FORTUNE 500 2007  
FORTUNE 500    

Onboard the wild ride of Doug Parker

Barney Gimbel, Fortune writer

While Parker is an extrovert who can make people feel they're the most amusing characters he has ever met, his passion is competition and "anything analytical." The son of a meat cutter turned Kroger executive, he played tight end on the Albion College football team in his native Michigan, got his MBA at Vanderbilt, signed up with American Airlines (Charts, Fortune 500) at a job fair, and ascended through the financial side of the industry ever since. He became CEO of the ailing America West just ten days before 9/11, distinguishing himself in the aftermath for going back to Congress three times before winning a $429 million bailout.

Later that morning, on my January visit to the company's headquarters, Parker was fighting to stay awake during the weekly integration meeting, where representatives from each department report on the status of combining America West and US Airways. Though they had merged on paper more than a year ago and cut costs by an estimated $340 million, the two airlines were still effectively operating separately.

There were problems with union contracts, combining the reservations systems - even designing new uniforms for flight attendants. One executive told the group the airline was suffering an employee turnover rate of up to 15% as companies such as JetBlue (Charts), FedEx (Charts, Fortune 500), and Boeing (Charts, Fortune 500) snapped up the carrier's best mechanics and engineers with promises of higher salaries. "We need more incentive programs to keep our best people," the man said.

Parker's mind seemed elsewhere. He was oddly quiet, letting Scott Kirby, the company's president, run the show. Parker explained to me afterward that he was spending two-thirds of his time on the Delta deal: "Sometimes there's only so many things you can keep track of." At the moment he was thinking of his forthcoming testimony to the Senate Commerce Committee, which planned to grill him on his takeover plans. "That's not the fun part of the process," he says. "Delta has better cards to play. They're making the merger an emotional thing: It's bad for the consumer, it's bad for small cities, it's bad for employees. It's not true, but it's putting us on the defensive because all we can say is, 'No, we're not going to do those things.'"

In a packed Senate hearing room five days later, Frank Lautenberg, the New Jersey Democrat, asked him about the airline's default on its pension obligations. "If you can come up with $5 billion in cash for the merger, shouldn't US Airways pay those pensions back before buying other airlines?"

"Well," said Parker, stopping as the room erupted into loud applause and cheering. The walls were lined with uniformed Delta pilots in double-breasted blazers with brass buttons. The seats were packed with Delta flight attendants and retirees. Nearly everyone in the room was wearing a large red pin that read KEEP DELTA MY DELTA. Parker strained to keep a smile on his face.

"Senator, the $5 billion is not our money. That money is Citigroup's money and Morgan Stanley's money, and that money only comes to us if we acquire the airline, because they know full well the value that can be created by putting these two companies together, and they know that they will be paid back." Senator Lautenberg cut him off: "That's a very large hope, and I'm concerned about that."

Hope was on borrowed time. When I met with Parker and Eberwein two weeks later, in the bar of a trendy Charlotte restaurant, they looked worn out and dejected. Delta's creditors committee - effectively the company's board of trustees while it's in bankruptcy - had rejected their bid. In retrospect, Parker said, he underestimated the extent of the "natural conflict" on the creditors committee. Members representing such creditors as Boeing, Coca-Cola (Charts, Fortune 500), and Delta's pilots union tried to secure the best return for other creditors even as they "have a relationship with Delta's management team." That meant they chose more on emotion than on pure dollars, he said.

Parker was in withdrawal - he had loved the intensity and adrenaline of the chase. "It was like drinking from a fire hose that suddenly gets turned off," he said. "And it's weird to reintroduce yourself to your old life. My wife asked me if I could help her shop for our son's ninth birthday and I'm like, Well, yeah, I have time. She didn't recognize me."

The next morning it was back to nuts and bolts. We piled into an employee's SUV and headed to the company's Charlotte maintenance base. Parker and Eberwein were in town to host "Crew News," a twice-monthly question-and-answer session between employees and executives. The mechanics were ready for him in a large, whitewashed lunchroom, which reeked of mold and resentment.