> > Ex-US Airways chief repeats flight pattern > > > > > > With his airline staggering, Chairman Stephen Wolf slashed costs by eliminating more than > 2,000 > > jobs and retiring scores of older aircraft. A year later, he was gone -- but not before > > collecting millions of dollars. > > > > US Airways after Sept. 11, 2001? > > > > No. United Airlines in 1993. > > > > Wolf's 37-year airline career reveals a repeated flight pattern. Namely: > > Take charge of a troubled carrier > > Slash costs and operations > > Paint the planes a different color > > Arrange a merger or buyout > > Cash out handsomely > > > > Over the years, Wolf's efforts have been rewarded with at least $55 million in stock options > and > > other incentive pay. > > > > Wolf's total career compensation amounts to more than $100 million including his annual > salaries > > and bonuses at US Airways alone. His last payment there was $15 million in severance before US > > Airways' Chapter 11 bankruptcy filing last August and before Wolf resigned as chairman when a > > reorganized airline emerged at the end of March. > > > > "There certainly are questions when the company isn't doing well, that (a chief executive) is > > awarded millions in cash or stock," said Jim Weber, a management professor at Duquesne > > University and director of its Beard Center for Leadership and Ethics. > > > > "We need to look at the disproportion of wealth given executives, in contrast to shareholders > > and employees," Weber said. > > > > Aside from the size of the golden parachute was the timing. Wolf received the $15 million > while > > US Airways was in the midst of cutting 12,500 jobs, including 3,900 locally. What's more, when > > the payment was disclosed in late February, the airline had begun to shred its pilots' > > defined-benefit pension plan because the company could not afford it. > > > > "It would be laughable if it wasn't so painful," said Robert Hartshorn, 33, of Beaver, a > > laid-off US Airways pilot. > > > > "Think about guys that have been there 15 years or so, to be told they lose their pensions and > > then hear, 'Oh, by the way, Stephen Wolf is getting $15 million.' " > > > > It was deja vu. United Airlines workers made $4.8 billion in concessions in 1993 -- months > > before Chairman Wolf cut 2,200 jobs and exited with a $37 million severance package. > > > > "Everywhere he's gone, he's gotten well-compensated," said Lynn Lenosky, a veteran US Airways > > flight attendant and former chairwoman of US Airways' flight attendants union. "But I have > > tremendous respect for him as a businessman." > > > > "I never lost as much money as I did with US Airways," said Julian Robertson Jr., whose > > investment firm was the airline's largest stockholder. "But I don't think I know too many > > executives that I respected more than Wolf." > > > > Born in 1941 to working-class parents in Oakland, Calif., Wolf has spent most of his working > > life in the airline industry, except for a brief stint loading cargo during his youth. Months > > after receiving a bachelor's degree in sociology from San Francisco State University in 1965, > he > > landed in American Airlines' training program. > > > > After 16 years learning the industry, Wolf in 1982 was tapped as president of Continental > > Airlines, then owned by Texas Air. Chairman Frank Lorenzo, known for brass-knuckles business > > tactics, fired Wolf the next year after he failed to strong-arm concessions from Continental's > > pilots. > > > > Wolf went on to turn around several major carriers. He restored money-losing Republic Airlines > > to profitability in the mid-1980s, for instance, then sold it to Northwest Airlines. > > > > He unwound the debt-crushing structure of United Airlines' parent company, the result of a > > disastrous expansion into the hotel and rental-car businesses by its previous chairman. Wolf > > sold the non-airline units, expanded United globally into lucrative markets in Latin America > and > > Europe, and oversaw a novel worker buyout of 55 percent of the company. > > > > When Wolf resigned from United in 1994, he received $37 million, mostly from cashing in the > > 250,000 stock options he was awarded for taking the job in 1987. > > > > "I have made my career taking on exceptionally high-risk jobs that in many cases no one else > > wanted," Wolf told The Wall Street Journal in