With his airline staggering, Chairman Stephen Wolf slashed costs by eliminating more than 2,000 jobs and retiring scores of older aircraft. A year later, he was gone -- but not before collecting millions of dollars.
US Airways after Sept. 11, 2001?
No. United Airlines in 1993.
Wolf's 37-year airline career reveals a repeated flight pattern. Namely:
Over the years, Wolf's efforts have been rewarded with at least $55 million in stock options and other incentive pay.
Wolf's total career compensation amounts to more than $100 million including his annual salaries and bonuses at US Airways alone. His last payment there was $15 million in severance before US Airways' Chapter 11 bankruptcy filing last August and before Wolf resigned as chairman when a reorganized airline emerged at the end of March.
"There certainly are questions when the company isn't doing well, that (a chief executive) is awarded millions in cash or stock," said Jim Weber, a management professor at Duquesne University and director of its Beard Center for Leadership and Ethics.
"We need to look at the disproportion of wealth given executives, in contrast to shareholders and employees," Weber said.
Aside from the size of the golden parachute was the timing. Wolf received the $15 million while US Airways was in the midst of cutting 12,500 jobs, including 3,900 locally. What's more, when the payment was disclosed in late February, the airline had begun to shred its pilots' defined-benefit pension plan because the company could not afford it.
"It would be laughable if it wasn't so painful," said Robert Hartshorn, 33, of Beaver, a laid-off US Airways pilot.
"Think about guys that have been there 15 years or so, to be told they lose their pensions and then hear, 'Oh, by the way, Stephen Wolf is getting $15 million.' "
It was deja vu. United Airlines workers made $4.8 billion in concessions in 1993 -- months before Chairman Wolf cut 2,200 jobs and exited with a $37 million severance package.
"Everywhere he's gone, he's gotten well-compensated," said Lynn Lenosky, a veteran US Airways flight attendant and former chairwoman of US Airways' flight attendants union. "But I have tremendous respect for him as a businessman."
"I never lost as much money as I did with US Airways," said Julian Robertson Jr., whose investment firm was the airline's largest stockholder. "But I don't think I know too many executives that I respected more than Wolf."
Born in 1941 to working-class parents in Oakland, Calif., Wolf has spent most of his working life in the airline industry, except for a brief stint loading cargo during his youth. Months after receiving a bachelor's degree in sociology from San Francisco State University in 1965, he landed in American Airlines' training program.
After 16 years learning the industry, Wolf in 1982 was tapped as president of Continental Airlines, then owned by Texas Air. Chairman Frank Lorenzo, known for brass-knuckles business tactics, fired Wolf the next year after he failed to strong-arm concessions from Continental's pilots.
Wolf went on to turn around several major carriers. He restored money-losing Republic Airlines to profitability in the mid-1980s, for instance, then sold it to Northwest Airlines.
He unwound the debt-crushing structure of United Airlines' parent company, the result of a disastrous expansion into the hotel and rental-car businesses by its previous chairman. Wolf sold the non-airline units, expanded United globally into lucrative markets in Latin America and Europe, and oversaw a novel worker buyout of 55 percent of the company.
When Wolf resigned from United in 1994, he received $37 million, mostly from cashing in the 250,000 stock options he was awarded for taking the job in 1987.
"I have made my career taking on exceptionally high-risk jobs that in many cases no one else wanted," Wolf told The Wall Street Journal in mid-May. He also defended accepting generous stock options for taking those jobs.
"My compensation has always been tied to shareholders' fate," he said. "If we could save the company, we would profit along with the shareholders, and employees' jobs would be saved."
Wolf, 61, is said to be living in France and could not be reached for this story.
PAINTING PLANES
About 20 years after leaving the loading docks behind, the 6-foot-6 Wolf got a chance to turn around his first major airline. He became president of Republic Airlines in 1984. Like US Airways, it was an amalgamation of regional airlines serving hundreds of cities.
Wolf embarked on what became a familiar flight pattern. He received massive stock option grants, repainted Republic's planes and overhauled routes. But the airline lacked the financial muscle to upgrade its fleet to compete with bigger rivals such as Northwest Airlines.
Wolf engaged 1980s junk-bond king Michael Milken to assemble a hostile takeover of Northwest. The brazen ploy forced Northwest to take over Republic instead -- for $1 billion, or $17 a share, in 1986. Wolf received his first cash-out -- $2 million for selling back stock options, plus $1 million in severance.
"He always had a reputation that he comes in, stirs things up and in the end picks up the airline and sells it," said Lenosky. "That was the suspicion at US Airways right from the start."
