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US Airways CEO: How 9/11 Changed Our Airline

Stocks in this article: AMR LCC UAL SAVE

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.

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