Mesa CEO Jonathan Ornstein Admits "Biggest Mistake" of Career

Say what you will about Mesa's top guy, Jonathan Ornstein, the man speaks his mind. In a candid interview with me today, Ornstein admitted that Mesa's decision not to invest in US Airways during the Star Alliance member's 2005 exit from Chapter 11 bankruptcy protection and merger with America West Airlines was a big ole mistake.

"Clearly the company would be in far different shape if we had in fact invested in US Airways," says Ornstein.

He adds: "I would say probably the single biggest mistake in my career was not making that investment..."

A number of outside investors were involved in the US Airways/America West deal, including Air Wisconsin, which, as one insider puts it: stayed in business, got a new contract and on top of that, made a handsome return on its investment.

There is also no doubt that Mesa has had a rocky time of late. Its profitability has taken a hit, and its reserves have depleted after being ordered to post a $90 million bond as security for a judgment against the company in favor of Hawaiian Airlines (you'll recall how things got rather ugly in court with Hawaiian accusing Mesa's former CFO Peter Murnane of spoiling evidence and the Phoenix-based regional arguing that he was deleting pornographic content from work computers).

Lest you start counting Mesa out, however, the company is vigorously defending itself and feels confident it will eventually prevail. Remember also that Mesa boasts feeder deals with Delta, United and US Airways (it does admit that 50-seat flying for United has been "significantly unprofitable").

To be fair, things haven't been all sweetness and light since US Airways exited bankruptcy. Merged labor deals continue to appear out of near-term reach for US Airways. And the carrier has faced quite a lot of negative press about operational disruptions, etc (especially in Philly). But let's give credit where credit is due. That was one sweet honey-pot of a merger deal.

(Ornstein photo from official bio at http://phx.corporate-ir.net/preview/phoenix.zhtml?c=78947&p=irol-govBio&ID=136195 )

US Airways Admits "Britney Spears-Like" Spiral, But Manages To Cut More Than Hair

When US Airways began trading as “LCC” following its September 2005 exit from bankruptcy and merger with America West Airlines, the carrier wanted all and sundry to believe it deserved the distinction of being called a low-cost carrier.

Fast-forward to December 2007, and it’s clear that the carrier has a long way to go before its ticker symbol matches its credentials. Major summer disruptions, significant labor issues and an attempted gate grab at Philly led to plenty of negative press for US Airways in 2007.

That said, I have got to hand it to the carrier for admitting that it fouled up this year, and showing a taste of the casual corporate culture normally attributed to true low-cost carriers like Southwest Airlines.

A few weeks ago, I received an invite to attend US Airways’ annual media day on February 28 in Tempe, Arizona. In it, US Airways' corporate communications team assures: “Yes, we are still here and kicking...and still LOVING our jobs in spite of spiraling Britney Spears-like during the past year!

“With res migration, operational challenges in the Northeast and the slow pace of labor contracts (just to name a few). At least we didn’t shave our heads, though.”

I’m grateful they didn’t shave their heads too. But let’s look at what they did shave – costs! US Airways saw a sharp improvement in its third quarter earnings, posting a net profit of $177 million versus a net loss of $78 million for the year-ago quarter.

The $255 million year-over-year improvement was achieved on a 2.3% rise in revenue to over $3 billion, and a 4% reduction in expenses to $2.8 billion.

US Airways might not yet be a low-cost-carrier in the classic sense (is there a classic sense anymore?…a question for another time) but if it can keep a tight control on costs, its LCC ticker symbol might not seem so out of place. (Photo from BritneyZone.com)

U-Turning Back to China: US Airways Vows Commitment to Philadelphia-Beijing

Should further evidence be needed to prove that US Airways has no intention of withdrawing plans to offer Philadelphia-Beijing service, one should look no further than the carrier’s latest filing to the US DOT.

Replying to a request by Maxjet Airways for back-up authority to US Airways’ China rights, the Star Alliance member tells the DOT: “Maxjet’s assertion that US Airways is not committed to the City of Philadelphia and Philadelphia-Beijing service is wrong.

“US Airways’ discussions with the City of Philadelphia are intended to ensure that sufficient gates are available so that the company can operate current and future international services from Philadelphia, including service to China.

"It would make little sense for US Airways, or any carrier, to bargain for additional international gates to support a service it does not wish to operate.”

The filing follows US Airways' announcement that it has delayed a decision on withdrawing Philly-Beijing until the Pennsylvania city's Mayor-elect Michael Nutter can see what might be done about gate space at the airport (the whole reason for US Airways' gripe in the first place).

For the record, US Airways told its employees in a recent newsletter that it has informed the airport authority, city and Pennsylvania Commonwealth officials "that if the airport moves Delta domestic flights to three international gates, we will have to reconsider international expansion from Philadelphia next year, and withdraw our authority for Philadelphia-China service that we hoped to begin in spring of 2009”.

Delta made the move last week.

Peddle fast and backwards.

Nutter Takes the Cake; Convinces US Airways to Hold-off on Decision to Withdraw Philadelphia-Beijing Plan

Philadelphia’s Mayor-elect Michael Nutter must be a powerfully persuasive guy. He has apparently succeeded where Senators Arlen Specter, Bob Casey and a host of state and local officials have floundered – convincing US Airways to delay a decision on withdrawing plans for offering nonstop service between Philadelphia and Beijing.

