Sky Talk

US Airways CEO Doug Parker testifies at Senate hearing, defends slots at Reagan National

US Airways chief executive Doug Parker a testified at a Senate hearing on Wednesday, defending the proposed merger of their two airlines.

Questions arose about slots at Washington D.C.'s Reagan National airport and if the merged carrier should divest any of those slots to competitors.

The Government Accountability Office, also reviewed the $11 billion deal, and said in its testimony to the Senate committee that changing business conditions could cause the new American to shift its hub operations from Charlotte to Miami.

"The combined airline could be expected to rationalize its network over time,” the GAO wrote, “including where it maintains hubs.”

Parker defended the merger's benefits to consumers, noting that several small and mid-sized communities that are currently served by US Airways are not served by American and that will create new connecting route opportunities.

"Because we have been able to build a robust slot portfolio, US Airways currently serves 40 small- and medium-sized communities from Reagan National Airport. No other airline at Reagan provides any significant service to smaller communities, such as Charleston, West Virginia and Des Moines, Iowa," Parker said in his written testimony. "At DCA our customers benefit from access to and from a wide number of small cities and we are committed to small city service for the long term."

Click here to view a replay of the hearing. And to view written testimony submitted by Parker and by American Airlines' general counsel Gary Kennedy, check here.

-Andrea Ahles

JetBlue tops customer satisfaction index, United on the bottom

JetBlue Airways and Southwest Airlines continue to please passengers with their air service while United Airlines continues to struggle to satisfy customers.

According to the American Customer Satisfaction Index, the airline industry improved its overall customer satisfaction score by 3 percent to 69. However, it still has one of the lowest customer satisfaction rates of the industries surveyed, beating only subscription TV and Internet service.

"Crowded seating, rising ticket prices, extra fees and poor service all contribute to a rather dreary travel experience," says ACSI founder Claes Fornell. "Airlines continue to improve service for business travelers, which is important since they are the most profitable customer group. Still, their satisfaction remains at a level slightly below that of other passengers."

The survey is based on interviews with almost 9,000 customers contacted between January and March about their experiences. JetBlue's score of 83 placed it in the top spot of the airline industry.

Southwest increased its score by 5 percent as it has worked on integrating AirTran Airways which it purchased in 2011. Fort Worth-based American Airlines ranked third from the bottom with a satisfaction score of 65.

Passengers were very satisfied with airlines' on-time performance and the ease of the check-in process, according to the ACSI survey. Air travelers were less happy with seat comfort and the quality of in-flight services, the survey found.

Airline	2012 score	2013 score	% change
JetBlue	81	83	2
Southwest	77	81	5
All Others	74	72	-3
Delta	65	68	5
American	64	65	2
US Airways	65	64	-2
United	62	62	0
Entire industry	67	69	3

-Andrea Ahles

American plans to add more seats to MD-80 and 737s

American Airlines plans to add more seats to its Boeing 737 and MD-80 fleets, according to a government filing made on Wednesday.

Vice president of flight services, Lauri Curtis, outlined the news in a letter sent to employees, saying the carrier hasn't determined yet how many seats it will add.

"On Tuesday, at a DFW Town Hall meeting with the newly announced Leadership Team for the new American, there was discussion about a decision to add seats to the MD-80 and 737 fleets and I wanted to share a recap of that with all of you. As you probably know, we are constantly taking a look at what our operation needs, and that includes how our fleet is configured. And sometimes, we make adjustments when we think it helps match supply to demand but can still be competitive. So from where we stand today, we expect to add seats to the 737 and MD-80 fleets, but we haven’t yet determined the right number of seats, and as a result, the impact on revenue and cost.

"Of course we are talking about adding seats and that automatically means the additional FA on a 737 regardless of the number of seats added. This will allow us to provide a higher level of onboard service while meeting the FAA staffing requirements. While this would obviously be good news for all of us, we are still working through the specific details and timing. So stay tuned! I’ll keep you posted!"

