Siegel Resigns

[El Gato]

Okay, since you seem to have all the answers, tell me this. How many times do emplyees have to give to save the company. The first time the employees gave the company everything it wanted. The second time, the company extorted the money through threats of liquidation and, yes, got everthing it wanted. That still wasn't enough. So why should we believe Dave knew what he was doing during the first round (voluntary concessions) and the second round (extorted concessions)? And why, pray tell, should we believe that the third time will be a charm and they won't come around for a fourth time or a fifth time? How many more active employees and furloughed employees have to file bankruptcy before we come the the realization that there never was a plan except to extort and furlough and downsize... and lie? And cheat! And make deals knowing full well that they have no intention of honoring their part of them!

Why? Because, do you know what the alternative to giving a portion up is?

Giving up everything, as you have just done.

Instead of taking a 18% paycut or work rule change, you have just taken a 100% paycut? How do you like those apples, unionman?

Tell you what, I am thinking of starting an airline. It will based down south, and will be flying some of the ex-usairways equipment. I will offer you a job starting at $5.50 an hour to sling bags.

Don't like that? Too bad for you. Guess you will be loafing around the house(until your mortgage holder reposseses it from you).

 

[DCAflyer]

OK, what should he have done to "strengthen the East Coast franchise"?

How should he have cut "non-labor costs?" How do we know they are not already cut to the bone?

Is he supposed to have figured out that traffic would return but pricing would not?

How was he supposed to have "improved the route structure?" What airlines have materially changed their route structure at all in the past few years? Only one I can think of is AA with more point-to-point flights, with undocumented results.

How did angering the state of PA result in Southwest entering Philadelphia faster? How did the state of PA figure that hurting US Airways further is in the state's or its residents' best interests?

1) I don't know that there was a lot he could do to strengthen it, but he was the one who said that was the plan... not me. Truth be told, I thought that was pretty stupid (read my prior posts) and that the money was to be made in long-haul flights.

2) He could have cut non-labor costs by increasing stage lengths in our flying. These 30 minute DAY-PIT hops ain't doin' it. We need long haul point-to-point... SFO-BOS, LAX-IAD, SEA-MIA. Keeping our planes in the air for 4-5 hours at a time would go a long way at spreading out costs, thus lowering CASM's.


3) Yes he should have figured out that pricing wouldn't return because that is exactly what corporate travel managers have been saying since before 9/11, when companies began telling their traveling employees and travel managers to start paying attention to price.

4) He could have improved the route structure by initiating longer-haul flights, closing a hub that is 300 miles from another hub, opening a focus city/transer point/mini-hub (whatever you want to call it) somewhere near the Mississippi River to take advantage potential fare-paying passengers that don't live between Washington and Boston.


5) Well, I just think it's interesting timing that in the midst of all the Pennsylvania negotiations, when it was Alleghaney County and the State of Pennsylvania (along with PHL) against UAIR, that the big announcement came from that LUV-filled airline... only about two months, by the way, after it said it had no plans to add new cities for at least a year. I can't prove anything, but by the same token there's no way you'll convince me, that a telephone call wasn't placed from Pennsylvania to Dallas. Just too coincidental for me.

 

[etops1]

u know what el gato. i thought dave could turn this company around . i am sad to see him go. no doubt the unions do play a big role on wether this company makes it or not. but i am sick and tired of you bashing u employees. so shut the fcuk up!!!!!! . i love that store they have awesome clothes.

 

[DCAflyer]

Why? Because, do you know what the alternative to giving a portion up is?

Giving up everything, as you have just done.

Instead of taking a 18% paycut or work rule change, you have just taken a 100% paycut? How do you like those apples, unionman?

Tell you what, I am thinking of starting an airline. It will based down south, and will be flying some of the ex-usairways equipment. I will offer you a job starting at $5.50 an hour to sling bags.

Don't like that? Too bad for you. Guess you will be loafing around the house(until your mortgage holder reposseses it from you).

Yes, I know what the alternatives are and I know that people can barely live on what they are making now. There has to be a time when people say enough is enough and there are risks that are worth taking. The hard-working people of US Airways are at that point and they deserve better than the management team we have had for the last two years. They have built this airline through hard work and sweat and genuinely caring about the airline, their fellow employees, and our customers.

