US Airways Chairman Uses Labor Talks as Scapegoat

I might have guessed.

For months, the management of US Airways (U) has been mute about continuing operational difficulties, declining load factors, and deteriorating revenues per available seat mile (RASM) and yields at the airline.

Chairman Stephen Wolf has been so invisible that rumors have circulated that the man was ill. I don't believe this is the case -- I think it is just a reaction to his very uncharacteristic disappearing act.

But now that the airline is only two days out from a possible shutdown and/or strike by its flight attendants, US Airways has its vocal cords back. Executives there have been sending out press releases, talking to investors, and giving exclusive interviews right and left.

But don't forget -- Wolf is a master at revisionist history.

In an address to investors last spring, Wolf lambasted the management of United Airlines (UAL) for what he called the unconscionable and irresponsible "capacity dumping" at Dulles.

What? Hello?

United did not start anything at Dulles.

It was US Airways that announced a substantial increase in service to Dulles in December 1998. It was US Airways that forced United to match the announced increases as a result. I mean, what did Wolf and CEO Rakish Gangwal think United was going to do? Sit there? And it is US Airways that now has been forced to cancel service left and right out of Dulles, as a result of too many flights and too few passengers.

The result of Wolf and Gangwal's big push at Dulles? A broken airline, a stock price that is about where it was when Wolf began his Wall Street routine, lost market share to United at Dulles, lower earnings, and continuing declines in RASM and yields.

However, if you listen to what the Wolfman is telling investors and selected media outlets, everything is just peachy -- operationally speaking at the airline. The only problem the airline has? Greedy flight attendants.

Last week, the airline gave guidance to investors on how it would perform over the next three months. The most interesting comments were those blaming a substantial amount of the recent past, current and future downside to earnings at the airline on the flight attendant negotiations.

I have news for you. The deterioration in RASM, yield and load factors for January and February had nothing to do with these negotiations.

Today, in an "exclusive" interview in Aviation Daily, Wolf says the airline's long-running operational problems "are fully resolved" and its recent operating performance is "absolutely superb."

With all due respect, that's a bunch of hooey.

What the airline is doing is positioning itself so that no matter what happens with the flight attendants, the airline can then blame this issue for the continuing financial shortfalls at the airline.

On another note, I laughed yesterday when the airline announced its new and improved Web site. For some reason, I just don't think this was a good time to trumpet the airline's new Internet services for its passengers -- especially when passengers are having to scramble to find flight alternatives for this weekend. (The end of the 30-day cooling-off period is at 12:01 a.m. Saturday.)

But, the announcement did prompt me to visit the site just to see how the airline was communicating information about the possible strike to passengers. Sadly, visitors to the Web site hardly get the impression there is a pending strike. You have to know the players to know that there could be information in the news section under the link that says, "Flight Attendant Update." If that's not euphemistic, I don't know what is.

Henry Harteveldt, senior analyst at Forrester Research, points out in his Technographics Brief today that the airline is missing the boat in terms of using its Web site effectively to communicate to passengers, because it does not prominently feature key information on the home page for passengers, does not offer an email update notification service, and does not clearly give the date and time of the last update posted to the site.

What is going to happen? I still think chances are good that the airline and the union will come to terms at the last minute, although with this one, both sides seem to be well entrenched.

But regardless of what happens -- strike or no strike -- one thing is clear. Stephen Wolf has now bought himself more time with investors, because he now has a reason for continuing poor financial performance at the airline.

If nothing else, in this industry, labor negotiations are a great excuse for hiding myriad operational and strategic problems.

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