America West CEO to Face Difficulties in Merger

43-year-old Doug Parker will be tested by America West's plan to take over Arlington, Va.-based US Airways and stitch together two geographically distinct airlines into one designed to better compete with lower-cost rivals.


Parker's people skills will be needed when confronting the challenge of combining 24,000 US Airways employees with America West's 14,000. Executives from both airlines said they hope to remove an unspecified number of jobs from the combined company through attrition.

Some America West workers worry they might end up with less flexible work schedules, because employees of the older US Airways would water down the seniority pool. ''That will challenge every one of his skills,'' said Ray Neidl, an airline analyst for Calyon Securities.

Parker himself is blunt when discussing America West's past operational problems.

America West had reached a low point about a year before he took over as CEO. A computer glitch led to the cancellation of 160 flights and left 1,000 passengers stranded. That prompted a plan to improve customer service and aircraft maintenance.

''We had done a disservice to ourselves by not running a good airline,'' Parker said. ''That perception was still there even in 2001, even though we had been running a good airline for six, nine months as of when I took over.''

Franke, who hired Parker from Northwest Airlines in 1995 and helped groom him to run America West, said his successor's nature is forthright.

''If you don't self-confess to the problem, you are never going to come to grips with getting it right,'' said Franke, who now runs a private equity firm.

It's important that Parker fixed the airline's operational problems, because he couldn't integrate both work forces while trying to overcome customer service difficulties, said Andrew Inkpen, a professor of management at Thunderbird, the Garvin School of International Management in suburban Phoenix.

Parker turned a demoralized airline into a marginally profitable carrier, Inkpen noted. ''In this industry, that's saying something,'' he said.

Still, Inkpen is skeptical of the prospects for succeeding after the takeover. He questioned whether the combined company will be able to capture the savings expected.

Parker said critics of the merger haven't seen all details, which were enough to raise $500 million in equity and another $650 million from partners. Savings will come from stable labor costs and from taking 59 planes out of the combined airline's fleet, he said.

If the deal happens, America West shareholders will own 45 percent of the combined carrier. The new investors will have a 41 percent stake. And U.S. Airways creditors will own 14 percent. Existing US Airways shareholders are the big losers: their shares will be worthless.

Michael Roach, a co-founder of America West who now works as an airline consultant, said Parker is setting out to create a new future for the company, rather than having to react later to changes in the industry.

''I think he and his team are by far the best team that America West has had,'' Roach said.

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