From what I've read, I don't think you have the brains to start an airline.

I don't loaf around my house and my mortgage is paid off, so I'm not worried about repossession (actually, with real estate, it's called forecloure (see my brain comment, above)). And besides, believe me when I say I have more money now than you can ever hope to have in your lifetime.

Oh, and one more thing... I am far from a union man (which, by the way, is two words (again, see my brain comment, above)). Just ask Pitbull how much of a union man I am.

Good day,
DCAflyer

 

[Boeingguy]

From another airline forum:

"I knew this was going to happen, and I'll tell you why.

Mr. Seagull was my former boss at another airline, I knew then that he didn't have the experience to do any good.

Seagull started his career out of Harvard's MBA program with Continental Airlines. He worked for Gordon Bethune as a planner, the equivalent of SWA's scheduling planning. Gordon set him up to take delivery of the EMB-145's that CAL was buying for the then wholly owned Coex.

All Seagull had to do was ensure the checks were signed and send airplanes to markets that had no service, some of which were failures, or replace props with jets on exsisting routes. Back then CAL was making money and the autopilot was "ON".

No real big decisions to make. He did have to weather a contract with Coex, but I'm sure he was getting his tips from Uncle Gordo.

Seagull left Coex while things were pretty good. He then went to work for Budget, the rentacar people. Within 7 months he left, citing disagreements in operational philosophy(read, they didn't like his style). Or, Budget wasn't getting what they were paying for.

When he took the reigns at USAir I thought to myself, this guy is in over his head. He's not used to dealing with bigtime pressure cookers, and folks that can apply real heat.

In the first few months of working for USAir things didn't change. In that I mean Seagull didn't do what he should have done, which was to define the airline. This was the same problem Wolfe neglected to take on. UsAir has had a history of trying to compete on too many playgrounds at the same time. What are you going to do? Are you going to be a domestic carrier, regional, international, low-fare, high-fare, or what? Seagull never picked one, the same as Wolfe. Do one thing, and do one thing really well is the key. Apparentley neither of those two could figure it out.

Then there's the problem with SWA, and what to do. Seagull should have read his history book about SWA and USAir battles. Last October we announced plans to go to PHL. Had Seagull been paying attention he maybe would have been able to set a plan in motion. But, he did nothing. Up until yesterday he was still doing nothing, unless you count trying to bring employees' wages down to the rock bottom to try to get back in the black. That's hardly a plan, even at the last minute.

I think it's fair to say that Seagull bit off way more than he was able to chew. I feel sorry for those USAir employees and the investors in the Alabama Retirement Systems that stand to lose their jobs and their money.

For those of you that saw the moive, "Kingpin", you may remember the phrase "Munsoned". Well the employees of USair and ARS have now been "Seagulled". "

 

[airbiiguy]

Good news, we need some fresh air. He was not credible to any labor groups anymore. Labor gave for what they thought was a "plan". It never happened the way they said it would (lied) so now we are in this predicament. He lied again during the webcast saying he was going to stay and fight. Guess he took the money and ran.

 

[FlyingHippie]

It worked!

 

[abonny]

Yeah, but I caution you that just two years ago we thought the same of Dave. Remember, he came with accolades from Gordon Bethune. Yes, I think we should trust him, because we don't have a choice right now. But we certainly should not blindly trust him. If he has half a brain, he should already know what we are made of. It's time for him to prove himself to us.

DCAflyer,

I was in the audience in DCA the first time Siegel spoke to the employees.

Although I came with an open mind, by the time this guy got off the stage I had a sinking feeling in my stomach.

This is what I saw that day:

1 A man who was trying to sell himself by taking credit for what others had accomplished (Bethune)

2. A man who was already looking for a scapegoat in the event he could not produce what he was promising. (Wolf, Gangwal, 911, LCC's, etc.)

3. A man who in one breath promised that 'he would not allow anyone who was not labor friendly to work at or with US Airways, while at the same time announcing and even bragging about who he had brought with him to work here. (at least one of which is a pretty well-known Union Buster)


I do not recall Bethune ever saying much about Siegel one way or the other. I certainly do not recall him making any public "accolades" about Siegel. What I do remember is Siegel telling us how much Gordon thought of him.

