By: Bill Brubaker, Washington Post Staff Writer

May 23, 2005, The Washington Post

One airline has painted some of its planes purple and turquoise, the colors of the Major League Baseball team it sponsors, or cardinal red, in honor of the pro football team it backs.

The other shuns any hint of glitz, with a fleet in subdued blue, white and gray.

One airline has its headquarters in an Arizona suburb known for its perpetual-sunshine-and-flip-flops lifestyle.

The other is based in a Washington suburb that is a center for government contractors and the home of a military cemetery.

But last week, younger, edgier America West of Tempe, Ariz., announced that it would merge with older, more conservative US Airways of Arlington in a $1.5 billion deal that would create one of the nation's largest low-cost airlines.

Employees and Wall Street analysts asked: Would this marriage of two cultures -- East and West, button-down and entrepreneurial -- really work?

Airline veterans say it will have to because neither US Airways Group Inc., which posted a $611 million loss last year, nor America West Holdings Corp., which was $89 million in the hole, has much of a choice.

"We may have some cultural differences," said John A. Taylor, a veteran US Airways pilot. "But we both want to survive. So we are looking forward to taking the best of both airlines and learning from each other."

One thing the two airlines share is a history of financial trouble deep enough to send them to bankruptcy court.

US Airways, the nation's seventh-largest airline, is fighting to emerge from its second Chapter 11 reorganization in three years. America West, the eighth-largest, operated under Chapter 11 protection from 1991 to 1994. Both carriers have tried to withstand the withering effects of soaring fuel prices, profit-draining airfare wars and the terrorist attacks of Sept. 11, 2001.

Under the merger deal, the combined airline would be called US Airways, but the company would have its headquarters in Tempe, a city of 160,000 that is a 10-minute drive from Phoenix Sky Harbor International Airport. The new US Airways would be headed by W. Douglas Parker, 43, America West's chief executive. US Airways chief executive Bruce R. Lakefield, 61, would be No. 2.

US Airways has more to gain from the merger, experts said, starting with some lessons it could learn from America West on customer service.

"When I think of America West I think of a low-cost airline that has a relatively good reputation. I would fly on them," said Betsy R. Snyder, a credit analyst for bond-rating agency Standard & Poor's who follows the airline industry.

And when she thinks of US Airways?

"Not my first choice to fly, just because of what you hear about their service," she said. "Their inferior service."

In the federal government's most recent airline performance statistics, for flights in March, America West ranked third among 19 U.S. carriers in on-time arrivals. US Airways was 17th.

America West apparently also could teach its new partner how to keep track of luggage. In terms of complaints about mishandled baggage, it posted the fifth-best record in March. US Airways, which has had labor problems and staffing shortages, was 18th.

America West has used employee incentives to improve customer service. For example, many employees received $50 bonuses this month because the airline exceeded its on-time goal in April.

US Airways traces its roots to a company called All American Aviation, which in 1939 began offering the first airmail service to small towns in western Pennsylvania and the Ohio Valley. The company changed its name to All American Airways in 1949 and to Allegheny Airlines in 1953, which in 1979 changed its name to US Air, which in 1997 became US Airways, acquiring several regional airlines along the way.

America West's history is a lot shorter. It was launched in 1983 with 280 employees, three Boeing 737s and a can-do spirit.

Originally modeled after no-frills Southwest Airlines, America West adopted a more-frills strategy, offering amenities such as newspapers, assigned seating and, later, first-class sections for passengers willing to pay more.

"From the start, we were a very employee-friendly place," said Michael Roach, the airline's co-founder and first president. America West maintained a 24-hour day-care center for its flight attendants' children. Its employees shunned labor unions.

By 1990 the airline had reported annual revenue of more than $1 billion and its fleet had more than 100 planes, serving 62 cities.

But the employees' optimism faded as their company grew too big too fast, spending money on unprofitable long-haul routes, including one to Nagoya, Japan, and plunging into bankruptcy court in the early 1990s.

"That touchy-feely culture only goes so far," said Roach, who left the company in 1984 but has followed it closely as a San Francisco-based airline industry consultant.

Roach said many employees turned against the man chosen to lead America West out of Chapter 11, William A. Franke.

"Bill Franke was -- is -- very much a numbers-MBA kind of guy," Roach said. "And the employees grew to loathe him. This is not a dump on Bill Franke. He had a very difficult situation, and he saved them."

America West emerged from Chapter 11 in August 1994 after a partnership, which included Continental Airlines, invested $214.9 million in the company.

A month later, America West announced that its flight attendants had voted to be represented by the Association of Flight Attendants. The pilots, mechanics and others employee groups also turned to unions.

By the late 1990s, the employees often were at odds with management. And passengers noticed a deterioration in service.

"They had a lot of operational problems," S&P's Synder said. "I remember flying them in the summer of 2000. You'd get to the airport and you'd look at the monitor and you'd see the flight was delayed by two hours. It was frustrating, especially late at night."

Franke retired, and Parker replaced him on Aug. 22, 2001.

A month later, after the terrorist attacks, America West trimmed its flight schedule by 20 percent and cut 2,000 employees from its payroll.

The airline may not have survived the post-9/11 slowdown in air travel, Parker has said, without a $429 million loan guarantee from the federal government.

Parker set out to restore the airline's image of being friendly to customers -- and employees.

"Doug Parker and his team are extremely competent managers," said Aaron J. Gellman, a professor and transportation expert at Northwestern University's Kellogg School of Management.

In today's fiercely competitive airline industry, both America West and US Airways are struggling to convince passengers that their fares rival those of discount competitors like Southwest with full-service amenities.

America West declared itself a low-cost carrier in 2002. US Airways has been acting like one for several years.

A chart on America West's Web site lists perks it offers that no-frill rivals don't -- first-class sections, airport clubs and frequent flyer awards to more than 300 destinations.

Among its marketing innovations, America West offers a "bill me later" ticketing option that gives travelers up to 90 days, interest-free, to pay for a ticket. It also sells gift cards at supermarkets that can be used to pay for tickets.

The biggest challenge of a America West-US Airways merger may be combining the staffs of the two airlines. For example, they must decide which pilots get the choicest routes on the largest planes. US Airways has nearly 30,000 employees, America West has 14,000.

"The problem is that US Airways employees who have survived are by and large senior employees, and they probably have significantly higher seniority than America West's," Roach said. "So their position will probably be: 'We want to merge the seniority lists based on date of hire.' The US Airways pilots will be wanting to fly the A330s and all that good stuff.

"And the America West pilots will say: ... 'You wouldn't have any job at all without us, so we'll fly the A330s.' "

Taylor, a US Airways pilot for 22 years, said he's optimistic that pilots from the two airlines will agree because they are represented by the same union and because they have all been through pay cuts and furloughs.

"Through all that pain what we have seen happen is sort of an attitude adjustment," he said. "Our expectations have been changed."