Ely Portillo of the Charlotte Observer covered the US Airways monthly employee meeting in Charlotte on Tuesday attended by CEO Doug Parker. Here’s a quick rundown:
Parker said he understands that fliers hate the new fees, but with fuel prices rising and the economy tottering, they are necessary for airlines to survive.
One especially odious fee for fliers is the now-common strategy of charging for all checked bags.
“Our customers have let us know they prefer not to have those, but the reality is it allows us to charge the customers that are using that service what we think is a very fair fee,” said Parker.
Fair enough. US Airways reported $450MN in profit last year. You can bet they would have been in the red without the fees. Fees are annoying, but with fuel prices high and relatively low (though rising) prices for tickets, I think the tradeoff is fair.
On the AmericaWest/US Airways Merger (yes, they are still separate airlines):
Six years after the merger, US Airways and America West flight attendants and pilots still fly separate flights under separate contracts.
Parker believes that the airline can get a combined agreement with flight attendants soon, but he’s less optimistic that the dispute with the pilots will be resolved in the near future.
“The flight attendant issue will get resolved,” he said. The pilot seniority dispute, which Parker said must be resolved before a new agreement with the pilots, is tied up in court and “it’s not months, it’s years,” before that plays out, he said.
Parker essentially admits the pilot seniority issue is a terribly messy conundrum that may never be resolved. We also cannot forget that US East and US West still operate as two separate airlines behind the scenes. Don’t be surprised if labor strife at US Airways gets much more serious. Already, we see that some pilots are taking direct and consequential action out of disgust for what they perceive as safety shortfalls. A recent full page ad in the USA Today proclaiming US Airways puts “revenues first, safety second” cannot be helpful to discussions moving forward.
On the Future of the Charlotte Hub:
As US Airways has closed hubs in Pittsburgh and Las Vegas, Charlotte has assumed a greater role in the airline’s operations. About 6,900 US Airways employees are based here.
“I think it will grow kind of as the economy grows,” he said. “We have the right amount of supply for the existing demand. As demand grows, as the economy in Charlotte gets stronger … I think you’d expect to see our seats out of here grow accordingly.”
He said the hub is “clearly one we’re going to have forever,” and said there are no plans to reduce the workforce in Charlotte.
Never say never. I think CLT will remain a hub for years to come, but who would have ever thought that PIT would become a ghost town and LAS would lose not only its around-the-clock service, but most of its US Airways flights?
On a Potential Merger:
“We have a stand-alone airline that works,” he said Tuesday. “The industry’s also shown that consolidation can, in the right situation, make airlines even stronger. We’re prepared for either. … If it happens one day, it happens.”
The labor strife could prove an obstacle to any possible merger. Parker said it was a difficult point in failed merger talks last year with United, which ended up combining with Continental instead of US Airways.
“We got very far along in those talks,” he said. “Yes, it was a cause for concern. Once they understood the issue, we were ready to close with United … absolutely not a deal breaker.”
The pilot dispute could simmer for years, and Mann, the independent analyst, said labor unrest could deter future mergers:
“I think that’s the one red flag in an otherwise attractive opportunity.”
I just cannot see another merger in the months ahead if US Airways cannot even get their America West merger complete. And while US Airways may not be given as much credit as they deserve (afterall, their route map is respectable and their new business class seats are great), I cannot picture American Airlines picking them up (or vice versa) unless we see a big change in the industry, such as a bankruptcy by AA or a massive uptick in fuel prices.