American's current 737 aircraft have 148 or 150 seats and it operates 195 of that aircraft type. The carrier also has 190 MD-80s, although it has been retiring those planes at it receives newer Boeing 737s and plans to add Airbus A319s to the fleet later this year.

Southwest Airlines has been squeezing six more seats into its Boeing 737s as part of its interior remodeling of the cabins that started in 2012. Its renovated 737s now have 143 seats.

-Andrea Ahles

Horton says he's grateful for departing American executives work as the airline operated in bankruptcy

American Airlines chief executive Tom Horton told employees that he is grateful for the work performed by departing American executives while the Fort Worth-based carrier has been in bankruptcy.

He also acknowledged in a message sent to workers on Monday that the new leadership team was made up primarily of executives from US Airways, which will merge with American later this year. US Airways chief executive Doug Parker will lead the newly combined carrier.

"As CEO of the merged company, Doug's first role is to choose the people to execute his plans to build a strong and successful future for the new American," Horton said.

Keep reading for the full letter from Horton.

-Andrea Ahles

 

Dear American Team:

 

Today marks an important milestone toward completion of our merger with US Airways. Doug Parker announced the leadership team who will lead the new American when the merger is complete, and we also named the new Board of Directors for the combined company. 

The new leadership team is composed mostly of leaders who have worked closely with Doug over the years, along with senior leaders who now serve on American’s team. As CEO of the merged company, Doug’s first role is to choose the people to execute his plans to build a strong and successful future for the new American.

Many on our current leadership team will be leaving the company after the merger closes later this year. To them I offer my gratitude for their extraordinary dedication over many years, and in particular, over the past year and a half to turn our airline around, creating a strong and renewed American poised for a successful merger.  In the weeks and months ahead, these leaders will continue to work with their counterparts at US Airways to ensure a successful merger integration.

Today’s announcements move us a step closer to a new chapter at American. I’m looking forward to serving as Chairman of our new Board after the merger closes. As Chairman, my first role will be to bring the new Board together in its mission to help guide the new American to a very bright future. 

There are no doubt more changes and challenges ahead, but the people of both companies have every reason to be optimistic about the future of American and the opportunities it will create. As we bring the restructuring to a successful close, we are building momentum which will only grow with the merger.

The American team across the world has shown tremendous spirit and strength. You should be very proud of your hard work to put American back on top.  

Thanks for all you do!

Tom

 

Parker thanks departing American executives, says it's time to move forward

In a letter sent to employees of US Airways and American Airlines, US Airways chief executive Doug Parker thanked departing American executives and said it is time to keep moving forward.

"We anticipate naming additional officers in the weeks ahead and will have the entire officer team selected by the time the merger closes, if not sooner. Looking ahead, I am confident that the new American will continue to provide great leadership opportunities for managers from both companies. In the meantime, please keep up the great work in support of our customers," Parker said in the letter.

Keep reading for the full letter from Parker.

-Andrea Ahles

 

June 10, 2013 

Dear American and US Airways Team Members,

Today I am pleased to announce the senior leadership team that has been selected to lead the new American Airlines. The team we are naming today is comprised of senior leaders from both American and US Airways. As individuals, they each have outstanding industry expertise and experience. Collectively, they form the best team in the industry. The team will be comprised of:

 

• ·         Scott Kirby: President
• ·         Elise Eberwein: Executive Vice President, People and Communications
• ·         Bev Goulet: Chief Integration Officer
• ·         Robert Isom: Chief Operating Officer and Chief Executive Officer of US Airways, Inc. post-close
• ·         Steve Johnson: Executive Vice President, Corporate Affairs
• ·         Derek Kerr: Chief Financial Officer
• ·         Maya Leibman: Chief Information Officer
• ·         Will Ris: Senior Vice President, Government Affairs

 

Scott, Elise, Robert, Steve and Derek will join the new American from US Airways. Bev, Maya and Will join from American.

