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EARLY ON, US AIRWAYS-AMWEST UNION HAS SEEN: TURBULENCE AND CLEAR SKIES(Tribune, The (Mesa, AZ) (KRT) Via Thomson Dialog NewsEdge) Jun. 18--The new US Airways -- the fifth largest U.S. airline since Tempe-based America West Airline rescued the then-bankrupt East Coast operation in September and adopted its more nationalsounding name -- launched a joint Web site June 9. Reservations were dropped. Frequent flyer miles went missing. Everything happened at turtle speed. Phone lines were jammed. Online reservations fell off 30 percent for two days, said Scott Kirby, executive vice president for sales and marketing. "We knew we'd have bugs with a program of this magnitude," Kirby said. "But we underestimated the number of people who would call about their frequent flyer miles." An emergency fix kept the system hobbling for a few days, and the big glitches have been permanently solved, Kirby said. Online visits, about 5 percent of which become bookings, are now up 10 percent from the combined number of visits to the two old airline sites, he said. Tick one more item off the to-do list. The integration of the two airlines is going "mostly well, ahead of our expectations," Kirby said. The company has renegotiated vendor contracts and settled on which procedures to adopt when there was a conflict. "There were hundreds of little policy changes, " Kirby said. Among the most visible to passengers, the airline selected beverages (Coke at US Airwaysand Budweiser at America West), dumped peanuts (an America West snack staple but banned on US Airways because of allergy concerns), and deep-sixed pets in the baggage compartment and unaccompanied minors on connecting flights. With the start-up problems resolved, the frequent flyer programs and the Web site are functional. At all but seven U.S. airports, the check-in and customer service counters are merged or at least side-by-side. US Airways is still operating as two separate airlines, but the company has installed terminals for the two reservation systems at the airport counters so customer service workers can access both, and passengers are mostly unaware of the distinction. Kirby expects to have the check-in operations at all airports combined by December. And the airline should be using a single reservation system by the first or second quarter, he said. The planes are getting repainted with the new look and logo. About 30 percent of the America West planes are done and the whole fleet is expected to be repainted by April. The old US Airways planes will get makeovers later because the new look isn't that much different from the old paint job, Kirby said. Financial reporting has been merged, although comparisons to previous year's statistics to measure growth and performance are meaningless until the merger has a full year plus a quarter under its belt. That will happen in the fourth quarter. Before US Airways can operate as a single airline, the staffs have to be combined, Kirby said. But even if employee contract negotiations drag, the company can continue to operate the two airlines, Kirby said. And once all the technical systems are merged, passengers won't even know the difference, he said. US Airways CEO Doug Parker, speaking to Merrill Lynch analysts Wednesday, said the company has already achieved $175 million in cost savings from the merger and is well on its way to beating the $250 million per year savings he estimated would result when all the system conversions -- human and technical -- are completed. Kirby hopes the merger and all the big and little details will be a done deal by late 2007. Right on schedule. "We said it would take two years," he said. But by then the company may be in taking on new challenges. In the session with the Merrill Lynch analysts, Parker would not rule out another merger. Two airlines -- Delta and Northwest -- are currently operating in bankruptcy. "We're interested," Parker said. "We think there's an enormous value in consolidation. We're staying focused on what's on our plate, but we're not letting opportunities go by that may not show up again." Parker said buying a bankrupt company is the only way to achieve the synergies from an airline merger, because a company can shed unprofitable routes, leases and contracts during reorganization. "If you are not in bankruptcy, you can't do any of those things," Parker said. "Consolidation creates large value as long as it results in reduced capacity. " - CONTACT WRITER: (480) 970-2338 or [email protected] Integration completed --Coke, not Pepsi, is the cola of choice --Budweiser, not Miller, is the beer of choice --No peanuts --No transport of pets in baggage --No unaccompanied minors on connecting flights --Joint Web site --Frequent flyer programs combined --Headquarters staff combined in Tempe. Virginia offices closed. To do --Reservation systems merged by first or second quarter --Complete integration of airport ticket/customer service operations by December --Repaint all America West planes by April --Single operator's license by late 2007 --Negotiate union contracts |