America West prepares for Tuesday merger with US Airways - East Valley Tribune: Business

America West prepares for Tuesday merger with US Airways

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Posted: Sunday, September 25, 2005 6:20 am | Updated: 10:02 am, Fri Oct 7, 2011.

Paul Hotchkiss remembers it all.

There was the young-buck airline that was out to prove itself with a single break room filled with excited pilots, flight attendants, rampers and mechanics. They liked each other so much many of them married.

There was the time they finally flew east of the Mississippi, a sure sign the upstart was a industry player.

There was the mistake of growing too fast and flying to exotic places like Nagoya, Japan and Hawaii. It turned the airline into a part-time pineapple shipper.

There were the dark days of bankruptcy when workers saw their profit-sharing plans fall harder than a plane in turbulence. The arch-rival, Southwest Airlines, looked good, and some were willing to cross the street.

There were the maintenance problems, scheduling snafus that left hundreds stranded and the headlines of drunk pilots and losing an 11-year-old girl traveling alone.

And now there is a name change after 22 years, a merger with US Airways — a company three times bigger — and more uncertainty.

A one-time baggage handler turned senior manager, Hotchkiss said America West Airlines is a survivor.

"There’s a lot of us that are still around after 22 years," he says. "We carried this airline as far as we could, doing everything we can to keep it alive as possible."

But higher fuel prices and industry overcapacity have led to a merger with US Airways that begins Tuesday.

"If we did not think about merging ... who knows where we’d be six months from now," Hotchkiss said.

The story of America West is one of hits and misses. It competed successfully against the industry’s best, Southwest, and at the same time made some bone-headed decisions that left employees angry and, in one case, marching down Mill Avenue.

All along, the hometown airline had difficulty figuring out what it wanted to be. It gave the Valley unprecedented prestige and became one of the largest local employers. But it was always a struggle.

"To date, the story has been a very complicated, difficult existence," said Michael Roach, one of the airline’s cofounders. "The first managers, my former colleagues, ended up virtually destroying the company, and it went bankrupt. Bill Franke and his colleagues in Phoenix got rid of them, brought in new money, brought the airline out of bankruptcy and managed to stabilize it ... at great cost in employee morale. They were not very popular, and they failed to clearly establish a market niche for America West."

Bob Mann, an airline consultant at New York-based R.W. Mann and Co., said the merger will propel the airline onto the national stage, something America West has tried to do throughout its history, including in the 1980s when it showed interest in some of Pan American World Airway’s domestic operations.

"This time it looks like they’ve got the whole enchilada here," Mann said, lauding the airline for being the only carrier after the terrorist attacks of Sept. 11, 2001, to use government-guaranteed loans wisely to overhaul its operations.

"You’d have to say the record is certainly no worse than average, and, in the sense that it seems to be now dressed for success, it may turn out to be a whole lot better," Mann said. "Time will tell. There are the usual disclaimers, but you look at other people out there and it just looks like it’s a downward drift almost everywhere, and it’s really sad."

Hotchkiss is one of four America West managers in the Phoenix command center inside Phoenix Sky Harbor International Airport’s tower. The team is responsible for overseeing the entire America West operation from safety and security to monitoring arrivals and departures.

Like most employees, he will miss the name. But he likes the company’s idea to include the America West logo and the logos of three other airlines that went into the making of US Airways on the side of the aircraft. Hotchkiss is also fond of the plan to paint at least one of the new company’s aircraft in America West’s orange and turquoise "Jurassic" scheme.

"As far as the name going away, it’s kind of sad," he said. "I’ve still got my stuff at home, my memorabilia from way back when. My wife is a 21-year employee. She’s a flight attendant, and she still has some of the ramp uniforms from back in 1983. . . I’ve got drawers full of all kinds paraphernalia from the old days, from when I used to be a ramper to a supervisor on the flight line."

In the early days of the airline, employees did it all. Flight attendants could fly one day and drive a bag tug and sling luggage between planes the next. Pilots would work dispatch. Customer service agents would work as flight attendants or on the ramp.

"The camaraderie was extremely high to where there were no departmental fences or barriers," Hotchkiss said. "Everybody knew everybody."

There was one break room for everybody in the company. There were three gates, three planes at first and free cocktails and newspapers for the passengers.

On a Web site called Cactus Wings run by a group of aviation enthusiasts, the "Unofficial History of America West" includes information from an employee who remembered washing the aircraft with a garden hose. The company’s maintenance center was called the Blue Sky Hangar because all of its planes were parked outside, and in-flight training was done in a room with folding chairs set up like an airplane interior, the site says. Tickets could be purchased on board.

"Unfortunately, as the company grew, we all started to become separated, and then as we started flying large aircraft we become a lot more technical," Hotchkiss said. "We tried to meet the needs of multiple different types of customers, anywhere from coach class to the elite class and everything in between."

In 1990, America West moved from Terminal 3 into the new Terminal 4 at Phoenix Sky Harbor International Airport, giving the carrier its own identity, an automated complex and centralized airport communications.

The company was trying to keep up with the majors. It grew, took on larger and larger planes and began flying to the East Coast. Then it unveiled a jumbo Boeing 747 with plans to begin flying over water to Hawaii and Japan. The carrier tried unsuccessfully to receive approval to fly to Sydney, Australia and Tokyo.

"When we had our first 747 parking here in Phoenix, I mean everybody in town was literally coming out to watch this operation happen," Hotchkiss remembered.

