Watching, Waiting.

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Author: Fiorino, Frances1

The US Airways/America West proposed merger is no sure bet. The deal, under optimum circumstances, will not be completed for 2-3 years-or maybe never, if another bidder emerges.

And that could happen when US Airways submits its restructuring plan to the U.S. Bankruptcy Court. The planned merger is part of US Airways Chapter 11 reorganization, and the go-ahead is contingent on the court's approval. The court will review the plan and open it to a 30-day competitive bidding process. What company or companies might enter the arena is a matter of speculation. If no bidders appear, the two airlines are free to pursue the merger.

Meanwhile, both airlines are maintaining close dialogues with their workforces, who are concerned about job security. Following the merger announcement, America West held a web-based Q&A session with employees. Executives fielded more than 450 questions and continue to post information on the employee hotline.

One participant queried how management planned to combine the diverse cultures of the two airlines "into a force that competes with other airlines, but doesn't compete internally."

America West CEO Doug Parker, who will become CEO of the new entity dubbed "US Airways" said there was no doubt the culture combination would be "a challenge. … During the 2-3-year integration period, the plan is to take it slow … and work together to create one airline that is profitable … and more successful than either of us could have done on our own."

The two-is-better-than-one philosophy applied to other matters as well, such as how employees are expected to respond when passengers ask about the merger. "The combined airlines will offer employees and customers a more stable future than either airline could on its own" says Parker.

Regarding the status of regional partnerships, Parker said that Mesa Airlines holds contracts with both America West and US Airways and will continue to feed into the network. Air Wisconsin will also feed into the combined system. The allocation of flying among Mesa, Air Wisconsin and others has not been determined.

Parker indicated pilot training and cockpit procedure issues have not yet been decided. He says no US Airways aircraft would be flown by AmWest crews until the merger gets final approval and that details about the final route network and certain operational issues are pending.

And the list of government approvals is long. The Justice Dept. is to review the competitive nature of the transaction; the Transportation Dept., the ownership, economic fitness and international routings; the Securities and Exchange Commission, the financial aspects. And, of course, the Bankruptcy Court has to approve the merger. The Air Transportation Stabilization Board will have to approve the deal as well, because both airlines have outstanding loan balances. Asked by an employee about the chances of government shooting down the deal, Parker responded that he was focused on "getting through the bidding period."

If the deal wins approval, management of both airlines will be integrated and matched to appropriate positions. As to how to implement that difficult mix, Parker quoted Good to Great author Jim Collins, discussing leading through change: "Get the right people on the bus and then figure out what seats to put them in."

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By Frances Fiorino, WASHINGTON