US Airways Media Day-Part 3

Bev Goulet, SVP and Chief Integration Officer, American Airlines

Robert Isom, EVP-Chief Operations Officer, US Airways

Elise Eberwein, EVP People, Communications and Public Affairs

BG:

  • Merger benefits flow to shareholders and stakeholders, employees, customers, and communities.
  • This will be subject to a lot of scrutiny. Delta-Northwest, Continental-United, Southwest-AirTran all had skepticism.
  • We’re taking a different path.

RI

  • You go through a period of time where the public sees intense integration. People forget everyone has issues with reservations integration.
  • Mergers are difficult, but we can’t take a break. We operate through the merger.
  • Customers won’t threat us as one airline until we act, look and feel like one airline.
  • Media will never let us live it down if we screw up.
  • 110,000 employees have to be motivated. Enough people to fill Michigan stadium.
  • 6,700 flights serving 41% of world’s population.
  • AA-US will have more than 1,500 aircraft, more than Airbus and Boeing combined delivered in 2012.

BG

  • Leadership term come from 20 airlines and governmental agencies.
  • (RI:) It’s not the first rodeo for many of us.
  • We’re working at configuring aircraft to harmonize the two fleets together as we take delivery of new aircraft.
  • Labor integration, organizational integration, leadership integration and communications vitally important to this company.
  • 29 planning teams. As many as major league baseball.
  • [It will take about 1.5 years to fully integrated AA-US–Editor].
  • Even though there is a billion dollars of value to capture here, it is easy to eat up this value if we don’t do this right. [Highly paraphrased.]
  • Took a cab in NY to US Airways and cabbie stopped at AA; we need to communicate we’re not quite there yet.
  • Guiding principles: Focus on Customer, Recognize employees as key to success, Make fast, effective decisions, Realize the value, Run two great airlines throughout the integration process.

RI

  • Our approach is to triage up front where needed. US operates world’s largest fleet of Airbus aircraft; AA is taking on Airbus. AA is heavily Boeing and US is getting out of Boeing. There is a lot here we don’t need to introduce “new” to. There’s about 20% of stuff that’s common-we ought to take advantage of that.
  • There’s a lot both carriers want to do which can be tabled until later.
  • There’s a lot we need to choose to do for the integration. We will probably rely on the bigger carrier for passenger service/touch points.
  • In a lot of respects, US will be the one to do a lot of migrating. We have experience with that.
  • About 10% at the end we need to harmonize, change to Best of Breed: product offerings, policies.
  • During first six months hope to start seeing aircraft optimization, use, earn and redeem FF miles between both airlines.
  • Getting to a single website in second six months.
  • Ultimately become single workforce, single brand, deliver single customer experience.
  • The overriding philosophy is don’t do any harm to customers.
  • We need a clear plan to switch from Star Alliance to oneworld. It won’t be simultaneous wit legal close, probably 3-6 months later.
  • There won’t be one wham-bam event on legal close.

EE:

  • US average age 49, average seniority 17 years. AA 48 and 18.
  • 10 employees at US with 50+ years of service, 11 at AA
  • One of the things our employees are thinking about is free travel. Ticketing on each up substantially.
  • Culture is a way to connect with your employees, being part of an airline is bigger than yourself. Community service. Be proud and participate.
  • AA and US have some common public service efforts.
  • Culture is also about to have fun.

Q&A

How do you make the employees believe what you say about culture, etc?

Parker: It’s a big challenge. We have the benefit now of the employees being excited about what’s happening. It will happen over time,  not over night. Our people had to do more with less, including less pay, because we didn’t have the assets of of airlines. Most of it is getting out in front of things. It’s communication primarily. It’s got to be real, not symbolic.

Eberwein: Everyone wants to be part of a winning team. They want to feel good about their company. We have to run a good operation, a profitable operation.

What is the difference between AA and US management cultures?

Parker: There are differences in the management. I know, I have been in both places. AA is more buttoned up or buttoned down and US is less so.

Fleet planning:

Kerr: Our original plan was to have 767s go out when A350s came in but those have been delayed to 2017. Now A330s are replacing them. As you start looking at the combined fleet plan, the 757s will start coming out.

Impact of FAA Sequestration

Parker: We have a number of issues with what’s going on. Complaints from flying public appear to be having effort on elected officials. I’m reluctant [to pile on]. A number of bi-partisan efforts are underway. The situation is highly unfortunate. It’s untenable. It’s unfair. It doesn’t make sense. [But he doesn’t want to pile on.]

 

One Comment on “US Airways Media Day-Part 3

  1. The Proforma Balance Sheet has interesting details on the combined company, including the combined loyalty program values to be redeemed in one year (current) or future years (long term) and the values are $4.75B vs $7.2B for the miles issued and outstanding.

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