The euphoria didn’t last long.

"The management of America West made many, many mistakes, including departing from the Southwest model," Roach said, adding the company’s five aircraft types and route structure led to piling on huge amounts of debt.

The overseas routes didn’t carry enough passengers, so America West began shipping pineapples, Hotchkiss said. Del Monte had trouble shipping fruit to Los Angeles, so America West began flying it from Hawaii to Phoenix. From there, it was trucked to Southern California.

"I’m talking semi-loads every single day," Hotchkiss said. "They wanted to jump with the big boys too fast.

Following a downturn in travel during the Persian Gulf War, America West filed for Chapter 11 bankruptcy reorganization in June 1991. With the company’s future in doubt, It was especially tough for the married couples who worked at the airline.

"There were hundreds and hundreds and hundreds of people like that, flight attendants marrying pilots and flight attendants marrying mechanics and people on the ramp marrying each other," Hotchkiss said. "I mean it was pretty bad. It got to the point, honestly, every day that (when) we came to work we didn’t know if the doors were going to be locked or not, or if we did go to work, if we were actually going to fly that day, or if we were all going to go home. It was pretty traumatic for months on end."

Before being hired, employees had to agree to buy America West stock as part of a profit-sharing plan, and "of course the stock went right down to nothing, and everybody started losing everything they could possibly have, plus their 401(k)," Hotchkiss said.

Chief Executive and cofounder Ed Beauvais was out, and Franke, a turnaround specialist, assumed the the airline’s reigns as chairman. At a recent farewell party for America West, Beauvais was reluctant to talk about the past.

"I guess I’m kind of like President Bush," he said when asked if he would have done anything differently. "I don’t want to admit my mistakes."

Under Franke, America West emerged from Chapter 11 in 1994 with new owners and new resolve. The free drinks were eliminated during the trip through court, and jobs began to be outsourced. When executives decided to contract heavy maintenance work, 500 furloughed mechanics and their supporters marched to America West’s headquarters and demanded Franke come out. He didn’t.

"In fairness, Bill saw the turn in the market that required fundamental change," Mann said. "If change is unsettling, then fundamental change is like, whoa. I think that did cause a lot of people some heartburn and especially for those folks who felt staying close the employee necessary to keep the company moving along. Bill really kind of just distanced himself from most of the line people."

Franke turned things around, but the damage was done. To this day, Hotchkiss says Franke’s name still comes up, and not in a positive context.

"His philosophy was if you don’t like it, get the hell out now," he said. "He just could not communicate openly in the open forums the corporation would have quarterly."

Franke could not be reached for comment.

By 1998, the airline was reporting record profits and winning awards. That summer maintenance problems began, and in June a record $5 million fine was imposed by the Federal Aviation Administration. In early 2000, the airline’s automated dispatch system went down, leading to nearly 300 flight cancellations in three days. America West became "America Worst" in the eyes of its customers. Profits fell too.

Doug Parker was promoted from executive vice president to president in May 2000. His job was to fix the airline. By the summer of 2001 things were looking up on the operations side, and Parker was promoted to chairman and CEO on Sept. 1. Then New York’s Twin Towers fell.

"It was just like a dead zone," Hotchkiss said. "Everybody was just in awe ... as the day progressed. The flight schedule was cancelled and all the aircraft came out of the sky. For the next 3 1 /2 or 4 days, we had no operations at all. When push came to shove and they released all the aircraft and decided the skies were safe, America West was the first airline in the sky within the continental United States. There was a lot of pride with that. There was a lot of pride because once again we stood ready, and we were prepared for what came at us."

America West was first in line for a federally-backed loan given following the terrorist attacks. It was on the verge of bankruptcy when the loan came through in January 2002.

Since then, Parker has run things ship-shape. He’s generally popular with employees, although union leaders grumble that flight attendants and mechanics need new contracts. America West rolled out a simpler fare structure and concentrated on being a low-cost airline. Passenger complaints are down, and ontime arrivals are more common.

The airline has managed to keep its head above water despite fuel costs that continue to soar. But its problems are deeper, Roach said.

"At the end of Franke period, people said ‘Why do we need America West?’ " he said. "What unique thing to do they bring to the marketplace that requires their continued existence. It’s easy to give the reasons for the existence of Southwest, given that they were all over us in Phoenix and Las Vegas. Why do we need America West? Franke never really answered that question."

Still, Roach gives Franke credit for saving the airline, although he left it too much like the established legacy carriers that now are in deep financial trouble.

"The world didn’t need another legacy carrier, which is what it is telling us right now in Chapter 11 filings. It didn’t need another one then. America West was both a lowcost carrier, but not as low as Southwest, and a legacy carrier, but not as good at that as American. It was in a not very comfortable no-mans land."

Roach says Parker will have his hands full transforming a regional airline into a much larger one that offers trans-Atlantic flights.

"In the time he’s had, he still hasn’t proved to the world that the world needs an America West," he said. "His take on it was America West needed to get much bigger, get national in scope, that the industry needed to consolidate ... and he decided to do that by acquiring US Airways."

How they’ve grown

America West Airlines began in the Valley 22 years ago with three airplanes. On Tuesday it becomes US Airways

1983: America West

3 planes 5 destinations 20 daily departures

2005: US Airways

760 planes 230 destinations 3,994 daily departures

Source: America West Airlines

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