 11 aircraft, deferral of deliveries from Airbus, and rent credits from the city of Phoenix. The price was high, with the government obtaining warrants to purchase up to one-third of America West's equity at $3.00 per share. Employees were not required to take pay cuts, but labor costs had to be controlled under the agreement.
With the economic environment not improving in 2003, and the SARS threat, America West took some painful steps to ensure survival. 250 management-level employees were laid off on April 14. The airline announced the closure of the Columbus mini-hub on February 18, with a reduction from 49 flights/day to four flights/day by June 15. Coach food service on all flights was eliminated on May 13.
In June, America West ended their 14 year sponsorship of the Phoenix Suns, due to the economic environment - leading to an interesting situation when arch-rival Southwest Airlines became the official airline of the Phoenix Suns - who still play in America West Arena.
Similar threads