Pick up a copy of Bethune's book "From Worst to First" you will see that the only mention Bethune makes of Siegel is that he was the head of scheduling.


While we kept hearing the connection being made between the two men (most of it by Siegel) it did not escape me that Siegel came to U via a rental car company NOT CAL.

The only thing I will agree that Siegel was very good at was his own "self-Promotion."

Bruce Lakefield is the guy named to take the lead and he has agreed to come out of retirement to try and clean up the mess his predecessor is leaving behind. We either embrace this guy thereby trying to get us back to profitability or we can stay our present course possibliy ceasing to exist in the near future.

As I see it, we only have one way to go after Siegel and that is UP!

 

[BoeingBoy]

I couldn't get the link to go anywhere except the sign-in page and the article was lengthy and mostly a rehash of what has appeared elsewhere - except for this paragraph:

"Mr. Siegel's resignation was apparently sought by the airline's chairman, David G. 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, Ala., where Mr. Bronner runs Alabama's pension fund."

Jim



Moderator's note: Merged threads.

 

[DCAflyer]

Greetings,

I do recall Bethune specifically recommending Dave to Wolf when Wolf was trying to find his replacement. As I remember it, Wolf placed a call to Bethune and the one name Gordo came up with was Siegel.

I did read the book and actually Bethune was somewhat complementary of Dave, but that was really only over scheduling issues and figuring out which flights weren't making money are cutting those, and also figuring out that the the A300 wasn't a good A/C for Continental and that they couldn't make money from it. From those comments and the fact that Bethune did recommend Dave, I took that to be pretty high praise, especially since I have always thought the world of Gordon. In fact, I would move heaven and earth to have him come over to UAIR.

I too believe that we need to get behind Lakefield. But I don't believe we should blindly follow him or anyone else. He needs to show us where he is leading us.

 

[EyeInTheSky]

 

[Piedmont4US]

I had no doubts in my mind that he really did not want to leave. But with another quarter gone by and a possible $125+ million loss to report, and WN coming in a few weeks. Somethings gotta give, and soon. But also Dave isn't really 'liked' by the majority, and he did make some mistakes, as Dr. Bronner has mentioned before with his 'corporate speak'. We all know concessions must occur, although they probably will now that the playing field has changed considerably for both labor and management. Anyone that thinks they won't or should not, is going to be living in deep doo-doo.

 

[EyeInTheSky]

Chief Executive of US Airways Quits Amid Strife
By MICHELINE MAYNARD

Published: April 20, 2004


he chief executive of US Airways, David N. Siegel, who vowed last month that he would not run from the airline’s deepening financial problems but had reached a logjam with its unions, resigned yesterday.

Bruce Lakefield, a former Lehman Brothers executive who is a member of the board at US Airways Group, the airline's parent, will succeed him.

Mr. Siegel's resignation was apparently sought by the airline's chairman, David G. 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, Ala., where Mr. Bronner runs Alabama's pension fund.

Mr. Lakefield, the former chief executive of the international operations of Lehman Brothers, joined the board last year as one of eight members chosen by Mr. Bronner, whose Retirement Systems of Alabama became the airline's biggest shareholder in 2002.

Mr. Lakefield, a graduate of the Naval Academy who served on submarines during his military career, has worked closely with Mr. Bronner during his months on the board and has been chairman of two key committees, helping him to forge ties with the airline's unions. He retired from Lehman Brothers in 1999; he had led its international operations in London for four years.

In a statement, Mr. Siegel said he took advantage of an escape clause in his contract with US Airways, which he joined in 2002. Under it, Mr. Siegel had the option to leave during a 30-day window, which began on March 31, and keep a $5 million bonus.

"I have great affection for the airline and its outstanding employees, and I want to see the company succeed," Mr. Siegel said in a statement that the airline released late yesterday afternoon. "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."

As recently as March 23, Mr. Siegel vowed that he would stay to help the struggling airline avert another brush with bankruptcy, telling employees on a telecast he would stay and fight for the airline's survival. "I'm not going to cut and run," he said. In fact, he said he had met recently with Mr. Bronner to discuss a new, presumably lower pay package similar to those received by chief executives at low-fare airlines.

