US Airways CEO Doug Parker, in Charlotte Thursday to pump up support for his pending merger with American Airlines, made it clear that his airline expects to have a big say in choosing the successor to longtime Aviation Director Jerry Orr.
A bill to transfer control of Charlotte Douglas International Airport from City Council to a new, independent authority is working its way through the state legislature. The city is spending $150,000 to study the proposed change, but so far hasn’t been able to stop the legislation.
Parker, whose airline is the airport’s largest tenant by far, hasn’t taken a position on the bill. But he said Thursday it’s very important to Tempe, Ariz.-based US Airways that the next aviation director enjoy the same level of autonomy that Orr did for decades, and that the airport remain a low-cost hub.
“We think the world of Jerry,” Parker said of Orr. The 72-year-old aviation director has run the airport since 1989, and indicated that he might step down in the coming year.
Charlotte Mayor Anthony Foxx said later Thursday that he supports giving US Airways a seat at the table when it comes to selecting the new aviation director.
“Doug is exactly right. There is no question that any succession planning at the airport should include our major stakeholders, especially US Airways. That’s been my long-held position,” Foxx said in an emailed statement.
The Observer reported Sunday that a tense meeting between former City Manager Curt Walton and Charlotte-based US Airways official Chuck Allen about picking Orr’s successor fueled the current push to establish a new regional airport authority.
“I wasn’t there, I don’t know. I’m not trying to disavow it,” Parker said of that meeting. “But Chuck speaks for all of us...If any of us were in a meeting and there was a suggestion that Jerry was going to leave, if I would have been there I would have said, ‘We’d like to have some input....That’s a really important job.’”
According to an account of the meeting from Stan Campbell, a former Charlotte City Council member who is backing the authority push, Allen wasn’t satisfied with Walton’s answer. “And (Allen) said they basically said, ‘Thanks for sharing, don’t let the door hit you on the way out. That’s not your business, that’s our business,’” Campbell told the Observer.
While stressing that he wasn’t at the meeting, Parker told the Observer that would have raised concerns for US Airways.
“If indeed we were then told ‘You’re not going to have any input,’ I can imagine we might have taken that negatively,” Parker said.
He said picking Orr’s successor isn’t US Airways’ job, but he said the airline deserves to have its voice heard. That could mean having a seat on any selection committee and the opportunity to interview and suggest candidates.
“I do think whoever’s job it is (to pick a successor) would want our input, and if they didn’t, that would start to sound like a difference in their relationship versus what we’ve seen in the past,” Parker said. “I think it’s a fair request.”
Airline’s growth in Charlotte
Thursday marked Parker’s first visit to Charlotte since the merger with American Airlines was announced Feb. 14. He met with business leaders, employees and reporters to tout the benefits of the merger he has been working on for more than a year. A longtime advocate of industry consolidation, Parker began pushing for a merger with American Airlines as soon as that carrier entered bankruptcy protection in November 2011.
The merger still must be approved by federal antitrust regulators and a bankruptcy judge. Parker said Thursday the airline expects to complete the merger in the year’s third quarter, but fully combining the two carriers is expected to take more than a year after that.
US Airways operates about 90 percent of daily flights at Charlotte Douglas, which is owned and operated as a city department. The combined airline will have more than 650 daily flights from Charlotte – about 94 percent of the airport’s total. About 75 percent of US Airways passengers at Charlotte Douglas are connecting to other destinations.
US Airways has grown dramatically at Charlotte Douglas, becoming the fourth-largest single-airline hub in the world when measured by departures, behind Delta Air Lines in Atlanta, American in Dallas/Fort Worth, and United in Houston.
That business model works, Parker said, only because Charlotte Douglas is the lowest-cost hub of any major airport from which to operate. Those pushing an airport authority have suggested costs could rise under city management.
Parker said he hasn’t heard specific concerns about increasing costs at Charlotte Douglas, but that if costs rose significantly, flights could be cut.
“If Charlotte were to lose its low-cost status, that would affect some of the flying,” he said. “It’s just math.”
He also said the ultimate structure of airport governance doesn’t matter to US Airways – but keeping the airport efficient does. Advocates for an airport authority have said recent city decisions, such as putting Charlotte-Mecklenburg Police in charge of airport police, have infringed on the airport’s autonomy and increased costs.
“We’re not taking sides. All we want is wherever this ends up is to result in the airport being as efficiently run as it has been today,” Parker said.
“We’re not neutral. Neutral sounds like we don’t care. We care a lot. What we care about is that wherever it ends up is consistent with everything we’ve seen so far...What we like is the current model.
‘Keeping all the people’
Putting US Airways and American Airlines together will mean more options for travelers in Charlotte, Parker said. The combined networks will offer travelers on each airline new destinations. Large-scale cuts won’t be necessary, Parker said, since only 12 of the company’s routes directly overlap.
“We have been extremely pleased with our performance at Charlotte,” Parker said. The $1 billion worth of synergies anticipated from the merger are based mostly on generating more revenue, not cutting costs.
The new airline will be called American Airlines, and will be based at American’s current headquarters in Fort Worth, Texas. Parker will be CEO of the combined company, while AMR Corp. chief executive Tom Horton will become non-executive chairman.
US Airways has more than 7,100 employees based in Charlotte. Parker said most of the redundant employees US Airways-American Airlines will look to eliminate are in upper-management positions. Since Charlotte’s US Airways employees are mostly operational – pilots, flight attendants, training and maintenance positions – Parker said he doesn’t expect any local job cuts.
“We’re keeping all the airplanes, keeping all the people,” Parker said. Some other cities will see cuts. Only one flight operations center is needed, so either US Airways’ center in Pittsburgh or American Airlines’ center in Fort Worth will likely remain, and Tempe will lose its US Airways headquarters.
But Parker remained adamant that Charlotte will benefit.
“The merger is good for Charlotte,” Parker said.
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