US Airways CEO: How 9/11 Changed Our Airline
On Sept. 22, Congress approved a $15 billion bailout for the airline industry. Parker said he "literally lived in Washington from September to December," fighting for a share. In October, America West got a $60 million federal grant, as funds were allocated to carriers according to their capacity. Then in December, America West received a $380 million loan guarantee from the Air Transportation Stabilization Board, becoming the first carrier to get an ATSB loan guarantee.
Funding enabled America West to reach a new deal with Airbus and GE Capital. In 2002, the carrier restructured its fares, eliminating Saturday night stay and round-trip purchase requirements. It was in business to stay.
US Airways' Problems
In the meantime, the Sept. 11 attacks ensnared US Airways in a different set of difficulties.Among them, Washington Reagan National Airport, a profit center for the airport, was closed for 23 days following the attacks before reopening gradually. Travel in the Northeast, site of the bulk of US Airways operations, declined because newly-introduced, cumbersome security procedures convinced many that land travel was preferable to air travel. Within months, the carrier cut capacity by 24% and eliminated 11,000 jobs. US Airways, bigger than America West, secured a $331 million share of the industry bailout, and later, a $1 billion ATSB loan guarantee. Unlike America West, US Airways suffered a run of management shakeups, including the turnover of five CEOs during a three-year period. In November, 2001, CEO Rakesh Gangwal suddenly resigned, forcing predecessor Steven Wolf back into the job, for which he had groomed Gangwal. In 2002, David Siegel took over as CEO. He led the carrier into a quick bankruptcy that ended in 2003. US Airways secured about $1.9 billion in savings, including $1 billion from labor. It wasn't enough, however, given a subsequent breakdown in industry pricing due to rapid expansion by low-fare carriers. So Siegel sought more cuts, which made him unpopular with employees and led to his departure. "I knew when I went to the second round that it would be tough for me to survive politically," Siegel said in a 2006 interview with TheStreet.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV