US Airways Letter to the New York Sun Business Columnist Liz Peek
New York Sun, Jan. 9, 2007
Dear Ms. Peek:
We have to take exception to statements made by analyst Zacharay Karabel in your Jan. 9 column. Karabel calls the proposed US Airways-Delta merger a seeming “act of desperation,†primarily because of difficulty integrating operations. We disagree.
The proposed merger would result in a better airline for employees, more choice for consumers on a much larger global network—and more financial stability to withstand economic down times that often plague this cyclical industry.
Our own track record (the US Airways-America West merger of fall 2005) conclusively proves that mergers today can and do work. Consider:
Since our merger, we have produced the highest pre-tax margins of any large, network airline. Shareholders who owned America West stock on Sept. 26, 2005, have seen their investments more than triple.
Our employees are now working for a more financially stable airline that has hired more than 4,000 new employees and recalled more than 700 to their jobs. Our profitability has allowed us to set aside $50 million for profit sharing for our employees based on results through the end of the third quarter.
Importantly, those employees are turning in the second-best On-Time Performance of the major carriers (just behind Southwest in DOT numbers through November, the last month available), and making significant improvements in other customer service measures. We’ve hit important integration milestones, including combining operations at airports, creating one frequent flyer program and one web site, reaching labor agreements with unions representing our customer service, reservations and dispatch employees (and transition agreements with other unions).
Our CEO, Doug Parker, believes in creating airlines that are financially stable for the long term, and in offering careers that will last beyond the next economic downturn. That’s the airline that he and his management team are creating with the US Airways-America West merger; a US Airways-Delta match-up will create even more stability and career potential than either carrier can provide on its own.
Andrea Rader
Director, US Airways Corporate Communications
US Airways Op-Ed
Charleston (W.Va.) Gazette, Jan. 5, 2007
by Andrew Nocella:
We’re sorry to see that the Charleston Gazette has fallen victim to the Delta Air Lines disinformation campaign regarding the proposed US Airways-Delta merger. (Editorial: Air Merger? West Virginia Problem, Jan. 5).
Quite simply, Delta’s claim that thousands of jobs and hundreds of flights would be cancelled (with resulting fare increases) is wrong. Moreover, we think it’s somewhat cruel to spread that story in the Mountain State, which has seen its share of significant change in other basic industries.
The facts—as stated by US Airways from Day One—are these:
No front-line employee will lose his or her job. And, employees at the merged airline will move to the higher of the pay scales, whether that be Delta’s, US Airways’ or America West’s, which merged to become US Airways last year.
The new Delta would continue to serve every city served by the individual airlines today.
US Airways has a history of lowering fares in West Virginia (we cut prices by as much as 23 percent to 131 markets from Huntington just this past fall). Delta led six industry-wide fare increases last year.
Take a look at the track record that supports our position.
The US Airways-America West merger in 2005 resulted in no layoffs of frontline employees, despite capacity reductions of 15 percent (compared with 10 percent contemplated in the Delta merger).
Even better news: we’ve recalled more than 700 employees laid off before the merger, and hired 4,000 new employees.
We continue to serve the same cities both airlines served before, and we’re doing it more economically, which has allowed us to lower fares nationwide in 1,000 markets—by as much as 83 percent—this past year alone.
But let’s talk closer to home. US Airways serves five cities in West Virginia through the US Airways Express brand. Delta serves just Huntington and Charleston.
Local leaders in West Virginia have been told that a merger would reduce competition to West Virginia markets. But six of eight West Virginia airports have no year-round competition today: Continental alone serves Clarksburg, Morgantown and Parkersburg; US Airways is the only carrier to Beckley, Bluefield and Lewisburg year-round (Delta does serve Lewisburg on a seasonal basis).
In Charleston, a US Airways-Delta matchup would carry 56 percent of the weekday passenger traffic (not the 70 percent mentioned in the editorial). Charleston also enjoys service from three other major airlines—Continental, Northwest and United—which operate non-stop service to their five hubs (Cleveland, Houston, Detroit, Dulles and Chicago), with connections worldwide. There will be no shortage of competitive airline service for customers flying from Charleston.
In Huntington, Delta flies to its Cincinnati hub and US Airways to its Charlotte hub on routes that are complementary, not overlapping. Although both hubs have hundreds of flights to lots of destinations, the Cincinnati hub is a convenient connecting point for Huntington residents flying to Midwest and Northeast cities, and Huntington customers will find convenient connections to the Southeast, Florida and the Caribbean through US Airways at Charlotte.
And, as noted, Huntington customers are benefiting from fares that US Airways lowered this past fall.
Rather than creating a “desperate operation eager to raise fares,†US Airways is already demonstrating that a combined airline can be profitable. Since our merger with America West, we have produced the highest pre-tax margins of any large, network airline. We are one of the few airlines that analysts predict will have a profitable fourth quarter (we’ve had three in a row now).
Most importantly, we’ve been able to put aside $50 million for profit sharing for our employees, and we still have the fourth quarter’s results to add to that amount.
Our CEO, Doug Parker, believes in creating airlines that are financially stable for the long term, and in offering careers that will last beyond the next economic downturn. That’s the airline that he and his management team are creating with the US Airways-America West merger. A US Airways-Delta matchup will create even more stability than either carrier can provide on its own.
We appreciate the opportunity to set the record straight. And we invite you and your readers to visit our web site—www.buildingabetterairline.com—and send questions or comments to [email protected].
Sincerely,
Andrew Nocella
Senior Vice President
Schedule, Planning and Alliances
US Airways
Nocella is senior vice president for schedule, planning and alliances at US Airways.