mid-May. He also defended accepting generous > stock > > options for taking those jobs. > > > > "My compensation has always been tied to shareholders' fate," he said. "If we could save the > > company, we would profit along with the shareholders, and employees' jobs would be saved." > > > > Wolf, 61, is said to be living in France and could not be reached for this story. > > > > PAINTING PLANES > > > > About 20 years after leaving the loading docks behind, the 6-foot-6 Wolf got a chance to turn > > around his first major airline. He became president of Republic Airlines in 1984. Like US > > Airways, it was an amalgamation of regional airlines serving hundreds of cities. > > > > Wolf embarked on what became a familiar flight pattern. He received massive stock option > grants, > > repainted Republic's planes and overhauled routes. But the airline lacked the financial muscle > > to upgrade its fleet to compete with bigger rivals such as Northwest Airlines. > > > > Wolf engaged 1980s junk-bond king Michael Milken to assemble a hostile takeover of Northwest. > > The brazen ploy forced Northwest to take over Republic instead -- for $1 billion, or $17 a > > share, in 1986. Wolf received his first cash-out -- $2 million for selling back stock options, > > plus $1 million in severance. > > > > "He always had a reputation that he comes in, stirs things up and in the end picks up the > > airline and sells it," said Lenosky. "That was the suspicion at US Airways right from the > > start." > > > > Later in 1986, Wolf stirred up Flying Tiger, especially when he confronted its pilots for > > concessions. Frustrated in bargaining efforts, Chief Executive Wolf broke off talks and vowed > to > > shut down the cargo carrier within 24 hours. "It's over!" he said, pushing his chair from the > > table, reported The Wall Street Journal. Also exiting the room was general counsel Lawrence > > Nagin, who later filled the same role at US Airways under Wolf. > > > > Flying Tiger pilots and other work groups that year gave steep concessions -- the first in > > another Wolf pattern. Wolf could have reaped a small fortune two years later by cashing in 1 > > million stock options. But he forfeited them when he left to tackle the turnaround of United > in > > 1989. > > > > Roughly a decade later at US Airways, flight attendant Lenosky faced one of Wolf's shutdown > > threats. She and other union leaders had been negotiating with Wolf for nine months by March > > 2000. Some 9,800 flight attendants, including 3,200 here, were ready to strike if they didn't > > get a new contract. Wolf said a strike would force him to shut down US Airways. > > > > No commercial airline ever had simply closed down in response to a strike threat. At roughly > > 3:30 a.m. on a Saturday after tense hours of talks, the two sides reached a tentative labor > > agreement and averted a shutdown. > > > > "Stephen Wolf was brought in at a time (1996) when the company was in trouble and looking for > > major concessions," Lenosky said. The flight attendants balked, at first. > > > > US Airways pilots -- then numbering about 4,800 -- agreed to a contract in October 1997. It > > reduced costs enough to allow US Airways to buy up to 400 jets from Airbus. Wolf, known for > his > > taste in French wine and culture, caught flak for choosing the French-led European consortium > > over American-made Boeing. > > > > "This doesn't brand me as an American turncoat," Wolf told The Associated Press. "It brands me > > as a global businessman." > > > > US Airways' fleet was a hodgepodge of models and makes, a legacy of deals for Allegheny > > Airlines, Mohawk, Piedmont, Empire and Pacific Southwest Airlines. Standardizing the fleet > would > > cut operating and maintenance costs. > > > > Within his first year, Wolf changed the airline's name to US Airways from USAir and -- as he'd > > done elsewhere -- painted the planes, changing colors to a gray fuselage belly beneath a deep > > blue top. > > > > "His trademark was to slap a coat of fresh paint on the planes and then put a for-sale sign in > > the yard," said furloughed pilot Hartshorn. > > > > NEARLY UNITED > > > > By 1999, Wolf was shopping US Airways, discreetly. In November, he met with Jim Goodwin, who > > followed Wolf's successor as United Airlines' chairman. Secret talks about a marketing > alliance > > quickly turned into ones pursuing