Later in 1986, Wolf stirred up Flying Tiger, especially when he confronted its pilots for concessions. Frustrated in bargaining efforts, Chief Executive Wolf broke off talks and vowed to shut down the cargo carrier within 24 hours. "It's over!" he said, pushing his chair from the table, reported The Wall Street Journal. Also exiting the room was general counsel Lawrence Nagin, who later filled the same role at US Airways under Wolf.
Flying Tiger pilots and other work groups that year gave steep concessions -- the first in another Wolf pattern. Wolf could have reaped a small fortune two years later by cashing in 1 million stock options. But he forfeited them when he left to tackle the turnaround of United in 1989.
Roughly a decade later at US Airways, flight attendant Lenosky faced one of Wolf's shutdown threats. She and other union leaders had been negotiating with Wolf for nine months by March 2000. Some 9,800 flight attendants, including 3,200 here, were ready to strike if they didn't get a new contract. Wolf said a strike would force him to shut down US Airways.
No commercial airline ever had simply closed down in response to a strike threat. At roughly 3:30 a.m. on a Saturday after tense hours of talks, the two sides reached a tentative labor agreement and averted a shutdown.
"Stephen Wolf was brought in at a time (1996) when the company was in trouble and looking for major concessions," Lenosky said. The flight attendants balked, at first.
US Airways pilots -- then numbering about 4,800 -- agreed to a contract in October 1997. It reduced costs enough to allow US Airways to buy up to 400 jets from Airbus. Wolf, known for his taste in French wine and culture, caught flak for choosing the French-led European consortium over American-made Boeing.
"This doesn't brand me as an American turncoat," Wolf told The Associated Press. "It brands me as a global businessman."
US Airways' fleet was a hodgepodge of models and makes, a legacy of deals for Allegheny Airlines, Mohawk, Piedmont, Empire and Pacific Southwest Airlines. Standardizing the fleet would cut operating and maintenance costs.
Within his first year, Wolf changed the airline's name to US Airways from USAir and -- as he'd done elsewhere -- painted the planes, changing colors to a gray fuselage belly beneath a deep blue top.
"His trademark was to slap a coat of fresh paint on the planes and then put a for-sale sign in the yard," said furloughed pilot Hartshorn.
NEARLY UNITED
By 1999, Wolf was shopping US Airways, discreetly. In November, he met with Jim Goodwin, who followed Wolf's successor as United Airlines' chairman. Secret talks about a marketing alliance quickly turned into ones pursuing an outright combination.
Pilot Hartshorn moved from Vancouver to Pittsburgh and US Airways employment in January 2000. He had been attracted by the airline's expansion plans. But on May 24 that year, Wolf announced US Airways would be sold to United for $60 a share, for a total of $11.6 billion.
"US Airways was growing at the speed of sound until Wolf announced the merger. Then, they didn't do anything to manage the airline for the next year," Hartshorn said, echoing many pilots' complaint.
The deal also met U.S. antitrust enforcers' resistance. After more than a year of legal wrangling and several congressional hearings, the U.S. Justice Department squashed the deal in July 2001.
Wolf, who had owned about 2.16 million shares, would have made nearly $130 million.
Some market experts thought Wolf did too good a sales job on United's Goodwin. Veteran industry analyst Samuel Buttrick estimated US Airways was worth $45 a share, not the agreed-upon $60.
"Wolf sold the airline at a good price, but the government didn't let the deal go through," said money manager Robertson. Robertson and his Tiger Management, which owned 25 percent of US Airways, would have made $1.5 billion on the deal.
"Stephen Wolf was a very respected leader in the business and, in my book, still is," Robertson said.
Sept. 11, 2001, came just two months after the deal was nixed. The attacks hit US Airways especially hard because the carrier dominated Washington's Reagan National Airport, which was closed for several weeks.
Wolf, who abandoned US Airways' growth track for a deal that failed, slashed one-quarter of the carrier's flights and jobs to conserve cash.
"On Sept. 11, I was sitting in training class," recalled pilot Hartshorn. "And four days later, I was sent home."
Less than a year later, despite workers granting $873 million in annual concessions, US Airways sank into Chapter 11 bankruptcy. Wolf received a lump-sum retirement package of $15 million. General counsel Nagin was paid $5 million; former Chief Executive Rakesh Gangwal got $15 million.
Said Hartshorn: "The thing I'd say about Wolf and all the airline leaders is that I miss working for people I can trust."