Mr. Siegel's short tenure was tumultuous. Only four months after his arrival, US Airways filed for Chapter 11 bankruptcy protection in July 2002. The move came less than a year after the Sept. 11 attacks in Washington and New York that devastated its traffic, which is overwhelmingly concentrated on the East Coast.

But Mr. Siegel led a swift overhaul of the airline, cutting costs by $1.9 billion a year and reducing its total debt by $2 billion. Backed by Mr. Bronner's $500 million investment, US Airways emerged from bankruptcy in April 2003 after obtaining $900 million in loan guarantees from a federal board.

In hindsight, analysts have criticized the airline for coming out of bankruptcy too quickly and not taking steps to fend off competition from low-fare carriers like Southwest Airlines and JetBlue Airways.

That threat became evident last October, when Southwest announced plans to begin service from Philadelphia, one of US Airways' three hubs. The others are Pittsburgh and Charlotte, N.C.

Mr. Siegel, on the employee telecast, declared that Southwest was "coming to kill us" and pressed unions to grant a third round of contract concessions on top of two sets of wage and benefit cuts they gave while the airline was in bankruptcy protection.

Indeed, Mr. 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.

It was not clear whether that plan would be considered. Indeed, some analysts have raised the question of whether the airline will have to again seek bankruptcy protection, a fate Mr. Siegel had vowed to avoid with further cuts.

Yet US Airways' unions, who would have contributed roughly half the cost cuts Mr. Siegel said were necessary to make the airline as lean as its low-fare rivals, resisted loudly. Only its pilots union agreed to negotiate, and even the pilots called for Mr. Siegel's resignation last year.

However, its mechanics, flight attendants, and ground personnel refused to open talks, even though Mr. Siegel wanted to have the negotiations completed by summer.

Leaders of the unions, which hold four seats on US Airways' board, had met with Mr. Bronner in recent months to voice their dismay and appeared to have forged a bond with him, although his state is noted for its right-to-work laws.

Their refusal to discuss further concessions led to Mr. Bronner’s request on behalf of the board that Mr. Siegel step aside, the people briefed on the conversation said. In a statement, Mr. Bronner said Mr. Siegel had “done an admirable job leading the company through a critical period.â€￾

Mr. Bronner and Mr. Lakefield declined to comment last night through a US Airways spokesman. Union officials said Mr. Siegel's departure was the right move.

Even as Mr. Siegel clashed with unions, US Airways' financial position deteriorated, putting in default of the covenants of its federal loan guarantees, prompting it to renegotiate those terms earlier this year.

Should it seek another round of bankruptcy protection, it would be in default once more. A complicating factor is that the federal government holds 10 percent of the airline under terms of the loan package.

Analysts said the airline needed to take steps to shore up relations with its corporate customers, some of whom have defected from US Airways in recent months as low-fare carriers have expanded their East coast service.

Peter Buchheit, director of travel services for the Black & Decker Corporation, based in Towson, Md., said he wanted to see US Airways remain a "viable entity."

But long term, Mr. Buchheit said, the airline needed to be run by an experienced airline executive.

Kevin P. Mitchell, chairman of the Business Travel Coalition, which represents corporate travel departments and business travelers, added the airline required "someone known and respected, who can put a complete and viable plan on the table quickly and who has the leadership skills to execute," Mr. Mitchell said.

 

[BoeingBoy]

PIT Trib-Review article...

US Airways CEO Siegel bails out

By Thomas Olson
TRIBUNE-REVIEW
Tuesday, April 20, 2004

Despite assurances he'd stay and fix US Airways' problems, CEO David Siegel suddenly stepped down Monday -- fueling speculation the nation's seventh-largest airline could be headed for liquidation or possibly a merger.

Full Article

[It does mention the possibility of a $197 million loss for the quarter]


PIT Post-Gazette article...

US Airways chief resigns after two turbulent years
Siegel will be replaced by board member; airline's sky-high problems remain

Tuesday, April 20, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette

David Siegel is gone after two tumultuous years as chief executive officer of US Airways, exercising his contractual right yesterday to leave the embattled carrier and still receive as much as $4.5 million in a severance package that extended only through the end of April.