an outright combination. > > > > Pilot Hartshorn moved from Vancouver to Pittsburgh and US Airways employment in January 2000. > He > > had been attracted by the airline's expansion plans. But on May 24 that year, Wolf announced > US > > Airways would be sold to United for $60 a share, for a total of $11.6 billion. > > > > "US Airways was growing at the speed of sound until Wolf announced the merger. Then, they > didn't > > do anything to manage the airline for the next year," Hartshorn said, echoing many pilots' > > complaint. > > > > The deal also met U.S. antitrust enforcers' resistance. After more than a year of legal > > wrangling and several congressional hearings, the U.S. Justice Department squashed the deal in > > July 2001. > > > > Wolf, who had owned about 2.16 million shares, would have made nearly $130 million. > > > > Some market experts thought Wolf did too good a sales job on United's Goodwin. Veteran > industry > > analyst Samuel Buttrick estimated US Airways was worth $45 a share, not the agreed-upon $60. > > > > "Wolf sold the airline at a good price, but the government didn't let the deal go through," > said > > money manager Robertson. Robertson and his Tiger Management, which owned 25 percent of US > > Airways, would have made $1.5 billion on the deal. > > > > "Stephen Wolf was a very respected leader in the business and, in my book, still is," > Robertson > > said. > > > > Sept. 11, 2001, came just two months after the deal was nixed. The attacks hit US Airways > > especially hard because the carrier dominated Washington's Reagan National Airport, which was > > closed for several weeks. > > > > Wolf, who abandoned US Airways' growth track for a deal that failed, slashed one-quarter of > the > > carrier's flights and jobs to conserve cash. > > > > "On Sept. 11, I was sitting in training class," recalled pilot Hartshorn. "And four days > later, > > I was sent home." > > > > Less than a year later, despite workers granting $873 million in annual concessions, US > Airways > > sank into Chapter 11 bankruptcy. Wolf received a lump-sum retirement package of $15 million. > > General counsel Nagin was paid $5 million; former Chief Executive Rakesh Gangwal got $15 > > million. > > > > Said Hartshorn: "The thing I'd say about Wolf and all the airline leaders is that I miss > working > > for people I can trust." > > > > > > > > Plane Evacuation at Lambert > > > > Saturday night, a scare at Lambert St. Louis International Airport. Airport officials say an > > inbound US Airways flight from Pittsburgh was forced to evacuate its passengers. A caution > light > > came on in the plane's cockpit 20 miles from St. Louis. > > > > The crew landed the plane immediately and got everyone off quickly. None of the three crew or > > the 17 passengers was injured. It's not clear yet what was wrong with the plane. > > > > > > > > > > US Airways' plan to build a regional future > > Carrier's plans depend on whether business travelers will continue to pay top dollar for > > frequent flights > > > > US Airways has made it clear that, if it is to remain a hub carrier in Pittsburgh, it will do > so > > on the wings of regional jets. Earlier this month, the airline struck deals worth $4.3 billion > > for the purchase of 170 regional jets and indicated that many of those will land in > Pittsburgh, > > slated to serve as headquarters for its newly created MidAltantic Airways unit, the > centerpiece > > of the airline's plans to expand regional jet operations. > > > > But some question whether the airline's turnaround strategy, built on deploying hundreds of > > regional jets seating 50 to 75, will work in an environment of increasing demands for the > > cheapest possible tickets, even from business clients once willing to pay top dollar to book > > flights at the last minute. > > > > Some 65 percent of the passengers who fly on regional jets are business travelers, and the > > Internet has given them more choices than ever to buy cheap tickets -- and they are doing it, > > said Kevin Mitchell, president of the Radnor, Delaware County-based Business Travel Coalition. > > "The Internet gives the business traveler the feeling that he has been ripped off. He now > > understands the air fare structure," Mitchell said. __________________________________ Do you Yahoo!? SBC Yahoo! DSL - Now only $29.95 per month! http://sbc.yahoo.com