Air Transport World

Western fights back. (Western Airlines)

Los Angeles--Despite four successive years of losses totaling more than $200 million on the bottom line, and a series of corporate crises and upheavals that might have pushed many a company over the brink, Western Airlnes entered 1984 convinced it no longer belongs on the airline "endangered species" list and that, belatedly, it finally is in a position to cope with deregulation.

"Our goal for 1984 is to demonstrate to the outside would that our direction is right and that we are poised to be profitable," sayd Gerald Grinstein, who on Jan. 9 became president and chief operating officer of the nation's oldest carrier (it was incorporated as Western Air Express on July 13, 1925, and made its first flight on April 17, 1926). "I would like to see the phrase 'financially troubled Western Airlines' forever buried," he added during an interview with ATW in February.

"Western has its feet on the ground now and I'm confident about the year ahead," says Lawrence H. Lee, the 40-year Western veteran who became president and CEO on April 11, 1983, and switched to the chairmanship (while remaining CEO) when he persuaded former chairman Grinstein to come aboard full-time in January. "We have staked out our territory, and now we are out to defend it."

Lee is given full credit by Western's management, employes, and Grinstein--who calls Lee "the most underrated CEO in the airline industry today"--for the beginnings of a turnaround that in 1983 saw the carrier post its first second-half operating profit in five years.

The overall year was not a good one; Western had a net loss of $54.5 million compared to a $44-million loss in 1982, and the 1983 figure would have been a horrendous $96 million except for a $41.5-milion gain on a pension plan termination. The 1983 operating loss was $56.4 million, up from $30.8 million in 1982, but all of it came in the first half as fare wars and an ill-considered Hawaii fare promotion drove yields down to 9.3 cents in the first quarter. By the fourth quarter, yields were up to 11.39 cents and

Western's ASM cost of 7.37 cents was one of the lowest among the U.S. majors. A dominant carrier

And with its finances in some semblance of order, a new and apparently stable management team, two strong hubs from which it serves 63 airports (27 of which have been added since May 1982), a new schedule and revamped marketing program designed to attract the business traveler, and an order in place for 21 Boeing 737s--nine of them the new dash 300 model--Western in 1984 is ready to solidify its position as, in Lee's words, "The Airline of the West," and in Grinstein's words, "a very strong regional carrier, the dominant carrier west of, say, Texas."

When he was tapped for Western's presidency a year ago, Lee defined three objectives that he felt it was imperative to achieve if the carrier was to survive 1983 and be in a position to take advantage of what promised to be a strong 1984. They were creation of a strong management team that would be worthy of the trust of both the airline's employes and the public; restructuring of a debt load about which he says "the load itself was not unmanageable but the repayment schedule was," and establishment of a "Partnership" program through which employes would exchange significant wage cuts for a 32% ownership in their company--the highest percentage of employe ownership in the airline industry. …

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