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US Airways CEO: How 9/11 Changed Our Airline

TEMPE, Ariz. TheStreet) -- No industry was impacted more by the Sept. 11 attacks than the airline industry, and no airline saw its course change more than US Airways (LCC).

Only US Airways filed twice for bankruptcy, then entered a merger where management of the smaller airline took over the operation and moved the headquarters. "The social issues," as they are called, were resolved in a dramatically different fashion than in other mergers, and brought Doug Parker -- now chief of US Airways -- into the ranks of major airline CEOs. Since then, Parker and his team have shaken up the industry, pushing for consolidation at every turn.

US Airways CEO Doug Parker

When the first airplane crashed into the World Trade Center, Parker, then CEO of America West, was at home in Paradise Valley, Ariz., getting ready to go to work. Just ten days earlier, he had replaced retiring Bill Franke, now chairman of Spirit (SAVE).

In the weeks that followed, the 40-year-old CEO underwent a baptism by fire, presiding over a nearly-broke airline that was carrying barely any passengers in a badly damaged airline economy.

That morning, the phone calls came in, first from Parker's sister-in-law, who mentioned a crash, and then from the airline's operations control center, which said the Federal Aviation Administration had grounded all commercial flights. As he quickly drove the half dozen miles to work, Parker said, "my first concern was making sure all our people were safe." That turned out to be the case.

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Another concern was not so easily resolved. America West, the ninth-largest airline, was about to run out of money. It had been negotiating with GE Capital and Airbus for a financing package; term sheets had been signed, but not definitive documents. The events of Sept. 11 dramatically reduced air travel, which constituted a "material change in events" leading GE Capital and Airbus to pull out of the financing deal.

After a three-day shutdown, flights resume, but travel did not. "We were flying 10% loads," Parker said. "I would go to the airport and walk into the crew rooms. Our employers were there. They put on their uniforms and went to work. They weren't afraid." Unfortunately, the public was.

From a Phoenix conference room, Parker joined in conference calls with top executives from other airlines and government officials, who discussed how to save the industry. The strangest part, Parker said, was that no airplanes flew by the windows, which looked out on the flight path for Phoenix Sky Harbor Airport. "It was a weird three days," he said. "You didn't see any airplanes all day."

Within a few days, Parker was in Washington, attending series of meetings with other airline executives. They gathered at the Air Transport Association, at the White House and at a session of the House Aviation Subcommittee. Carriers had different issues, Parker said. American (AMR) and United (UAL) needed federal insurance after each lost two aircraft to terrorists. Every airline needed federal loan guarantees. And America West, which cut back its schedule by 15%, needed cash immediately. "We were the most in need," Parker said.

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