Bruce Lakefield, a former Lehman Brothers executive, replaced Siegel and, in 2004, led the airline into a second bankruptcy, when it secured another $1.5 billion in annual cuts. Lakefield, now vice chairman, said his mission was to save jobs. "I didn't really come into this for anything but that reason, and that mission was accomplished," he said in a 2006 interview with
In 2004, Parker and his team made their first public effort at a merger, bidding for troubled ATA airlines. The effort failed because ATA's aircraft lessors determined they could get more value for their planes from foreign operators than from America West, and because Southwest could pay more for ATA's facilities at Chicago Midway.
Afterward, "somewhere along the line we decided we should talk with US Airways about a merger," Parker said. "We were a small airline, with a cost advantage driven by labor costs. We saw United and US Airways in bankruptcy, getting their labor costs down to our level, and we knew it would be difficult to compete, given their revenue premiums. We saw US Airways as a way to mitigate some of that effect."
Given the reduced costs, Lakefield was able to find investors willing to bet on the carrier and on the America West management team, leading to the 2005 merger. Lakefield's willingness to step aside as CEO resolved what is often a major "social issue," while the synergies of the deal were clear, because America West was a West Coast airline while US Airways had a strong East Coast presence. Negotiations were complicated, given the necessity to secure labor concessions, find investors, satisfy debtholders and put the airlines together. Initially, they were conducted in secret, but word of the talks eventually leaked to the media, so the September 2005 announcement surprised no one.
The merger is generally considered to have been successful, despite a failure to integrate pilot groups due to a controversial seniority ruling. But most experts say US Airways needs yet another merger, because its hubs still aren't big enough to compete globally.
working on that
-- Written by Ted Reed in Charlotte, N.C.
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