I wanted to make sure I'd get a seat at the America West Airlines stockholders meeting. For this reason, I drove down I-10 to the Pointe at South Mountain an hour early the other day.
The parking lots were already filled. A crowd that would total more than 1,000 moved slowly into the huge room where the meeting was to be held.
Some people claim to admire the Pointe's architecture. Not one of these savants, however, has ever been able to explain his appreciation to me in a way that makes sense.
Personally, I consider the Pointe to be among the most tasteless of these institutions now in existence.
How does anyone ever find his way around? It's too spread out. The rooms are gloomy. Rustler's Rooste is a trashy caricature. The oversize fountain in front of the main building is both ostentatious and garish. Enough said.
As I walked into the meeting room, a man was passing out fliers protesting the oversize salaries that America West chairman Ed Beauvais and president Mike Conway were still paying themselves despite the airline's catastrophic financial losses.
Since owning stock is a condition of employment at America West, there was a tremendous employee turnout.
By the time president Conway stepped to the microphone, the standing-room-only crowd was estimated at better than 1,200. The place was actually packed to the doors.
Conway wasted no time. He hit them right between the eyes.
"In the last nine months, we've lost $130 million," he said.
Everyone has known about the horrendous figures for a long time. They have had people in financial circles whispering for months.
For example, they prompted this report in Financial World this past March: "Is Phoenix-based America West Airlines about to file for bankruptcy?"
There's more. Every business magazine following the airline industry expects the failure of America West.
Another example:
"They're flying into oblivion," an analyst at a big New York bank told a reporter from Business Week. "It's only a matter of time."
The War in the Gulf, rocketing oil prices and the recession are three factors blamed for America West's losses.
Conway obviously knew about the fliers being handed out about the high salaries of the executives. It was important to talk about that immediately.
He made no apology for the money he and Beauvais were drawing.
"We're not embarrassed by the compensation awarded to us by the compensation committee," he said defiantly.
With bonuses, Beauvais' salary was close to $1 million this year and Conway's was listed at $432,000.
I had never before heard of something called a "compensation committee." As Conway spoke, I wondered if the compensation committee were allowed by Beauvais and Conway to consider the fact that America West's nonunion employees are the lowest paid in the airline industry?
Why do I always ask myself these questions when I already know the answers?
Conway was bullish on America West's future. But his strategy for success provided no encouragement to workers facing the possibility of furloughs.
"We will go as deep [with cuts] as necessary and do whatever is necessary to get this company back to where it needs to be," Conway told them.
Later, Beauvais took to the microphone.
"We're going to survive," he promised. "It may be painful, but we know what to do."
I had the eerie feeling as Beauvais spoke that his words might hold a double meaning. After all, no matter what happens to America West, Beauvais will fall to earth in a golden parachute with millions.
That's the beauty of capitalism, I suppose.
But stewardesses and workers who toss baggage and sell tickets will not fare quite so handsomely. This is why the chairman of the board is always able to show up in a new suit and smile confidently for the television cameras.
Because of Beauvais, America West has always been a mystifying operation to me. From the very beginning, there has been the question of whether Beauvais' overambition would sink the operation.
He is the ultimate high-wire artist.
"Some day I'd like to fly to the moon with a picnic lunch," Beauvais once said. "That would be the ultimate experience."
Beauvais once told an interviewer how much he admired Herb Caen of the San Francisco Chronicle.
He cited one of his favorites quotes from Caen: "It's not only important that I succeed; it's also important that all my friends fail at the same thing."
Admittedly, the startup of America West and its rapid expansion have been a remarkable thing to watch.
But during the buildup, a series of uncommon events have taken place. They are enough to give one pause.
What comes to mind first is the strange odyssey of Earl P. Thurston, the America West vice president who decided to drop down to being a pilot again.
Thurston and two other America West pilots, Robert J. Russell and Carl Wobser, were indicted in 1987 for flying 7,000 pounds of marijuana from Colombia.
They were caught when forced to land a subsequent flight from Chandler in their own DC-6 on Aruba because of low fuel. When officials searched the airplane, they discovered the three were carrying not only weapons but $47,000 in cash. The police were summoned.
