- The Washington Times - Thursday, October 20, 2005

Nearly one month after US Airways Group Inc. combined with America West Airlines to form a single airline, employees are packing boxes, moving out of cubicles and saying goodbye to colleagues.

US Airways found new life in a union with America West, but its long life in suburban Washington is coming to an end.

The newly formed airline makes its home in Tempe, Ariz., where America West put down roots in 1983. The deep roots of US Airways are being pulled from the ground it has held since 1949 so it can merge operations with its new partner.

US Airways is relocating, even though it was twice as big and 34 years older than America West.

“There are compromises in every deal. I’m sure there are many advantages to being in Arizona,” said Edwin Colodny, chief executive of US Airways from 1975 to 1991, when the company was known as USAir.

The main advantage of relocating is the lower cost of doing business in Arizona, US Airways Chief Executive Bruce Lakefield said when the companies announced the deal in May.

US Airways employed 604 management and administrative employees and two ticket agents on six floors of a swanky Crystal City office building.

The departure of those employees has amounted to a trickle so far. In November, employees are expected to leave in droves. US Airways informed the Virginia Employment Commission early last month that it would begin to shutter operations about Nov. 8.

About 400 employees are leaving the airline to find work elsewhere. Most have balked at relocating. About 200 others are expected to continue working for the airline and move to Arizona.

“You have such a strong job market here,” said Jerrold Glass, who was US Airways’ executive vice president and chief human resources officer before he left last month to start a labor and human resources consulting firm. “If you can get a similar job with similar pay, why uproot your family?”

Not all employees have been given their release dates, US Airways spokeswoman Amy Kudwa said. Many still have time to decide whether to move to Arizona.

US Airways will lease its office space through April 30, according to the terms of an agreement reached in bankruptcy court, and it could maintain a skeleton staff in Crystal City until then.

The airline’s relocation has proceeded quietly, and without moving trucks. The office furniture stays because it is the property of the building’s owner. The computers, leased from EDS Corp., will be left behind.

US Airways moved its headquarters to Crystal City in 1989 from a hangar at Ronald Reagan Washington National Airport. Two years ago, CEO David Siegel threatened to move the company’s headquarters to another city, arguing that it was too expensive to conduct business in the Washington area and that it did not have enough slots at Reagan Airport, where it is the largest carrier.

The airline stayed, but this time, under different circumstances, US Airways is on its way out.

Mr. Lakefield has finished packing and has stepped aside to let America West Chief Executive Douglas Parker, 43, run the airline.

US Airways is ceding much more than its executive control and headquarters. America West shareholders own 45 percent of new shares in the combined airline, while US Airways creditors own 14 percent. The rest of the shares are owned by new investors who have injected $1.5 billion of equity into the airline.

Mr. Parker and five America West board members will serve on the board of directors of the merged airline, giving the America West contingent a majority. Mr. Lakefield and three members from the US Airways board of directors will sit on the new board.

Despite concessions by US Airways and its subordinate role in the union, there is widespread relief that it didn’t dissolve — either in 2005 or in 2002, when the airline filed for bankruptcy the first time. That has diminished concerns over its relocation to Arizona.

“Over the last three years, nobody thought we would make it. It’s great we are surviving,” Mr. Glass said.

Because only a fraction of the airline’s employees work at the Crystal City headquarters, there has been no uproar over the move, said Rick Weintraub, who was a spokesman for US Airways from 1994 until 2002.

“The vast majority of people who work at an airline don’t work at headquarters. They work in airports and in airplanes, so they are not affected,” he said.

US Airways has lost its headquarters, but keeping the airline’s name is more significant than where the company is based, Mr. Weintraub said, because it is a nod to its widely recognized brand.

“They’re keeping the name, and that’s what’s important,” he said.


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