An angry old eagle lands on `nice guy'

August 25, 2002|By JAY HANCOCK

ARECENT column on the high pay and low accomplishment of US Airways boss Stephen M. Wolf generated a ton of response, mostly from rank-and-file employees at the bankrupt airline eager to join the Wolf abuse.

No surprise there. What I didn't expect was a similar call from the former president of Continental Airlines, American Airlines and Airbus Industrie's North American division.

"One on one, he's a nice guy," George A. Warde said of Wolf. "But I've watched him go through and ruin so many ... airlines."

Now there's an economic indicator. When corporate chieftains turn on their own kind, in public, you can figure the pigeons have hit the jet turbines in an ugly way.

Warde's experience in the airplane business may be unmatched by anyone alive. It's what makes his anger at recent events and worries about the future worth listening to. He worked as a mechanic on DC-2s and DC-3s in the 1940s, for 38 cents an hour, and was chairman of an Internet reservations business in the 1990s. He was president of American Airlines in the early 1970s and hired a young Bloomingdale's executive named Robert L. Crandall, who went on to run the airline for two decades.

With European jet-maker Airbus later in the 1970s, Warde (pronounced Wardee) broke the lock on U.S. airliner sales held by Boeing, Lockheed and McDonnell Douglas. He ran Continental in the early 1980s, working briefly with Wolf there, headed Continental affiliate Air Micronesia until the mid-1990s and today is chairman of Giro Inc., which helps airlines collect money owed under manufacturers' warranties.

Warde told me, and a Washington source confirmed, that last fall, at age 80, he was asked to apply to be executive director of the Air Transportation Stabilization Board, the body created by Congress to oversee federal loan guarantees for airlines after the Sept. 11 attacks.

The job went to somebody else, but the point is that Warde is still a player, still has all his marbles and is respected as a disinterested expert with an insider's perspective. At US Airways, he faults Wolf for collecting outlandish pay while overextending the company, which became a prelude for its struggles after the Sept. 11 attacks and a recent bankruptcy filing.

"He tried to expand something that had the highest costs in the industry ... and he also had a visitor called Southwest Airlines come in his back yard and eat his lunch," Warde said. "They started expanding to be like the big boys, and they didn't have the wherewithal to do it."

A US Airways spokesman declined to respond to Warde's comments, saying Wolf, now the company's nonexecutive chairman, was unreachable. But the spokesman said Wolf didn't make nearly as much at US Airways as he could have because he never exercised his millions in stock options.

Wolf's defenders say the executive was trapped by high union contracts, uneconomical airplane leases and a cramped route structure created by his predecessors, and they say he significantly reduced US Airways' pilot costs.

In any event, Warde thinks most of the industry is flying in a blizzard with no instruments.

"All the airlines today, take any airline, do not have any operationally trained or experienced people at the helm" and instead employ financial engineers or turnaround managers, he said. "There is no operational philosophy in the airlines left today that makes any sense."

Especially troubling, Warde said, is the disconnect between management and employees.

Today's airline leaders "don't necessarily get a great deal out of the troops in trying to move the elephant off the tracks," he said. "The loyalty to the company is lacking. The loyalty to the individual is booming. What makes an airline is its people. I'm a firm believer in that. They know more about what's going on in the company than you or I do because they're doing it every day. But there has to be a line that's open" between the corner office and the jetway.

After six decades in the business, Warde is ambivalent about airline deregulation, lamenting the resulting financial turmoil and the loss of routes to smaller towns but not prepared to scrap the whole enterprise. He blames the U.S. Export-Import Bank for contributing to the industry's problems by cheaply financing airplane purchases by foreign carriers who swipe passengers from U.S. airlines. And he sees no end soon to the boom-and-bust cycle that has buffeted airlines for two decades.

When an airline emerges from bankruptcy proceedings shorn of debt and expensive labor contracts, it creams the carriers that are still paying their creditors, and new players begin to have problems. Warde fears that US Airways and United Airlines, two sick puppies that tried and failed to merge last year, will wed in front of a bankruptcy judge and put pressure on everybody else.

"I see something on the horizon," he said. "I see USAir filing bankruptcy. I see United Airlines thinking about it. If those two merge and bankruptcy protects them, they'll be the lowest-cost, biggest airline in the world."

Take it from a guy who brandished a wrench in 1940 at New York's LaGuardia Field. Northwest, American, Continental, Delta: Look out.

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