USAir decides on Stephen Wolf as new CEO Turnaround artist choice of panel and of departing Schofield

Some analysts skeptical

One notes reputation as a boss 'who can't get along with labor'

January 17, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

Stephen M. Wolf, a former head of United Airlines and a turnaround artist in the nation's troubled airline industry, was tapped yesterday to become the new chairman and chief executive officer of USAir Group Inc.

The announcement by the Arlington, Va.-based carrier ends a search that began in September when Seth E. Schofield, 57, announced his retirement. That effort was suspended for nearly two months last fall while United explored a possible takeover of USAir, which handles half the 31,000 daily passengers at Baltimore-Washington International Airport.

Known as an aggressive yet low-keyed executive whose relationship with labor has sometimes been rocky, Mr. Wolf has been credited with reversing the declining fortunes of several airlines.

"He has engineered turnarounds at several major, very troubled companies," said Daniel M. Kasper, a transportation consultant with Coopers & Lybrand, Boston. "He had to be on anybody's short list."

Indeed, USAir officials said yesterday that the 54-year-old Mr. Wolf was the top choice of the board of directors' search committee and of Mr. Schofield, whose failure to secure critical concessions from the airline's unions was a significant factor prompting his retirement after 38 years with USAir. Mr. Wolf will take over the airline on Monday.

According to Richard M. Weintraub, a spokesman for USAir, Mr. Wolf is "very, very clear that one of his top priorities is to meet as soon as possible with labor leaders in an atmosphere of complete cooperation."

Officials of USAir's labor unions could not be reached for comment yesterday.

Terms of the deal -- including sala-ry, benefits and bonuses -- were not disclosed. Last year, Mr. Schofield's base salary was $500,000. At one point, Mr. Wolf was the highest paid executive in the nation, making $16 million in one year.

In a career spanning three decades, the lanky 6-foot-6-inch California native has headed four airlines: Continental; Republic; Tiger International, the parent corporation of Flying Tiger cargo airlines; and United.

He is widely credited both with Republic's turnaround, which led to its merger with Northwest, and the salvation of Flying Tiger, which was bought by Federal Express.

At United, he was charged with making the Chicago-based carrier grow. And he transformed the largely domestic airline into a global giant, increasing the number of countries it served from 13 to 33 and expanding its fleet by nearly 50 percent.

After serving as UAL Corp.'s chairman and CEO for seven years, he left in 1994 following a $5 billion employee buyout of the company. He relinquished the job to employee-chosen Gerald Greenwald, the former Chrysler Corp. vice chairman who led the takeover talks with USAir. Those talks ended when United decided not to pursue the deal.

Shortly after leaving United, Mr. Wolf became a senior adviser with Lazard Freres & Co., serving as a top adviser to Air France Chairman Christian Blanc.

"He has clearly demonstrated his ability to lead a major carrier and to add shareholder value in past executive positions," Mathias J. DeVito, the Rouse Co. chairman and USAir board member who led the search, said in a statement yesterday.

Mr. Schofield described him as "unquestionably one of the most knowledgeable and successful CEOs in our industry," noting that he is "ideally suited to carry on the restructuring of USAir to successfully meet the many challenges facing the company."

Among the challenges at USAir will be reaching cost-cutting agreements with the company's 42,000 employees.

Between 1988 and 1994, the airline lost more than $3 billion. Last year it experienced an impressive turnaround, posting $59 million in profits through the third quarter compared with a $362.9 million loss in the comparable period in 1994.

But, faced with intense competition from low-cost carriers, sustaining that performance will be difficult for USAir, which has the highest costs in the industry, without labor concessions.

Some industry analysts expressed skepticism about Mr. Wolf's appointment.

"I just don't know whether USAir can afford to have someone who can't get along with labor," said Michael J. Boyd, president of Aviation Systems Research, an airline consulting firm in Golden, Colo. "He threatened to tear United apart and got the employees to buy the company out. Then he walked away from United with $20 million while employees took a 15 percent pay cut."

"It looks like they looked for an outside messiah to save their company," he said. "But former airline executives are like plants. They usually don't repot very well."

Mr. Kasper, who served on the National Commission to Ensure a Strong Competitive Airline Industry in 1993, said Mr. Wolf's selection will likely prompt USAir employees to return to the bargaining table as a group. A 16-month-long effort to reach a agreement with all four unions ended last summer after the talks stalled.

"His record should inspire confidence for labor," Mr. Kasper said. "On the other hand, they will talk to their brethren at United and they will hear things about management style and the way he dealt with labor that they may not like."

USAir announced Mr. Wolf's selection after the stock market closed. USAir stock closed yesterday at $12.625, up 12 1/2 cents.

Mr. Wolf earned a bachelor's degree in sociology from San Francisco State University. He and his wife, Delores, reside in Middleburg, Va.

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