I also wanted to let you know that Dan Garton will step down as President and Chief Executive Officer of American Eagle Airlines later this year. We will name a successor prior to Dan’s departure.

I could not be happier about this team. They are an intelligent, results-oriented and energetic group who enjoy working collaboratively. They are experienced airline executives who understand and love our business. They care about our customers and are dedicated to providing industry leading customer service with an unwavering commitment to safety. They understand they work for the shareholders of the new American and that their job is to reward the shareholders’ confidence in all of us.

And…they know that the only way they can accomplish all of those things is by engaging, motivating and respecting the more than 100,000 hard-working team members of the new American. Our job is to support all of you – to give you the tools and information you need to do your jobs and then let you do it as the exceptional and experienced group of aviation professionals you are. This team was built to do just that.

Mergers unfortunately result in departures, and there are some on both teams, but I want to use this opportunity to specifically thank some of the outstanding senior executives at American. The American restructuring is far and away the most successful in aviation history and it would not be possible without the exceptional and dedicated work of people like Dan Garton, Bella Goren, Gary Kennedy, Denise Lynn, Jim Ream, Jon Snook and Virasb Vahidi. We are grateful for their phenomenal work and dedication and are committed to building on the foundation they have put in place.

It is time to move forward and this announcement is a key step on the path. The merger is progressing well and we continue to expect it will close in the third quarter of this year. We anticipate naming additional officers in the weeks ahead and will have the entire officer team selected by the time the merger closes, if not sooner. Looking ahead, I am confident that the new American will continue to provide great leadership opportunities for managers from both companies. In the meantime, please keep up the great work in support of our customers.

I am excited about today’s announcement but even more excited about the years ahead and the opportunity to work with all of you. In fact, I can’t wait to get started. Thank you so much for your support and your commitment to the new American Airlines – we will be one team soon.

Doug

 

American-US Airways name new board of directors

The combined American-US Airways named their new board of directors on Monday, bringing on three existing US Airways directors and two American directors.

The new board also consists of five independent directors. The merger of the two carriers is expected to close in September.

Alberto Ibarguen and Ray Robinson were selected from American's current board while Matthew Hart, Richard Kraemer, Denise O'Leary were picked from US Airways existing board.

The independent directors named to the board include John Cahill, executive chairman of Kraft Foods, James Albaugh, senior advisor to Blackstone Group and a former Boeing executive, Jeffrey Benjamin, a senior adviser to Cyrus Capital Partners, Michael Embler, chief investment officer of Franklin Mutual Advisers, and Richard Schifter, a partner at Fort Worth's TPG Capital.

American's creditors committee and an ad hoc committee of creditors were involved in the process of selecting the five new independent board members.

As previously announced, American chief executive Tom Horton will become non-executive chairman of the board while US Airways chief executive Doug Parker, who will lead the new American, will also have a seat on the board.

-Andrea Ahles

American-US Airways announce new management team, includes 5 US Airways execs and 3 American execs

American Airlines and US Airways announced their new executive team on Monday morning, naming five US Airways executives and three American executives to lead the combined carrier.

"This announcement is another step forward in creating the new American Airlines and opening a new chapter for its more than 100,000 team members," said US Airways chief executive Doug Parker, who was previously announced as the new CEO of the combined carrier. American chief executive Tom Horton will become non-executive chairman of the board, which was stated when the merger was announced in February.

The new executive team includes:

-Scott Kirby,45, as president. He is currently US Airways president.

-Elise Eberwein, 48, will be executive vice president of people and communications. She is US Airways' EVP of people, communications and public affairs.

-Beverly Goulet, 58, will take on the role of chief integration officer. She is currently American Airlines' treasurer.

-Robert Isom, 49, will become chief operating officer. He currently holds the position at US Airways.

-Stephen Johnson, 56, will be executive vice president of corporate affairs, a position he currently has at US Airways.

