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Disaster only one in a string of setbacks for troubled company


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By Steve Halvonik
Sunday, September 5, 2004

New name. New logo. Same problems.

Little has changed about US Airways since Flight 427 fell out of the sky 10 years ago, industry experts say. It remains a small mainline carrier burdened with high labor costs, crushing debt and dwindling cash, teetering on the brink of bankruptcy.

"The problem is that the world has changed dramatically over the past decade but US Airways has been marking time," said Michael Boyd, an aviation analyst based in Colorado.

The most visible changes at the company have been the revolving nameplates on the chief executive officer's door.

Bruce Lakefield, a Wall Street veteran, is the fourth CEO since the crash. He replaced David Siegel, who replaced Stephen Wolf. Wolf replaced Seth Schofield, who stepped down in January 1996.

For some employees, memories of Flight 427 and the airline's ongoing financial troubles are intertwined in a decade of woe.

"This airline has had one foot on a banana peel and one foot over the ledge since 1994," said pilot Tim Baker, of Coraopolis.

Neither Baker nor existing evidence suggests that the company's financial troubles directly contributed to the crash of Flight 427. However, the crash did increase pressure on a company already showing stress fractures.

Several months after the crash, The New York Times published the results of an extensive investigation of USAir safety lapses. Among its findings:

  • In the two years before Flight 427's crash, USAir planes left gates nine times with insufficient fuel levels. The Times reported that USAir had eliminated preflight refueling checks to save time.

  • Counting Flight 427, USAir had five accidents in five years, including two at LaGuardia Airport in New York that were caused by pilot error.

  • Federal Aviation Administration inspectors in 1993 found more than 40 deficiencies in USAir's flight operations and training programs for pilots.

    Gregory Drahuschak, a vice president with the financial firm Janney Montgomery Scott, Downtown, said he could understand how some employees might link Flight 427 with USAir's financial troubles at the time, even though there was no cause-effect relationship.

    "Sometimes, an event that doesn't appear connected to the problem does occur, and it causes you to refocus your attention and realize that the emperor has no clothes," Drahuschak said.

    Many employees said they vividly recall where they were and how they felt when they heard about Flight 427.

    Baker, the Coraopolis pilot, said he was attending flight training near Windsor, England, and got the news from a British Broadcasting Corp. report.

    "It put a sick feeling in the pit of my stomach," Baker said. "How could this be happening to us again? What was it we were doing that could be so wrong?''

    When Flight 427 crashed, USAir carried $2 billion in debt and was finishing its sixth consecutive year without profit. Signs of deteriorating service had been cropping up since 1993, according to an airline quality survey conducted by professors at the University of Nebraska at Omaha and Wichita State University in Kansas.

    USAir's financial prospects had been looking up before Flight 427 crashed. A strengthening economy brought double-digit booking increases, but bookings slid in October.

    USAir's percentage of available seats filled by paying customers declined for the rest of the year. Increased passenger traffic and cost-cutting restored profits in 1995, but Schofield announced his retirement at the end of the year after failing to secure $500 million in labor concessions.

    Schofield's predecessors also tried -- and failed -- to address USAir's structural problems. Wolf, who came on board in early 1996, tried to give the airline a fresh start. He changed the company's name, to US Airways, but not the underlying economic fundamentals.

    A decade later, US Airways is still saddled with one of the highest airline cost structures.

  • Steve Halvonik can be reached at or (412) 320-7993.

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