US Airways chief known for his bold moves
His bid for Delta is in line with his belief the airline industry must consolidate to reduce capacity.
By ASSOCIATED PRESS
Published November 22, 2006
ATLANTA - When JetBlue announced in April it was launching flights to Charlotte, N.C., a major hub city for US Airways, JetBlue's CEO belittled the service passengers in that city had been getting as "substandard."
US Airways' chief executive, Doug Parker, shot back in a letter to his own employees: "US Airways is going to be here long after JetBlue."
Analysts, industry experts and those familiar with Parker's reputation said last week the 45-year-old's hostile bid for Delta Air Lines was not surprising, given bold statements like that.
"I think anybody has to be feisty to do what he's doing," said Boston University School of Management professor Allen Michel, referring to the unsolicited offer for Delta launched last Wednesday by US Airways.
Parker also has been described as genial and approachable. Observers say those qualities could help him and his Tempe, Ariz., airline win over Delta employees.
Parker, who has held management positions at Northwest Airlines and American Airlines, led America West when it bought US Airways last year and adopted the latter name. While he's still integrating the two, he says he's ready to tackle an even bigger challenge in acquiring Delta. The company would keep the Delta name, becoming the nation's largest carrier in revenue terms.
Delta CEO Gerald Grinstein, in a message to employees Thursday, responded to concerns that they had learned of US Airways' offer from news reports rather than Delta. "We had no advance warning of any kind," he said.
Grinstein had told employees in a memo Wednesday that the Atlanta-based airline is committed to its plan to emerge from bankruptcy as a standalone carrier. He also said "the history of mergers in the airline industry is almost always one of failure, with overpromise of synergies and underdelivery of results."
Parker clearly has a different view: that consolidation is the wave of the future in the airline industry. He also knows the bankruptcy process gives him an opportunity to pitch an alternative plan to Delta's creditors. Whether his bid for Delta works or not, analysts tend to agree with Parker that major carriers need to combine to reduce capacity in the industry.
Bernie Han, who has worked with Parker at three different airlines over the past 18 years, said the bold move to buy up Delta doesn't surprise him.
"Every time he gets the bigger job it seems effortless. I think it's clear he's always had the capacity to do more than his current role," said Han, a former chief financial officer at Northwest and now the CFO at EchoStar Communications Corp.
Even so, the bid for Delta poses several challenges. Those include proving to creditors that the offer is superior to what they'd get from the solo bankruptcy reorganization plan Delta plans to file, or a potential rival bid prompted by the US Airways offer. Parker also needs to nail down an agreement soon, as Delta has said it plans to emerge from Chapter 11 in the first half of next year.
US Airways also still has the America West integration to deal with. Its pilots pressed their case for a consolidated contract by taking to the picket line at the company's Phoenix and Charlotte hubs Thursday.
"It's a question of, do you think an independent restructuring can create that kind of value or is the roll-up a more compelling structure because you can get revenue synergies and force out additional costs," aviation consultant Robert Mann said about how creditors would view the Delta deal.