“Mayor-elect Nutter has asked us to ‘refrain from taking action’ until he and his staff have time to study the gate issue and we will honor that request,” says US Airways in a statement.

No doubt US Airways is glad he asked. The request could not have been any better timed. For the moment, it relieves US Airways from making good on a threat to scuttle Philadelphia-Beijing service should Delta Air Lines move over to Terminal A-East – which Delta did last night!

Just what remedy might Nutter produce to satisfy US Airways, which claims its international growth is being hampered by Delta’s move?

Previous ideas that have been floated – and ceremoniously rejected by one party or another - include constructing an additional wing, as well as building a brand new terminal at the airport.

Referring to the latter plan, Specter last week said: “Well I don’t know that I’m going to back federal expenditures on a new terminal for Philadelphia with the way that this company [US Airways] conducts itself.”

According to US Airways, Nutter and his team will “evaluate options that would meet the dual goals of expanded domestic gate capacity for new domestic service and dedicated gates to allow US to jointly grow Philadelphia as an international hub”.

It all sounds so simple. And maybe it will prove to be just that.

Does anyone really believe US Airways will give up its China rights, flying in the face of all those Philadelphians who supported its application to the DOT? Or that US Airways will allow Maxjet Airways to slip in and take the authority?

Maxjet has already called on the DOT to investigate US Airways’ threat, and to give the all-premium operator back-up authority to fly Seattle-Shanghai.

From The Horse's Mouth: US Airways Confirms Plan To Scuttle Philadelphia-Beijing if Delta Makes Terminal Move

Lest there be any lingering doubt that US Airways has in fact threatened to scuttle plans for serving Philadelphia-Beijing, the carrier released the following statement to employees:

“…The Philadelphia Inquirer reported on Wednesday [November 7] that US Airways may give back its authority to fly PHL-China because international gates may not be available. This is the result of decisions by PHL airport officials to boost domestic flying in Terminal A at the expense of international operations.

“These news reports are true, and may become an unfortunate reality. We’ve told the airport authority, city and Commonwealth officials that if the airport moves Delta domestic flights to three international gates, we will 1) have to reconsider international expansion from PHL next year, and 2) withdraw our authority for PHL-China service that we hoped to begin in spring of 2009.”

“We’ve pledged that we wouldn’t subject our customers or employees to an unreliable international operation again. We haven’t given up. US Airways and Philadelphia worked hard to win this award together, and in that spirit of partnership, we hope to find a solution.

“We’ll continue to work for an agreement right up until the time the airport finalizes its decision, and we’ll keep employees posted as these events unfold.”

US Airways’ threat is being made in response to Delta's move tomorrow from Philadelphia’s Terminal E to Terminal A-East, which will make more room for Southwest Airlines at Terminal E, and strip US Airways of three of 16 widebody gates at the international concourse.

Last week, during a heated joint press conference between Senator Arlen Specter and US Airways CEO Doug Parker, the former likened US Airways' threat to extortion. At that time, Parker did not outright confirm the accuracy of the Inquirer's report, but said: "What we have simply said, and very careful to say in a way that we’re not trying to threaten anybody, simply to give facts that if indeed we have fewer gates than we had last summer, not only can we not expand, we are going to have to contract on our international operations."

Delta confirmed today that it plans to move to Terminal A-East tomorrow.

Parking in a Pile: US Airways CEO Faces the Specter of Common Sense

Every now and then, when I emerge from my home office in Lancaster County, outside of Philadelphia, Pennsylvania, I catch a whiff of the Dairy Farm down the road. It’s a powerful scent, but it’s no longer entirely unpleasant. My tolerance for shit, it seems, has increased.

Why then did I find yesterday’s joint press conference of Senator Arlen Specter and US Airways CEO Doug Parker so uncomfortable to watch? Perhaps it’s because a 77-year lawmaker, who has battled a brain tumor, bypass heart surgery and Hodgen’s Disease, with somewhat halting speech was able to back Parker into a corner, and make his carefully tailored explanation for why US Airways is threatening to withdraw plans for Philadelphia-Beijing service seem, well, foul-smelling.

US Airways’ threat, by the way, is being made in response to Delta Air Lines' move next week from Philadelphia’s Terminal E to Terminal A-East, which will make more room for Southwest Airlines at Terminal E, and strip US Airways of three of 16 widebody gates at the international concourse.

It’s a deal struck by Philadelphia a couple of years ago when US Airways was floundering under its second Chapter 11 bankruptcy filing, and made sense for the airport at the time, Parker admits. Now-profitable, the dominant carrier at Philadelphia doesn't quite see the sense anymore. In addition to its warning about Beijing, the carrier says it may have to shrink its entire international operation at Philly, and divert service to its Charlotte and Phoenix hubs.

The most-talked-about moment of the press conference came when Specter – still furious over US Airways’ planned draw-down at Pittsburgh – responded to the carrier's new Phillly threat by saying: “In talking to Mr Parker, I said to him, and I don’t use this word lightly, it sounds like extortion.”

But for me, things turned most interesting at the end.

Asked repeatedly by Specter if US Airways – which claims to have a bevy of solutions to solve the gate problem - has ever in fact offered to give up two or three of its total 67 domestic gates to facilitate Delta’s plans, Parker hemmed and hawed and finally said: “I don’t know that we said that specifically because there are other airlines flying less domestic than we do.”

Specter retorted: “You don’t know. That’s the answer.”