-Derek Kerr, 48, was named chief financial officer. He is currently the CFO at US Airways.

-Maya Leibman, 47, as chief information officer. She is currently CIO at American.

-William Ris, 65, will be senior vice president of government affairs, a position he has at American.

"As we bring the restructuring to a close, the new American is strong, renewed and positioned for a successful merger," Horton said in a statement on Monday.

American Eagle chief executive Dan Garton plans to step down from leading the regional carrier owned by AMR Corp. later this year. Parker said he will name a replacement for Garton at that time.

Not included in the executive team are several American executives including chief financial officer Bella Goren, general counsel Gary Kennedy, senior vice president of people Denise Lynn, senior vice president of operations Jim Ream, senior vice president of customer service Jon Snook and chief commercial officer Virasb Vahidi.

-Andrea Ahles

Judge sets August 15 date for AMR bankruptcy confirmation hearing

U.S. bankruptcy judge Sean Lane has set an August 15 date for AMR Corp.'s confirmation hearing.

At the hearing, the court will consider confirming the plan if enough creditors have voted in favor of the plan that will allow AMR to exit bankruptcy.

American Airlines' parent company is now allowed to begin soliciting votes for its reorganization plan which includes merging with US Airways. The Fort Worth-based carrier will send out voting packages by June 20.

The voting deadline is July 29, the court order filed on Friday said.

"This is a significant step forward in our efforts to complete the most successful restructuring in aviation history," said AMR chief executive Tom Horton. "The proposed merger is expected to maximize recoveries for all of the company's economic stakeholders."

The judge approved AMR's disclosure statement at a court hearing earlier this week but did not rule on Horton's executive compensation package of $20 million. 

US Airways chief executive Doug Parker, who will be chief executive of the newly merged carrier, has not yet announced the new executive team for American-US Airways, although an announcement could come early next week.

-Andrea Ahles

Judge approves AMR's disclosure statement

U.S. bankruptcy judge Sean Lane approved AMR Corp.'s disclosure statement which outlines the Fort Worth-based carrier's restructuring plan.

The parent company of American Airlines plans to merge with US Airways as it emerges from bankruptcy. With the approval of the disclosure statement, AMR will meet with creditors who will vote on the reorganization plan later this summer.

"We’re pleased the Court has approved the Disclosure Statement, allowing us to move forward with our restructuring and our planned merger with US Airways," said American spokesman Mike Trevino. "Our Plan of Reorganization will maximize recoveries for all of our economic stakeholders and provide the foundation for a stronger future for our people and our customers."

-Andrea Ahles

AMFA says NMB denied its efforts to be placed on American mechanics' union representation ballots

The Aircraft Mechanics Fraternal Association said federal labor regulators have denied its request to be a part of a union representation election of American Airlines' mechanics.

On Tuesday, the International Brotherhood of Teamsters filed for a representation election with the National Mediation Board. AMFA then asked the NMB to "obtain intervenor status" in the election.

Currently, American's 11,000 mechanics and related employees are represented by the Transport Workers Union. The Teamsters and AMFA have both undertaken campaigns to get the mechanics to switch unions as the Fort Worth-based carrier prepares to merge with US Airways. Mechanics at US Airways are currently represented by the International Association of Machinists.

AMFA says that the NMB applied a technical rule that required the union to present additional authorization cards from mechanics on the same day that the Teamsters filed of the election and American produced an eligibility list to the NMB.

The union's national director, Louie Key, said he was disappointed with the NMB's ruling.

"We were approached some time ago by mechanics at American Airlines who were unhappy with their current representation, and concerned about what representation would be like should the Teamsters be successful in their drive," Key said.

The NMB, which oversees union representation elections, will review the Teamsters' application to see if the union collected authorization cards from over 50 percent of the mechanics and related employees at American. If it is determined that the Teamsters met the requirement, a representation election would be held later this year.

-Andrea Ahles