USAir Plans to Take Year to Blend PSA’s Operations

SAN DIEGO — USAir anticipates that its $400-million acquisition of Pacific Southwest Airlines will clear regulatory hurdles by March 31 but its chairman said Thursday that it could take a year to actually combine the operations of the geographically diverse airlines.

USAir Group Chairman Edwin Colodny also predicted that PSA’s dominant role in the California air corridor eventually will be strengthened by the addition of a commuter airline that will feed passengers into the high-frequency flights operated by PSA.

But because USAir wants an “orderly combining” of the two airlines’ routes and work forces, it may take at least a year to integrate their flight schedules and other operations.

“Of all the mergers I could think of, this would be the least disruptive,” Colodny said at a breakfast with reporters in PSA’s headquarters here, referring to the schedule disruptions that have dogged past airline industry mergers.

Airline industry analysts believe that a smooth transition will be possible because PSA generated its $635 million in 1985 revenue from West Coast operations, while flights to and from the West Coast generated just 20% of USAir’s $1.8 billion in revenue. Consequently, the two airlines’ route systems should complement each other.

Plans Commuter Airline

USAir wants to bolster PSA’s muscle in the California corridor by buying or creating a West Coast commuter airline similar to Allegheny Commuter, which feeds passengers into USAir’s Eastern and Midwest flights.

Colodny dismissed the possibility that PSA’s 4,950-member labor force, which includes 3,500 Teamsters union members, would balk at the merger because relatively few of USAir’s 14,768 employees are represented by the Teamsters organization.

USAir, which successfully merged with Lake Central Airlines in 1968 and Mohawk Airlines in 1972, will “show a sensitivity to the need for an orderly combining of the work forces.” Colodny said.

Labor representation differences will be settled in accordance with “an established body of (labor law) procedures” that will determine who represents PSA’s union members after the proposed merger, Colodny said.

Despite staff duplications that will cause some layoffs, Colodny said USAir wants “to grow our presence on the West Coast . . . so there should be overall job enhancement.”

No Decision on Name

Colodny said he has not yet decided to eliminate the PSA name or its “catch our smile” slogan because both have “tremendous marketing appeal.”

In a related development Thursday, Standard & Poors downgraded the credit rating of both USAir and USAir Group, citing the $400-million acquisition price tag, “higher labor expenses to bring PSA employees up to USAir pay scales” and negative effects to be generated by the consolidation of “financially weaker” PSA.

But Standard & Poors offered a positive outlook on PS Group, which owns about 80% of Pacific Southwest Airlines’ stock. The San Diego-based holding company, which will retain its airline leasing and energy exploration and development operations, will “benefit greatly by proceeds from the sale and divestiture of its unprofitable airline operations,” S&P; said.