Airline merger deemed right move; terror changed situation

ST. LOUIS -- Optimism soared as high as 747s above Lambert Airport two years ago when American Airlines completed its buyout of bankrupt Trans World Airlines, saving thousands of jobs and retaining the St. Louis airport as a vital hub.

Two-and-a-half years later, half of those TWA workers have lost their jobs. As of November, American will cut the number of departures out of St. Louis by more than half, to 207 from 417, the company announced last week. Nonstop service will be axed to 27 destinations. Smaller planes will be used. And some believe the scaling back isn't finished yet.

It's not that Fort Worth, Texas-based American made a mistake in purchasing debt-ridden TWA, experts say. Nor, they say, has the airline betrayed its adopted community.

Simply put, fate -- and the terrorists -- intervened.

"In a very real sense, the terrorists won," said Michael Boyd, president of the Evergreen, Colo.-based Boyd Group, an aviation consulting firm. "Victim: St. Louis.

"Nine-11 and the inept aftermath of it basically reduced the air transportation system in revenues by 20 percent. That changed everything."

American executive vice president for marketing Dan Garton said the Sept. 11, 2001, terrorist attacks were only part of the problem.

"We've had a war, terrorist threats and a SARS epidemic," Garton said. "No one could have predicted this turn of events."

Still, for some in St. Louis, there was a sense of betrayal.

Mike McDermott was laid off in July after 28 years as a flight attendant, first for TWA, then for American.

"Three years ago I told everybody we needed our seniority or the merger was going to be disastrous," McDermott said. "There is no question we were all lied to. The idea of two great airlines, one great future, was nothing but a farce. It was a way to get the politicians on their side in order to get the merger approved."

About 1,500 jobs will be lost when the latest cuts take effect Nov. 1. Many of those workers are former TWA employees who went to the bottom of American's seniority ranks with the merger. Of the 20,000 or so TWA employees at the time of the merger, about 10,000 will still be with American after the latest cuts, an American spokesman said.

McDermott, a former union leader, questioned those numbers.

"If there are 5,000 overall TWA employees who are continuing to work, I'd be surprised," he said. "They got rid of 80 percent of the pilots and 100 percent of the flight attendants. Every flight attendant who worked for TWA is laid off."

Meanwhile, about 500 more workers will be laid off Sept. 15 when American closes a reservations office in St. Louis.

This week's news was the latest in a long line of gloomy developments for the aviation industry here.

TWA, based in St. Louis, struggled for more than a decade to stay afloat despite losing money year after year after year. The downtrodden but proud airline was about to go under for good, filing for bankruptcy in January 2001, when American announced plans to purchase its assets.

'A brilliant stroke'

Three months later, top executives from both airlines gathered with employees in an emotional merger ceremony in a hangar at Lambert. TWA and American jets stood nose-to-nose on an adjacent runway. Many longtime TWA employees cried -- tears that were, in part, sadness at the loss of TWA, but mostly, happiness that they could keep doing their jobs for a profitable, vibrant company like American.

"The purchase of those assets from TWA was a brilliant stroke of strategy for American Airlines," Boyd said. "It was a good move then. Having Chicago, Dallas and St. Louis as mid-continent connecting hubs, they could dominate the business."

Garton agreed.

"Just take a minute and go back to that time," he said. "Our operations in other hubs were essentially at capacity. We had demand we couldn't meet. We needed another way to take people east and west. We were making money on almost all of our flights, and we were facing a United-US Air merger.

"Now, the world is completely topsy-turvy."

Some Missouri politicians wonder why American has singled out St. Louis and former TWA workers to take the brunt of the cutbacks. Even as Lambert flights are cut in half, American is growing operations at the Chicago O'Hare and Dallas-Fort Worth hubs.

"In two short years, a promising acquisition has turned into a string of broken promises," Sen. Kit Bond, R-Mo., said.

U.S. Rep. Kenny Hulshof, R-Mo., said American executives told St. Louis area congressmen during the merger talks that job losses "would not fall disproportionately on TWA employees. Those statements were false."

But analyst Juli Niemann of RT Jones in St. Louis said American should be praised, not scorned.

"Basically, American gave them (laid-off employees) three years they wouldn't have had," she said.