Testimony in the case showed the three pilots were paid $1 million for the job. They were sentenced by Judge Paul Rosenblatt on November 11, 1989, to serve two years in federal prison after pleading guilty to conspiracy to import a controlled substance.
There was also the mysterious underreporting of America West passengers at Sky Harbor International Airport which resulted in the other airlines paying $900,000 extra in operational expenses.
Under investigation, it was learned that America West underreported its passengers from 1984 to 1989. The airline had handled nineteen million passengers and only reported fifteen million.
America West repaid the money, claiming as an excuse that the rule about declaring passengers was confusing.
This was discounted by Neilson "Dutch" Bertholf, the aviation director at Sky Harbor.
"We think the interpretation in the normal reporting process is one of long standing and not difficult to understand," he said.
An official from a rival airline was less charitable.
"It doesn't take an Einstein to figure out they were playing games," he said.
The recent expansion to Japan is an example of Beauvais' high-stakes gamesmanship.
Industry analysts estimated the cost of startup of $30 million to train crews and set up maintenance. Having started the flights at the start of the war, things got so bad, according to Conway, that America West once flew all the way to Nagoya with just a single paying customer aboard.
Beauvais has not stopped making flamboyant moves.
The latest is a series of television commercials by comic Jonathan Winters dressed up as General H. Norman Schwarzkopf. They began running this week.
Beauvais explained that he would have done the same with generals Dwight Eisenhower and Douglas MacArthur after World War II.
Beauvais showed the Winters commercials to the meeting on two big screens. They are both hilarious. No doubt they are very expensive, too.
But they are certainly not as expensive as Beauvais' decision to have the Phoenix Suns' arena named the "America West Arena."
This excursion into the field of personal empire-building will cost the company $550,000 a year for the next thirty years--providing America West is around that long. It also will not sell a single passenger ticket.
America West's profit picture has always been a graph consisting of precipitous ups and downs.
In 1988 it made a net profit of $9.4 million after losing $47 million in 1987.
In addition to the $75 million loss of 1990, it also has a corporate debt, according to Business Week, of $645 million.
Now the airline has been forced to halt scheduled flights to five cities on its routes.
One of Beauvais' most controversial ways of bringing in fresh cash was the famous half-price sale. This move was assailed by the first stockholder to speak.
"I became a stockholder so I could speak at this meeting," the man said without identifying himself. "I suppose we should consider it good news that we have reached Thursday of this week without another half-price sale of tickets.
"Your December sale was the biggest farce I've ever been involved in . . . we now have people hesitating to buy tickets because they are sure that by next week, you're going to have another half-price sale.
"You're mortgaging your future by selling half-price tickets," the man shouted into the microphone.
Conway did not offer to debate.
"Since there was no question," he said, "it requires no answer."
It would have been interesting to hear Conway address the problem of flights that are now heavily booked with reduced-fare passengers and how the airline expects to make a profit when full-paying passengers are opting for other, less-crowded airlines.
Company meetings are always a fascinating study in human relationships. The audience is always packed with those who think they can curry favor by getting on their feet and announcing their overwhelming loyalty.
Now an employee stood up to express just such a sentiment. But then he mentioned ever so hesitantly that he perceived there is a serious problem with morale among the workers.
Conway assured him that morale wasn't bad, "merely stressed."
"A lot of people are going through stressful times," Conway said, "particularly when you have seen your friends in the airline industry lose 50,000 jobs in the last nine months. If other airlines don't make it, then another 50,000 will lose their jobs, too."
Conway's message was clear. America West's employees should realize how much better off they are--low morale and all--than those already on the street.
"I don't think our morale is low," Conway said, repeating his words, "I think it's stressed."
The boss is always right. The employees greeted this non sequitur with an enthusiastic round of applause. Some may even have believed him. I had the eerie feeling as Ed Beauvais spoke that his words might hold a double meaning.
"You're mortgaging your future by selling half-price tickets," the man shouted into the microphone.
"I don't think our morale is low," Mike Conway said, repeating his words, "I think it's stressed.
