ANALYSIS <b>Corporate Case Study:</b> America West's turnaround is down to its employees

To survive after 9/11, America West Airlines remade itself into a low-fare airline and upgraded its PR and media relations to attract customers and boost its profits.

To survive after 9/11, America West Airlines remade itself into a low-fare airline and upgraded its PR and media relations to attract customers and boost its profits.

Right after 9/11, airline reporters and analysts were preparing to write America West Airlines' obituary. The Phoenix-based carrier already had weathered one bankruptcy reorganization. With dismal service ratings, it had less cash on hand than other airlines and was the first to apply for a government loan. And it seemed to have a chip on its shoulder where the press was concerned. "They were as close to death as any airline has ever been," recalls Dr. Adam Pilarski, SVP of Washington-area airline-analyst firm Avitas. "They were really close to going under." In an act of self-preservation, America West announced it would remake itself into a low-cost airline while retaining some service perks offered by so-called legacy carriers like American, Delta, and United. It also borrowed Continental's idea of paying employees bonuses when the airline scored well on federal service ratings. The airline cut costs and fares drastically while continuing to offer reserved- and first-class seating. Born in 1983 after airline deregulation, America West's relative youth meant it didn't have the pension burden of older airlines. Limiting its fleet to a few models also kept the airline's costs down, explains Elise Eberwein, VP of corporate communications. Reporters and analysts didn't immediately buy America West's low-fare declaration. Pilarski likens the announcement to an overweight friend vowing to go on a diet and run a marathon. Chairman and CEO Doug Parker, who took the reins just days before the September 11, 2001, attacks and who strongly advocates open communications, concedes he remains a bit frustrated by some lingering skepticism. "We changed the strategic positioning of the company. While we know that, it's incumbent upon us to prove that to others," says Parker, who views changing attitudes as a long-term goal. Four quarters of profitability have turned many doubters into believers. PR improvements While observers credit Parker with improving America West's communications culture, company executives recognized the need to improve PR before Parker's tenure at the top. His predecessor, former chairman and CEO Bill Franke, elevated the communication leader's job title to VP and hired former Burlington Northern Santa Fe Railway executive Jim Sabourin in 2000. While USA Today airline reporter Chris Woodyard recalls Franke as a nice guy, he confirms the company's own admission that the former CEO was at best gun-shy with the media. "Up to that point, the company had engaged in an almost run-and-hide sort of mentality," says Sabourin, who left the company to become VP of corporate communications for UnumProvident, a disability insurance company whose Chattanooga, TN, headquarters put him closer to his family. "When there was any sort of negative coverage at all, rather than try to work through it with a reporter, it was immediate confrontation." Complaints from customers often filled the void created by management's silence. Hired to improve media coverage, Sabourin credits Franke with not creating any roadblocks to a successful communication strategy despite his personal reservations about the press. He allowed Sabourin's staff to host media days, during which reporters toured company headquarters and spoke to key executives. "What I was hearing from a lot of reporters was, 'You're not accessible, and when you are accessible, you don't tell us anything,'" Sabourin says to explain his rationale for hosting media days. "There were probably 30 stories generated from that first session. I was shocked. Most of them were positive. I think it showed people in the company that the press was willing to listen to what I had to say." Parker ascended to CEO several months before Sabourin left the company. A big believer in employee communications, Parker embraced the internal town hall meetings that Sabourin's staff organized. "Communications arguably is the most important thing that I have to do," says Parker, adding that employees must know where the company is headed to do their jobs effectively. America West faced plenty of internal communications challenges. Some long-term employees felt demoralized by the company's early 1990s bankruptcy. Many were furloughed after 9/11 or left for other jobs due to concerns about the company's future. And America West was recently in the midst of tense contract negotiations with its pilot's union. Pilots narrowly approved a new contract in December. Parker faced tough questions during the first couple of town hall meetings, but employees responded well to his plainspoken style and to his self-deprecating humor. "We knew if we could create that environment for him, he could disarm them," Sabourin recalls. Eberwein's role Parker's commitment to employee communications also revealed itself in the selection of Sabourin's successor. "Hiring Eberwein from Frontier [Airlines] was a huge step," says Woodyard. "She was very strong at Frontier and knows a lot about the industry." A veteran of three other airlines, Eberwein worked as a stewardess at age 20 before returning to college to earn a mass communications degree. While VP of corporate communications at Frontier Airlines, she went through flight-attendant training again and worked the aisles occasionally to keep in touch with employees. "Sitting in an office all day, you might as well be working for an insurance company," Eberwein says. "It's good for employees to see an officer out working, and it's good for the customers, provided I don't spill something on them." Eberwein commends her predecessor for turning around America West's attitude toward media relations. She sees her mission as improving internal communications. "We really have 13,000 PR agents who are ready to tell our story to customers and anybody who will listen," she says of the employees. Eberwein supervises a staff of seven that handles corporate communications, media relations, and employee communications. She also just assumed responsibility for investor relations following the departure of a finance VP who previously oversaw the function. She has assembled a staff mostly of people hired within the past year. She says the new crew is jelling nicely, and she praises longer-term PR staffers for "keeping their noses to the grindstone, even when the story wasn't positive." Among Eberwein's priorities for the summer is to password-protect the employee website. With the site open to anyone, she says, the first calls she gets after posting a letter from the CEO often come from reporters. Adding the feature will allow management to provide employees with competition-sensitive information, such as flight-load statistics to help them figure out when they can use free trip benefits. But when most of your employees work at 30,000 feet, many don't have access to computers. So Eberwein also pushed to return the airline's quarterly publication to a monthly newsletter mailed to employees' homes. The move not only gives employees and their families more timely news about the company, but transitioning from a glossy, two-color magazine to newsprint also addressed perceptions among some employee shareholders that the publication looked too expensive. America West now follows up quarterly announcements to financial analysts with media Q&A sessions and employee webcasts. This year it also hosted what Eberwein calls its first "real annual meeting" at headquarters since 1997. For several years, the company had held smaller shareholder meetings in less public settings. Investors and employees seem to appreciate the openness, Eberwein says. The company still faces external communications hurdles, as well. Phoenix companies in general must work harder to gain exposure because few national media outlets post correspondents there. America West is also coping with an uphill battle convincing some reporters - especially those on the East Coast - that it should be included in stories about low-fare carriers. When a reporter fails to mention America West alongside Southwest, AirTran, and JetBlue, Eberwein places a friendly reminder call and offers up executives as expert sources for future articles. The company's efforts to turn around its business and its communication culture are paying off. "We were in kind of a netherworld a couple of years ago with them. They were saying they were low-fare, but we were a little hesitant to write that they were low-fare," Woodyard says. "Gradually, the proof seemed to show up in the pudding." PR contacts VP of corporate comms Elise Eberwein SVP, government relations C.A. Howlett Employee comms manager Robert Colbert Media relations manager Janise Monahan PR agency BJ Communications

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