This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

As US Airways Plans a Sixth Merger, Ed Colodny Recalls the First Four

During the 1980s, Colodny also engaged in merger discussions with Continental, Eastern, Northwest and United (UAL - Get Report). "We saw we had to bulk up or we would not go anywhere," he said. "We came close with Continental."

The fourth and best-remembered USAir merger came in 1987 with Piedmont Airlines. Today, it is often cited as an example of an extreme case of corporate culture clash. As Jerry Orr, director of Charlotte Douglas International Airport, once said: "When you buy somebody, you ought to save the good parts and throw away the bad parts, but USAir did the opposite." Orr added: "They thought the sun rose and set in Pittsburgh."

Colodny said the merger was not so bad, despite the challenge of merging two successful airlines. "There was a very proud group of employees and managers at Piedmont," he said. "They had built a wonderful airline and they weren't anxious to lose their identity. As with many things, there was emotional resistance, and they thought US Air people were imposing USAir operating policies on their systems.

"But it did come together," he said. "When we merged with Piedmont we doubled the size of the airline and Charlotte became a wonderful hub."

Still, leadership conflicts simmered. A few years before the buyout, USAir had sought a friendly merger. "It fell apart largely over the issue of leadership," Colodny said. At the time, Bill Howard was Piedmont CEO. "I was willing to let Bill be CEO first for a couple of years, but then, at 65, he would retire and become chairman and I would take over as CEO. But he claimed he had a deal with his board to be CEO until he was 67. I said 'I am sorry, I can't buy that deal' and we walked away from each other." When US Air acquired Piedmont, Howard left. Recalled Colodny: "I would not say we parted on lovey-dovey terms."

Additionally, Colodny said, a dispute with the International Association of Machinists made it difficult to merge work forces. And one other thing: a small, Phoenix-based airline slowed things down. The airline was America West, and CEO Ed Beauvais thought he could obtain slots at Washington National as part of a merger divestiture. "He went to court to try to break up the merger," Colodny said: "It caused a delay; we lost over a year. That particularly hurt the Piedmont operation because management people started to defect."

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
UAL $68.19 0.65%
AAPL $126.37 2.53%
FB $83.20 -0.13%
GOOG $552.03 0.67%

Markets

DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs