MIAMI — On April 8, 2015 American Airlines and US Airways obtained their Single Operating Certificate (SOC) which is another major step in their merger, which is expected to conclude at the end of this year, once the two reservation systems become one and the two workforces combine contracts.
US Airways and the airlines it composed and acquired during its history will be visible on special American Airlines heritage livery jets for some time to come. Moreover, many aircraft will still be wearing the US Airways brand, while they await a new American Airlines paint job. As the “Cactus” call sign becomes “American”, we look back at US Airways from its origins to the current merger.
In 1939 All American Aviation, founded by members of the famed du Pont family and headquartered in Pittsburgh, began airmail service to communities in the Ohio River valley. In 1949, the company began passenger service and adopted the name All American Airways. In 1953, it became the Allegheny Airlines, in recognition of the geographical area at the heart of its growing network.
Allegheny received its first turboprop, the Convair 580, in 1965, and it joined the jet age when the DC-9 joined its fleet in 1966. Two years later, the airline began its first commuter service, which was operated by Henson Aviation, the forerunner of Piedmont airlines. Moreover, this marked the beginning of the network of regional airlines that would eventually become US Airways Express.
As the carrier grew, it absorbed other airlines, including Indianapolis-based Lake Central Airlines in 1968 and Utica-based Mohawk Airlines in 1972. By 1973, Allegheny was one of the largest carriers in the northeastern U.S., and the sixth largest airline in the world in terms of passenger boardings. This rapid expansion also resulted in some growing pains, such as being labeled “Agony Air” due to customer dissatisfaction.
The Airline Deregulation Act of 1978 allowed the airline to expand its route network into the southeastern U.S. To reflect this growth, the carrier assumed the name USAir. Furthermore, it added destinations in Arizona, California, Colorado, Florida, and Texas.
USAir had the distinction of being the launch customer for the Boeing 737-300, the first of the three members of the 737 “Classic” series, and participated during the development of the aircraft. The airline introduced the -300 into service on November, 28 1984 and also introduced its frequent flyer program that year. In addition, Piedmont Airlines, which would eventually become part of USAir, launched the larger -400.
In the mid-1980s, USAir embarked on further expansion, acquiring San Diego-based Pacific Southwest Airlines (PSA) in 1986 and Winston-Salem-based Piedmont Airlines in 1987. PSA gave USAir a hub on the West Coast, while Piedmont provided a presence in the mid-Atlantic. The Piedmont purchase gave USAir its first widebody, the Boeing 767-200, which operated transatlantic service from Charlotte. PSA and Piedmont operate to this day as wholly-owned regonal subsidiaries of US Airways.
By 1990, USAir had a consolidated headquarters in Crystal City, Virginia, while maintenance and operations headquarters remained in Pittsburgh. Furthermore, in the early 1990s, USAir grew its transatlantic operations by complementing the Charlotte-London service with flights to Frankfurt from Charlotte and Pittsburgh. The airline also established routes from Philadelphia to Paris and London, as well as Baltimore to London, and by the mid-1990s, the primary hubs in Baltimore, Charlotte, Philadelphia, and Pittsburgh had flights to London, Paris, and Frankfurt.
USAir also entered the Washington (National Airport)-New York (La Guardia)-Boston shuttle market by partnering with the Trump Shuttle, and marketing it as “USAir Shuttle”. In addition, the company entered into a brief transatlantic alliance with British Airways but ended up in a court battle in 1996 when British announced a new partnership with American Airlines. In 1996, the airline began service to Munich, Rome, and Madrid from Philadelphia and announced a major fleet modernization order for 400 aircraft from the Airbus A320 family, including the A319, A320, and A321 with deliveries starting in 1998.
On February 27, 1997, officially rebranded as US Airways and introduced a new dark blue livery accentuated with red and white lines, with the U.S. flag as its new logo on the tail. That same year, US Airways had full ownership of the former Trump Shuttle, which officially became US Airways Shuttle, exclusively operating Boeing 727-200s and later A320s. In 1998, the company also chose Airbus for its widebody needs with an initial firm order of seven A330s.
US Airways ventured into the low-cost market in 1998 by introducing MetroJet, which consisted of single class Boeing 737-200s to compete with low-cost powerhouse Southwest Airlines. The -200s were among the oldest aircraft in the fleet, and the airline wanted to maximize their utilization before retirement. As the first A320s began to arrive in 1998, calls began for the airline to merge with another carrier, given the high operating costs of its network concentrated in the northeastern U.S.
The first of the company’s A330-300s arrived on March 30, 2000. With a transition to an all-Airbus fleet, the company hoped to simplify fleet types and reduce costs, given their commonality and improved efficiency. Also, in the early 2000s, US Airways began service to new destinations in Europe and the Caribbean. From May 24, 2000 to July 27, 2001 US Airways and United Airlines considered merging, but factors such as labor union objections and antitrust concerns ended the plan.
The aftermath of the tragic September 11, 2001 terrorist attacks had a negative impact on most airlines, including US Airways. First, the temporary closure of Ronald Reagan Washington National Airport took away a significant portion of the network, resulting in heavy financial losses. Second, MetroJet closed with the de-hubbing of its Baltimore operation, which resulted in furloughs for thousands of employees. Finally, under such a heavy financial burden, the company entered Chapter 11 bankruptcy on August 11, 2002.
Another casualty of the post-September 11 financial difficulties was the loss of the airline’s hub in its original home – Pittsburgh. The airline attempted to negotiate lower operating fees and lease payments at Pittsburgh, but the Allegheny Country Airport Authority rejected these demands since, under antitrust rules and FAA regulations, it would have to extend the same courtesies to other airlines flying there. As a result, Pittsburgh, despite having modernized the airport especially for the airline, lost its hub status in November 2004, as the airline reallocated flights to its Philadelphia and Charlotte hubs.
US Airways exited bankruptcy in 2003 and began to look for merger partners, as well as much-needed financing. On May 4, 2004, the company became a member of the Star Alliance. It also became one of the first major airlines to eliminate pilot pensions in order to cut costs. Unable to secure any additional financing and facing labor disputes, the carrier entered a second bankruptcy on September 14, 2004. Moreover, US Airways came close to liquidation during the Christmas holiday rush of 2004, as a result of widespread employee discontent that led to a high number of personnel calling in sick.
Merger with America West
On May 19, 2005, Phoenix-based America West Airlines announced plans to merge with US Airways. Doug Parker, former American West Chairman and CEO, would run the new US Airways Group with headquarters in Phoenix. One advantage of the merger was complementary networks and similar labor costs. In August 2005, the company introduced a new livery that retained the U.S. flag as its logo. The airline name kept the US Airways name because of its recognition but retained America West’s “Cactus” call sign and “AWE” ICAO designator. Furthermore, bankruptcy officially ended on September 27, 2005.
In 2006, US Airways exceeded analyst expectations and made a profit during the first half of the year. In addition, Lisbon, Stockholm, and Milan became the latest European destinations, and the company ordered 22 examples of the newly-launched Airbus A350. US Airways also introduced heritage liveries on its A319s to commemorate Allegheny, America West, PSA, and Piedmont, as well as football team liveries from current and former hubs to include, the Phoenix Cardinals, Carolina Panthers from Charlotte, Philadelphia Eagles, and Pittsburgh Steelers. In December 2006, the Embraer 190 joined the mainline fleet, and the airline briefly considered taking over the struggling Delta Airlines.
In 2007, international growth continued with orders for the Airbus A330-200s to join the carrier’s fleet of -300s and new service to Athens, Brussels, and Zurich from Philadelphia. On September 25, 2007 America West and US Airways obtained their SOC. That same year, the two airlines’ reservation systems migrated into a single platform.
As the merger progressed, US Airways struggled in categories like on-time performance and customer satisfaction. It even took the unpopular step of eliminating complimentary beverages on domestic flights in August 2008, but backtracked and restored the service seven months later. The first good news came in 2008, when US Airways led the six hub-and-spoke carriers in the U.S. in on-time performance, while it continued to lag behind in customer satisfaction, despite starting to close the gap with other airlines.
From a labor perspective, “East” (US Airways) and “West” (America West) pilots struggled with seniority issues. The parties reached an agreement through mediation, in which a new union would be called the US Airline Pilots Association (USAPA), and it would be the sole bargaining agent for all pilots. Also in 2008, US Airways briefly flirted with United Airlines a second time for a possible merger, but the talks only lasted from late April to late May.
US Airways served London’s Heathrow Airport for the first time in 2008. All previous service dating back to the Piedmont days served Gatwick Airport. Transatlantic service continued to expand into cities like Birmingham and Oslo. Moreover, Tel Aviv became a new international destination. Also in 2008, the airline activated its new Operations Control Center in Pittsburgh for its 1,300 mainline daily flights. In October 2008, America West and US Airways formally completed their consolidation.
2009 – Present
The post-America West merger era began with what could have been a major tragedy for US Airways, but the skills and heroics of the crew of “Cactus 1549” resulted in the “Miracle on the Hudson” on January 15, 2009. Shortly after departing New York La Guardia Airport, the A320 under the command of Captain Chesley “Sully” Sullenberger experienced a bird strike that resulted in loss of power to both engines. Captain Sully was able to ditch the aircraft on the Hudson River, and all 150 passengers and five crew members survived.
By 2009, US Airways Shuttle operated Airbus A319/A320s and Embraer 190s for its network. The airline also entered the South American market with service to Rio de Janeiro from its Charlotte Hub. As part of post-merger route optimization, US Airways closed its focus cities in Las Vegas, Boston, and New York LaGuardia, while growing its focus city at Ronald Reagan Washington National Airport after trading La Guardia slots with Delta.
In 2010, US Airways considered merging with United for a third time, but those discussions only lasted two weeks, and United went on to merge with Continental Airlines. Consolidation speculation continued into 2011, as many analysts saw the merger of US Airways and one of the “Big Three” (American, Delta, and United) as inevitable. During this period, the company continued to suffer from low customer satisfaction, but it achieved its first profit since 2006.
In 2011, US Airways and Delta settled disputes that originated with their La Guardia and Reagan National slot swaps. The company also faced tough negotiations with USAPA that led to prolonged legal action. By the end of 2011, international flights out of the Charlotte hub grew to six cities in Europe and 25 in Latin America and the Caribbean.
2012 started with new merger speculation with another struggling legacy carrier – American Airlines. By the end of the year, on December 7, US Airways announced a proposal to merge with American, which was already under bankruptcy protection. Under the deal, the new airline would keep the American Airlines name and would be based at American’s headquarters in Fort Worth.
The US Airways Group and American’s parent AMR Corporation formally announced their merger on February 14, 2013. Doug Parker, who was already CEO of the US Airways Group, became the CEO of the new American Airlines Group. The U.S. Department of Justice filed a lawsuit to block the merger in August 2013, claiming it would result in less competition. Three months later, all parties reached a settlement that allowed the merger to proceed on December 9, 2013, forming the largest air carrier in the world. US Airways enters the merger with hubs in Charlotte, Philadelphia, Phoenix, and Ronald Reagan Washington National, and it has full ownership of regional subsidiaries Piedmont and PSA. US Airways and American Airlines will be fully merged by the end of this year when their reservations systems integrate and all employees fall under the same contracts.