In late May, only weeks after announcing record losses for a second straight quarter, America West Airlines chairman Ed Beauvais boasted to nationwide airport executives meeting at the Phoenician resort that the airline would soon expand service into Mexico. As one onlooker put it, "The most disturbing thing about Beauvais' claim was not that it was bullshit; it was that he was saying it to people who knew enough about his airline to see right through him."
Two weeks before seeking shelter from creditors from a federal bankruptcy court, Beauvais told New Times that America West was "neither planning nor contemplating Chapter 11 [protection]," despite the airline's loss of over $100 million since Iraq's invasion of Kuwait almost a year ago. He was telling Wall Street the same thing.
At 4:30 p.m. on June 27, less than an hour and a half before bankruptcy papers were filed in downtown Phoenix, the airline was still denying that a filing was imminent. Told that rumors were flooding the street, media rep Mike Mitchell said, "They aren't coming from here."
Now Beauvais is telling America West passengers--many of them holding an estimated $60 million in travel vouchers purchased during two recent half-price sales--they can depend on "business as usual" while the airline attempts to shore up its finances under the protection of a federal bankruptcy court.
Improbable as it may seem, he may be right. It is even possible, industry analysts say, that shock waves from the bankruptcy may never be felt in most Arizona households despite America West's standing as the largest private employer based in the state. America West could as easily become another Continental, which has plugged along under Chapter 11 for a decade, as it could go supernova and drop out of the skies altogether.
But almost no one believes that the airline will ever again be what it has been--an ambitious upstart barnstorming across the desert and into competition with industry majors, like a sparrow hawk harassing condors for a share of their hunting territory.
The question teasing Wall Street onlookers and company insiders now is, at whose cost will the books be balanced? Layoffs seem inevitable and could, if they go deep enough, sorely test a corporate culture as gung ho as any Tokyo automaker could imagine.
Even if the airline survives, not everyone believes Ed Beauvais will still be leading it. "We've been hanging out in the breeze for eight long years," says one veteran pilot. "It's time somebody thought about building us some shelter, and it's not clear if Ed's the guy who can do it."
For the past eight years, America West has been more fun to watch than the Phoenix Suns, its growth fueled by the ego of its founder and a work force stoked on faith and possibilities. America West put Phoenix on the national map, much as Delta did for Atlanta, with every route expansion feeding the state's desire to become more than a truck stop on the interstate into L.A.
But the airline's spiraling fortunes, made worse by its leaders' constant denials, are nothing if not sobering. Arizona is mired in a 36-month recession, America West is on the ropes, and the community is facing some hard questions about what best serves its interests. It's one thing to quip, as did Tucson lawmaker Peter Goudinoff, "Live by free enterprise . . . die by free enterprise." But slogans can't replace 9,000 paychecks--especially when those dollars more than double their worth as they filter up the economic food chain.
Despite initial protestations from Governor Fife Symington and other state leaders, there is a lot they could do to help America West short of mortgaging the state's future--tax breaks, easing airport leases, and credit backing, to name a few. (Some states have gone much further than that to protect a home-based airline--the Minnesota state legislature amended its constitution to provide Northwest Airlines with loan assurances and a multimillion dollar cash handout.) Most experts say it makes no sense for Arizona to turn its back on the airline in the name of free-enterprise principles. They predict major dislocations even if job losses are limited to 2,000 or 3,000 people-- an entirely plausible prospect. Should the airline's reorganization fail, the state will lose its only toehold in the expanding national and international trade markets.
Finally, the statistic has not yet been invented that can measure the true cost of a total collapse. It cannot be measured, but it can be described: "We have a great product here and the troops, no matter how they feel about Beauvais right now, believe in it," says one rank-and-filer. "The airline was a great idea in its time; hell, it still is a great idea. It would be a shame to see it go down in flames."