USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
Yesterday’s sudden announcement that Dave Siegel would step down as US Airways’ chief executive officer leaves the future uncertain for the airline and its employees. Siegel said in a statement his "leaving is in the best interests of the company, as management seeks to secure the necessary changes to make the airline competitive."
"Unfortunately, the past two years have been difficult for all of us, and I believe our ability to move forward and make additional changes require a change in leadership." He said he hoped his departure would be "a first step in a healing process that will enable the company to complete its restructuring."
Apparently the airline's deepening financial problems and a logjam with its unions about the upcoming restructuring led to Siegel’s departure, which permits him to obtain a $4.5 million severance package.
The New York Times reported Siegel's resignation was sought by the airline's chairman, David Bronner, according to people briefed on the conversation. The request came at the beginning of a three-day meeting by the US Airways board in Montgomery, Alabama.
According to the Washington Post, the board believed Siegel and the unions had reached an impasse in negotiating needed cost cuts. The unions, which have four of 11 seats on the board, said they no longer trusted Siegel but were willing to work with Lakefield and US Airways Chairman David G. Bronner, according to a US Airways source close to the negotiations.
"Mr. Siegel's resignation, which was not unexpected, was apparently due to unwillingness of the airline's unions to consider further labor cost concessions without a change in senior management, a situation that has become common in the airline industry over the past year," said Standard & Poor's credit analyst Philip Baggaley.
Separately, Siegel had been scheduled to present a business plan to the US Airways board today that was to have outlined steps the airline would take to reduce its costs to the level of low-fare carriers, particularly Southwest, which appears to now be the direction of the current management team.
The Pittsburgh Tribune Review today noted "Mr. Lakefield has been appointed to the position to continue with the company's business plan to become a stronger, more competitive airline," said airline spokesman David Castelveter this morning.
The Post noted, "This is the sacrificial lamb to satisfy the union gods and to save the company and save the union members' jobs," said Raymond Neidl, an airline analyst with Blaylock & Partners LP. Jack Stephan, spokesman for the US Airways pilots union, praised Lakefield. "He brings with him perhaps the most important tool -- his record of team-building. He respects the employees."
Interestingly, Siegel's resignation activates a similar severance package for Chief Financial Officer Neal S. Cohen. US Airways spokesman David Castelveter said Cohen has no plans to leave, the Post noted.
Passenger flying out of Pittsburgh this morning hope this signals a new chapter for US Airways. "It's a good thing," said Todd Perz of Pine, who travels almost every week as a sales executive. "They needed to restructure. They need a fresh start and to make major changes. Change starts at the top," the Tribune-Review noted.
From this observer’s perch, Lakefield will be the leader to get the company through the next round of negotiations with its unions, which will include rank-and-file ratification of the pending RJ Scope relief and so called “Going Forward Plan†across-the-board contract changes.
Meanwhile, reports indicate the company could seek contract changes similar in scope to America West Airlines, which today posted a Q1 profit and then told analysts in a conference call it expects to be profitable for the full year, reiterating the outlook given in the previous quarter.
For the long-term, provided unions agree to participate in the new business plan designed to dramatically boost productivity and drive down unit costs, then I expect a new CEO or COO to be named with potential candidates former Continental president Greg Brenneman, current board member and former United Airlines president Rono Dutta, and US Airways’ senior vice president of corporate planning and express Bruce Ashby. However, with the changing economic climate, after Lakefield’s work is complete, Brooner could decide it may be in the best interests of RSA to sell or merge the company.
Respectfully,
USA320Pilot
"Unfortunately, the past two years have been difficult for all of us, and I believe our ability to move forward and make additional changes require a change in leadership." He said he hoped his departure would be "a first step in a healing process that will enable the company to complete its restructuring."
Apparently the airline's deepening financial problems and a logjam with its unions about the upcoming restructuring led to Siegel’s departure, which permits him to obtain a $4.5 million severance package.
The New York Times reported Siegel's resignation was sought by the airline's chairman, David Bronner, according to people briefed on the conversation. The request came at the beginning of a three-day meeting by the US Airways board in Montgomery, Alabama.
According to the Washington Post, the board believed Siegel and the unions had reached an impasse in negotiating needed cost cuts. The unions, which have four of 11 seats on the board, said they no longer trusted Siegel but were willing to work with Lakefield and US Airways Chairman David G. Bronner, according to a US Airways source close to the negotiations.
"Mr. Siegel's resignation, which was not unexpected, was apparently due to unwillingness of the airline's unions to consider further labor cost concessions without a change in senior management, a situation that has become common in the airline industry over the past year," said Standard & Poor's credit analyst Philip Baggaley.
Separately, Siegel had been scheduled to present a business plan to the US Airways board today that was to have outlined steps the airline would take to reduce its costs to the level of low-fare carriers, particularly Southwest, which appears to now be the direction of the current management team.
The Pittsburgh Tribune Review today noted "Mr. Lakefield has been appointed to the position to continue with the company's business plan to become a stronger, more competitive airline," said airline spokesman David Castelveter this morning.
The Post noted, "This is the sacrificial lamb to satisfy the union gods and to save the company and save the union members' jobs," said Raymond Neidl, an airline analyst with Blaylock & Partners LP. Jack Stephan, spokesman for the US Airways pilots union, praised Lakefield. "He brings with him perhaps the most important tool -- his record of team-building. He respects the employees."
Interestingly, Siegel's resignation activates a similar severance package for Chief Financial Officer Neal S. Cohen. US Airways spokesman David Castelveter said Cohen has no plans to leave, the Post noted.
Passenger flying out of Pittsburgh this morning hope this signals a new chapter for US Airways. "It's a good thing," said Todd Perz of Pine, who travels almost every week as a sales executive. "They needed to restructure. They need a fresh start and to make major changes. Change starts at the top," the Tribune-Review noted.
From this observer’s perch, Lakefield will be the leader to get the company through the next round of negotiations with its unions, which will include rank-and-file ratification of the pending RJ Scope relief and so called “Going Forward Plan†across-the-board contract changes.
Meanwhile, reports indicate the company could seek contract changes similar in scope to America West Airlines, which today posted a Q1 profit and then told analysts in a conference call it expects to be profitable for the full year, reiterating the outlook given in the previous quarter.
For the long-term, provided unions agree to participate in the new business plan designed to dramatically boost productivity and drive down unit costs, then I expect a new CEO or COO to be named with potential candidates former Continental president Greg Brenneman, current board member and former United Airlines president Rono Dutta, and US Airways’ senior vice president of corporate planning and express Bruce Ashby. However, with the changing economic climate, after Lakefield’s work is complete, Brooner could decide it may be in the best interests of RSA to sell or merge the company.
Respectfully,
USA320Pilot
