Integration
November 2009Check out these headlines:
September 27, 2005
…Its official. East has met West. Bankrupt US Airways Group has formally merged with America West Airways and is operating as a single airline. And,
…The combination of US Air, the nation's No. 7 carrier, and America West, the No. 8 airline, would create a major low-cost airline and stronger competitor to Southwest Airlines, the leading discount carrier. And,
…Operations were not fully integrated until October 2008, when government approval allowing the airlines to operate under a single operating certificate…
That’s funny because I’ve been flying US Airways to Florida every week for months now and had an in-depth conversation with a flight attendant last week—while she thoroughly ignored her responsibilities—about how it was still operating as two companies. It wasn’t so much a conversation as a “rant” on her part. I was sympathetic for a moment, but after I heard her whine about how she used to make more money 15 years ago when she worked for General Motors in Detroit (Hmmm…) she told me that she spends half her time at her home in Canada and half her time in Phoenix. Guess things aren’t maybe as bad as she thinks.
She relayed to me that the two work groups (remember, this is 4 years after the merger and at least one year after the “full integration”) hate each other, still had different pay scales, and in fact couldn’t even fly each others’ routes. She still receives her paycheck with the America West logo. (America West was in fact the surviving entity, but they do business as US Airways.) Even the planes are different colors from East to West. I asked her what she heard from “management” about the integration. “Hear from management?!” she said incredulously, “Nothing!”
I know that combining two companies is loads of work. Maybe they had boxes of old America West pay checks that they had to use up. Maybe they got a discount on left-over paint so had to use two different colors. Since the pay-scales are still different, I suppose there would be fistfights in the aisles if they mixed crews. But how can management be silent as to what is going on? When I board a US Airways flight I notice that they have the legacy partners’ logos stenciled on the door frame of the aircraft. Remember Pacific Southwest Airlines, better known as PSA? After a mid-air collision, it was referred to as People Scattered About. Wouldn’t you want to eliminate that logo? PSA has been gone since 1988! Seems like these guys are almost anti-integration.
When you watch the Southwest Airlines commercials on TV that clearly identifies their strategy (low fares), don’t you get the feeling that the baggage handlers, pilots and flight attendants in the commercials are real people, on the same page and probably know where their company is heading?
I have not done enough research to understand all of the reasons (perhaps spelled EXCUSES) that the integration has taken so long, but a quick web search and my angry flight attendant’s attitude tell me that it ain’t going so well. As discussed in previous newsletters, about 80% of mergers actually destroy value. Fortunately, both US Airways and America West have spent many years in bankruptcy court so their shareholders may have low expectations.