New York Sun, Jan. 9, 2007
Dear Ms. Peek:
We have to take exception to statements made by analyst Zacharay Karabel in your Jan. 9 column. Karabel calls the proposed US Airways-Delta merger a seeming “act of desperation,†primarily because of difficulty integrating operations. We disagree.
The proposed merger would result in a better airline for employees, more choice for consumers on a much larger global network—and more financial stability to withstand economic down times that often plague this cyclical industry.
Our own track record (the US Airways-America West merger of fall 2005) conclusively proves that mergers today can and do work. Consider:
Since our merger, we have produced the highest pre-tax margins of any large, network airline. Shareholders who owned America West stock on Sept. 26, 2005, have seen their investments more than triple.
Our employees are now working for a more financially stable airline that has hired more than 4,000 new employees and recalled more than 700 to their jobs. Our profitability has allowed us to set aside $50 million for profit sharing for our employees based on results through the end of the third quarter.
Importantly, those employees are turning in the second-best On-Time Performance of the major carriers (just behind Southwest in DOT numbers through November, the last month available), and making significant improvements in other customer service measures. We’ve hit important integration milestones, including combining operations at airports, creating one frequent flyer program and one web site, reaching labor agreements with unions representing our customer service, reservations and dispatch employees (and transition agreements with other unions).
Our CEO, Doug Parker, believes in creating airlines that are financially stable for the long term, and in offering careers that will last beyond the next economic downturn. That’s the airline that he and his management team are creating with the US Airways-America West merger; a US Airways-Delta match-up will create even more stability and career potential than either carrier can provide on its own.
Andrea Rader
Director, US Airways Corporate Communications
US Airways Op-Ed
Charleston (W.Va.) Gazette, Jan. 5, 2007
by Andrew Nocella:
We’re sorry to see that the Charleston Gazette has fallen victim to the Delta Air Lines disinformation campaign regarding the proposed US Airways-Delta merger. (Editorial: Air Merger? West Virginia Problem, Jan. 5).
Quite simply, Delta’s claim that thousands of jobs and hundreds of flights would be cancelled (with resulting fare increases) is wrong. Moreover, we think it’s somewhat cruel to spread that story in the Mountain State, which has seen its share of significant change in other basic industries.
The facts—as stated by US Airways from Day One—are these:
No front-line employee will lose his or her job. And, employees at the merged airline will move to the higher of the pay scales, whether that be Delta’s, US Airways’ or America West’s, which merged to become US Airways last year.
The new Delta would continue to serve every city served by the individual airlines today.
US Airways has a history of lowering fares in West Virginia (we cut prices by as much as 23 percent to 131 markets from Huntington just this past fall). Delta led six industry-wide fare increases last year.
Take a look at the track record that supports our position.
The US Airways-America West merger in 2005 resulted in no layoffs of frontline employees, despite capacity reductions of 15 percent (compared with 10 percent contemplated in the Delta merger).
Even better news: we’ve recalled more than 700 employees laid off before the merger, and hired 4,000 new employees.
We continue to serve the same cities both airlines served before, and we’re doing it more economically, which has allowed us to lower fares nationwide in 1,000 markets—by as much as 83 percent—this past year alone.
But let’s talk closer to home. US Airways serves five cities in West Virginia through the US Airways Express brand. Delta serves just Huntington and Charleston.
Local leaders in West Virginia have been told that a merger would reduce competition to West Virginia markets. But six of eight West Virginia airports have no year-round competition today: Continental alone serves Clarksburg, Morgantown and Parkersburg; US Airways is the only carrier to Beckley, Bluefield and Lewisburg year-round (Delta does serve Lewisburg on a seasonal basis).
In Charleston, a US Airways-Delta matchup would carry 56 percent of the weekday passenger traffic (not the 70 percent mentioned in the editorial). Charleston also enjoys service from three other major airlines—Continental, Northwest and United—which operate non-stop service to their five hubs (Cleveland, Houston, Detroit, Dulles and Chicago), with connections worldwide. There will be no shortage of competitive airline service for customers flying from Charleston.
In Huntington, Delta flies to its Cincinnati hub and US Airways to its Charlotte hub on routes that are complementary, not overlapping. Although both hubs have hundreds of flights to lots of destinations, the Cincinnati hub is a convenient connecting point for Huntington residents flying to Midwest and Northeast cities, and Huntington customers will find convenient connections to the Southeast, Florida and the Caribbean through US Airways at Charlotte.
And, as noted, Huntington customers are benefiting from fares that US Airways lowered this past fall.
Rather than creating a “desperate operation eager to raise fares,†US Airways is already demonstrating that a combined airline can be profitable. Since our merger with America West, we have produced the highest pre-tax margins of any large, network airline. We are one of the few airlines that analysts predict will have a profitable fourth quarter (we’ve had three in a row now).
Most importantly, we’ve been able to put aside $50 million for profit sharing for our employees, and we still have the fourth quarter’s results to add to that amount.
Our CEO, Doug Parker, believes in creating airlines that are financially stable for the long term, and in offering careers that will last beyond the next economic downturn. That’s the airline that he and his management team are creating with the US Airways-America West merger. A US Airways-Delta matchup will create even more stability than either carrier can provide on its own.
We appreciate the opportunity to set the record straight. And we invite you and your readers to visit our web site—www.buildingabetterairline.com—and send questions or comments to [email protected].
Sincerely,
Andrew Nocella
Senior Vice President
Schedule, Planning and Alliances
US Airways
Nocella is senior vice president for schedule, planning and alliances at US Airways.
