Stephen Wolf cut it close but his tough approach towards US Airways' pilots has paid off. The carrier's chairman and chief executive officer brokered a deal after 18 months of frustrating stalemate just in time to secure production slots for the first of 400 Airbus A320s on order.
At presstime, information packages and voting papers were being distributed among the carrier's 4,800 pilots, with a widespread feeling that the deal would be accepted. It is up to Wolf to deliver on his side of the bargain: he has promised to grow US Airways.
The alternative of shrinking the airline into a regional player was no more favoured by management than by the unions. The first priority for Wolf is to confirm the Airbus order. The Air Line Pilots' Association (Alpa) says the first 10 aircraft could now arrive between November 1998 and March 1999.
The second task is the east coast Shuttle, which is managed by the airline but owned by a number of banks. American Airlines is interested in buying the operation which is central in securing US Airways' position in the high-yield Boston-New York-Washington DC corridor. But US Airways can afford to meet the $500 million price tag for the Shuttle after a record profit of $260 million last year and 1997 is likely to be at least as good. However, more investment is needed to raise its service standard levels to those of rival Delta Shuttle.
The final part of the jigsaw will be to launch a low-cost subsidiary that would function separately but within the main airline to compete with the expansion of Delta Express and Southwest Airlines in its core markets. US Airways declines to comment, but the pilots union clearly expects the low-cost carrier to happen. Crucially, it is willing to accept pay rates on a par with those at Southwest. 'We are supportive of this,' says Alpa's Mike Oakey. 'The idea has been around for a while now and we regard it as one of the key points to the plan.'
The five-year deal with the pilots also establishes pay parity with the four largest US carriers, the first step in bringing down US Airways from its position as the highest cost carrier in the country. In return the pilots secure protection from furloughs and a guarantee that the airline will be expanded. US Airways says that once the deal is cemented, growth will follow a pattern that has been outlined clearly to the pilots over the last 18 months.
Aside from a low-cost subsidiary, the new strategy will include an expansion of the airline's international operations centred on its Philadelphia hub. However the limited scope of the international network means the airline needs to do more than just adding routes. Wolf will soon be seeking international alliance partners.
Source: Airline Business