Full Article

Jim

 

[BoeingBoy]

US Airways: The Siegel era

Tuesday, April 20, 2004
Pittsburgh Post-Gazette

March 6, 2002: Siegel resigns as CEO of Avis Rent a Car System Inc. after less than six months on the job to become CEO at US Airways.

March 28, 2002: US Airways says it will seek federal loan guarantees to help stem mounting financial losses caused by a sharp drop in traffic after 9/11.

April 18, 2002: US Airways' pilots union agrees to let the airline and its commuter affiliates double the number of lower-cost regional jets they can fly, from 70 to 140.

May 30, 2002: US Airways said it's planning a new commuter airline subsidiary, MidAlantic Airways, that would fly regional jets and be based at Pittsburgh International.

June 10, 2002: US Airways applies for $900 million in federal loan guarantees from the Air Transportation Stabilization Board.

July 26, 2002: Vowing to share the pain with other employees, Siegel cuts his annual salary 20 percent, or $150,000, to $600,000 and says he will forgo bonuses and pay increases.

Aug. 11, 2002: US Airways files for Chapter 11 bankruptcy, and within weeks announces a 16 percent cutback in flights at Pittsburgh International.

Sept. 19, 2002: A re-vote by unionized mechanics and an initial vote by unionized reservations, gate and ticket agents gives the airline an additional $222 million in annual cuts.

Sept. 26, 2002: The Retirement Systems of Alabama, a public pension fund, emerges as the lead bankruptcy investor. The pension fund's head, David Bronner, would go on to serve as chairman of the airline, becoming Siegel's boss.

March 22, 2003: US Airways and its pilots union agree to a new, less generous pension plan, ending an impasse that threatened its emergence from bankruptcy.

March 31, 2003: US Airways emerges from Chapter 11 and promptly discloses it has canceled its leases at Pittsburgh International Airport.

May 6, 2003: US Airways earns a paper profit of $1.6 billion, aided by cash infusions arising from its exodus from bankruptcy. Excluding the one-time gains, it lost $282 million in the first quarter.

May 12, 2003: US Airways strikes deal to buy 170 regional jets.

June 10, 2003: A day before meeting with state political leaders, Siegel tells analysts in New York that if the airline can't get costs down enough in Pittsburgh, it will pull its hub from the market.

June 11, 2003: Gov. Ed Rendell offers the airline a $263.9 million package aimed at keeping US Airways' hub in Pittsburgh.

Sept. 17, 2003: US Airways proposes a mix of higher hotel, sales and car rental taxes to raise $500 million that could be used to slash the Pittsburgh International's debt.

Oct. 8, 2003: US Airways pledges to maintain its Pittsburgh operations at current levels through Labor Day, 2004.

Oct. 28, 2003: Southwest Airlines announces plans to begin service in May, 2004, in Philadelphia, US Airways' most important and profitable hub.

Nov. 12, 2003: Siegel says the airline will need to seek additional, steep concessions from unionized workers.

Dec. 16, 2003: Leaders of US Airways pilots union call for the ouster of Siegel and Chief Financial Officer Neal Cohen.

Dec. 18, 2003: Bronner says Pittsburgh remains an "integral part'' of the US Airways system and notes the board rebuffed the pilot union's call for the resignation of Siegel and Cohen.

Jan. 6, 2004: Siegel lashes out at unions, saying a discussion of his new recovery plan is being put on hold because of continued resistance from labor leaders.

Jan. 8, 2004: Bronner discloses that the airline has hired investment banker Morgan Stanley to seek possible buyers for its East Coast shuttle, hub operations and other assets.

Feb. 3, 2004: Pilots agree to new round of talks on concessions.

March 12, 2004: The Air Transportation Stabilization Board eases restrictions on loan guarantees, providing US Airways with more time to work on a plan to regain profitability.

March 24, 2004: In a Web cast to employees Siegel says the airline is running out of time to cut costs at Pittsburgh International and pleaded directly with the rank-and-file for more sacrifices.

March 31, 2004: Leaders of the machinists union call for Siegel to step aside.

April 13, 2004: Days after pilots union hard-liners ousted half of the union's four-member negotiating team, the other two members quit.

Jim