Some thoughts:
1. Siegel did not cause US’ current predicament. Neither did Wolf and Gangwal, for that matter. US’ problems stem in large part from decisions made over a decade ago for the carrier to focus on short-haul/regional travel at the expense of long-haul domestic and international flying. Although US was able to cut some of its losses by shuttering its regional operations in the West, given the post-deregulation eastward shift of airline assets, it was only a matter of time until other legacy carriers (and ultimately, the LCCs) ate US’ lunch on the East Coast.
2. Siegel was hired to pick up where W&G left off – the duo ended the “US Scare” era, initiated a major rationalization of US’ fleet and route network, and made US a significant transatlantic player. However, W&G wisely realized that even the most comprehensive restructuring of US would be a short-term fix at best, and decided to pursue a merger. Since the current industry environment is not conducive to lucrative corporate combinations, the hope was that Siegel could obtain enough cost cuts in order for the company to survive until industry conditions improve within a few years. Unfortunately, the revenue environment has not improved quickly enough, and the upcoming financial pressures mean that the “dealmaking” which was supposed to occur in 2-3 years will have to take place within the next 2-3 MONTHS.
3. The asset sales are not intended to be a threat, but are a bona fide course of action should management prove unsuccessful in obtaining the cost savings necessary to keep the airline running until a better endgame can be worked out in the future.
1. Siegel did not cause US’ current predicament. Neither did Wolf and Gangwal, for that matter. US’ problems stem in large part from decisions made over a decade ago for the carrier to focus on short-haul/regional travel at the expense of long-haul domestic and international flying. Although US was able to cut some of its losses by shuttering its regional operations in the West, given the post-deregulation eastward shift of airline assets, it was only a matter of time until other legacy carriers (and ultimately, the LCCs) ate US’ lunch on the East Coast.
2. Siegel was hired to pick up where W&G left off – the duo ended the “US Scare” era, initiated a major rationalization of US’ fleet and route network, and made US a significant transatlantic player. However, W&G wisely realized that even the most comprehensive restructuring of US would be a short-term fix at best, and decided to pursue a merger. Since the current industry environment is not conducive to lucrative corporate combinations, the hope was that Siegel could obtain enough cost cuts in order for the company to survive until industry conditions improve within a few years. Unfortunately, the revenue environment has not improved quickly enough, and the upcoming financial pressures mean that the “dealmaking” which was supposed to occur in 2-3 years will have to take place within the next 2-3 MONTHS.
3. The asset sales are not intended to be a threat, but are a bona fide course of action should management prove unsuccessful in obtaining the cost savings necessary to keep the airline running until a better endgame can be worked out in the future.
