<?php 

// Set the locale to something that's UTF-8 capable
setlocale(LC_ALL, 'en_US.UTF-8');

$str = "a\u0308a\u0308";

// Convert the codepoints to entities
$str = preg_replace("/\\\\u([0-9a-fA-F]{4})/", "&#x\\1;", $str);

// Convert the entities to a UTF-8 string
$str = html_entity_decode($str, ENT_QUOTES, 'UTF-8');

// Convert the UTF-8 string to an ISO-8859-1 string
echo iconv("UTF-8", "ISO-8859-1//TRANSLIT", $str);