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April 24, 1999


Indian CEO pilots US Airways to dizzy heights

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Arthur J Pais

US Airways has turned around under an Indian CEO In a dramatic turnaround, US Airways (formerly US Air), one of the most chronically ill aviation outfits in the United States till about three years ago, zoomed into the first place (more of the ranking later). The driving force behind the airline is an Indian, Rakesh Gangwal, president and chief executive officer, US Airways.

A year back, the airline had to ground its operations in the wake of a quality survey of ten major American airlines including itself.

Southwest Airlines which was placed first in the 1997 survey, dropped to fifth place. The survey was confined to US airlines with revenues of over $1billion.

The survey released on April 19 was conducted by Dean Headley, associate professor of marketing at Wichita State University in Kansas, and Brent Bowen, director of the Aviation Institute at the University of Nebraska.

They used over 12 criteria for ranking 1998 airline quality including the handling of passenger baggage. They also drew information from government reports and other information available to the public.

Rakesh Gangwal, CEO and president, US Airways "The recognition of US Airways as the top-rated airline in the United States by the Airline Quality Rating study is a clear acknowledgement of the hard work by the entire family of US Airways employees," said Gangwal.

He had announced two years ago that unless US Airways became a carrier of choice, rather than a carrier of convenience, it will find it difficult to earn substantial profit.

US Airways's annual revenues were $ 7.5 billion in 1995 and $ 8.7 billion in 1998. Its passenger load factor: 64.7 per cent in 1995 and 72.7 per cent in 1998. The operating profit shot up from $ 322 million in 1995 to $ 1.01 billion in 1998.

The total debt of the company has been reduced from $ 2.8 billion in 1995 to $2 billion last year, in spite of a huge buying spree.

One of the key factors that took US Airways to the top was its relatively low claim of denied boarding -- when a ticketed passenger is denied a seat on a full aircraft -- and the minimal mishandling of bags.

US Airways Inc is the main operating arm of US Airways Group. With almost 400 aircraft, US Airways Inc operates more than 2,100 flights daily, carrying an average of more than 155,000 passengers.

'Today, US Airways is sparring with the big boys,' noted BusinessWeek recently. 'It has trans-Atlantic reach and fills up some of the most modern craft in the skies. And after years of hefty losses, earnings have once again taken off. And though US Airways shares, like those of all other airlines, have been hammered recently by fears of recession, they have held up better than those of rivals.'

Gangwal, 45, is a graduate of the Indian Institute of Technology and has a Masters in Business Administration from the Wharton School of the University of Pennsylvania. Prior to joining US Airways as president and chief operating officer in February 1996, he was executive vice-president (planning) and development at Air France and a senior officer at United Airlines.

He is credited -- along with his mentor and company chairman Stephen Wolf, 57 -- with cutting costs at US Airways, improving the overall morale, and going aggressively after new routes. Their partnership started seven years ago when Wolf put Gangwal in charge of planning for United.

When Wolf was made to leave United, Gangwal followed him.

The two have had a work-plan: Gangwal, detail-oriented, pores over efficiency measures while Wolf pursues global visions, spending several days in a month hammering new deals.

Gangwal, who grew up in Calcutta, believes that life is about learning, touching, reading minds, understanding dynamics. "You can't boil it down to a number," he says while explaining his life philosophy.

"Either we do it, or we perish," Gangwal had said when he joined as US Airways.

Among the major undertakings Wolf and Gangwal took were: spending $ 14 billion for 400 new planes from Airbus Industrie to replace US Airways's ageing fleet, shelling out $ 1.5 billion for new wide-body jets from either Boeing or Airbus, replacing the airline's B767s and flying international routes, allocating $ 300 million for expansion of US Airways's operations in Philadelphia. The city, Wolf and Gangwal believed, has a large population that is under-served and so ripe with potential.

"For the past three years, employees at every level of our company have been working together to review all aspects of our operations and effect the changes necessary to make US Airways the carrier of choice. Dramatic improvements in such critical service areas as on-time arrivals, baggage performance, consumer complaints and denied boarding are the result of employee teams concentrating on these issues and bringing about change," Gangwal said recently.

"At the same time, an employee team planned and implemented an entire new division, our low-cost service, MetroJet, which is serving 21 cities only 10 months after its first flight. Another employee team worked for months to bring about a very smooth entry into service of our new Airbus aircraft, which are coming into the fleet at a rate of almost three per month, bringing a superior level of comfort to passengers."

While these changes were taking place on the operational side of the airline, Gangwal noted that US Airways also dramatically reduced debt and returned value to shareholders through share repurchases.

Two weeks ago US Airways reported that revenue-passenger miles ratio for March 1999 increased 1.8 per cent as compared to March 1998 while available seat miles for the month increased 3.6 per cent. The passenger load factor for the month was 73.9 per cent, a decrease of 1.3 percentage points as compared to March 1998.

"While March began on a difficult note due to a series a snowstorms, both operations and traffic improved as the month progressed and we are entering April with a smoother-running system," Gangwal said.

US Airways under Rakesh Gangwal has opted for new colours In one sense, 1998 was a year of major restructuring, cost-cutting and consolidation under Wolf and Gangwal. To highlight the rebirth of the airline, it changed its name from USAir to US Airways and repainting all of its planes in a new grey-and-blue color scheme.

The full ranking was: US Airways, Continental Airlines, American Airlines, Delta Air Lines, Southwest Airlines, America West Airlines, TWA, Alaska Airlines, Northwest Airlines and United Airlines.

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