Us Airways Maps A New East Coast Strategy
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BoeingBoy
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US Airways Maps a New East Coast Strategy
By Keith L. Alexander
Washington Post Staff Writer
Wednesday, April 21, 2004; Page E06
US Airways plans to take on Southwest Airlines in Philadelphia next month with lower fares and add more direct flights between other key East Coast cities as part of a concerted strategy to protect its territory and stave off competition from low-fare carriers.
The Arlington-based carrier is finalizing plans to reduce walk-up fares by as much as 40 percent and eliminate Saturday-night-stay requirements for its Philadelphia flights, people familiar with the plans said yesterday. It also plans to replace some turboprops with jets and add more direct flights out of Washington's Reagan National, Boston and New York to capitalize on the large concentration of high-paying business travelers in those markets.
The changes, expected to be announced as early as next week, will be the first significant test for US Airways' new president and chief executive Bruce R. Lakefield, who was appointed Monday after the abrupt resignation of David N. Siegel.
"When it comes to competing with low-cost carriers, we have beach-front property," said Christopher L. Chiames, US Airways' senior vice president of corporate affairs.
Chiames and other US Airways officials declined to comment on the proposed fare changes.
"What I've seen of the plans so far, I'm very optimistic about its prospects for success if properly implemented," said Bill Pollock, head of the US Airways pilots union and a US Airways board member.
Early next month, the airline will resume concession talks with its pilots, one of the airline's largest unions. Lakefield is expected to resume his key negotiating role just as he had been during the past few weeks in an effort to smooth relations between the unions and senior management.
The airline, which secured more than $1.2 billion in pay and benefit cuts from its workers during its bankruptcy reorganization, says it needs to cut costs by an additional 25 percent. The airline has to show substantial cost reductions this summer to meet the terms of its agreement with the Air Transportation Stabilization Board, the federal panel that agreed to back $900 million of US Airways' loans.
Lakefield, 60, settles into his Arlington office for the first time today. Siegel's fate was sealed at the company's regularly scheduled board meeting earlier this week at a hotel just outside of Mobile, Ala., people familiar with the situation said. Chairman David G. Bronner serves as head of Retirement Systems of Alabama, US Airways' largest investor, located in Montgomery, Ala.
In recent weeks, Bronner had grown increasingly frustrated by workers' unwillingness to engage in meaningful negotiations on concessions with Siegel, the sources said. The former chief executive had lost the trust of the unions, stalemating the carrier's efforts to reduce costs enough to prevent it from defaulting on its federal loan guarantee and eventually return to profitability.
While the board was conducting its business in one part of the hotel on Monday morning, Bronner and Siegel were meeting elsewhere. Siegel had previously raised the possibility of his resignation in talks with close colleagues and he had not yet renewed his contract, which expired last month, the sources said.
Bronner and Siegel, 42, discussed whether Siegel was the best person to lead the struggling carrier through this critical phase, given the resentment he engendered among most union leaders.
Bronner said that Siegel should resign, and both men agreed that his departure was in the best interests of the company, sources familiar with the discussions said. What's more, if Siegel stepped aside before April 30, he was entitled to nearly $5 million in severance.
Bronner then summoned the board members and announced at an early afternoon meeting that Siegel had stepped aside. He proposed that the board choose Lakefield as Siegel's replacement, and Lakefield was unanimously elected, the sources said.
Calls to Bronner and Siegel were not returned.
"It seemed sort of all of a sudden, but it didn't entirely seem out of character or unreasonable of Dr. Bronner," said one official present at the meeting.
Siegel, Bronner and a handful of executives then passed along news of the changes to the airline's major creditors, including G.E. Capital and the Air Transportation Stabilization Board.
By Monday evening, Siegel had directed executives at the airline's headquarters along the Potomac to prepare a memo for employees and the media.
While surprised by the move, one of US Airways senior officials said Siegel should be admired for his accomplishments in the past two years. He noted that Siegel undertook a massive restructuring of the airline as he guided it through seven months of bankruptcy. But now it was time to move on, he said.
"Bruce is a great successor to Dave. Timing is everything. The time for Dave to be CEO ended and the time for Bruce began Monday," said the executive, who spoke only on condition he not be named. "The senior management team deeply admires Bruce Lakefield and enthusiastically supports him."
Employees at the airline said they were more at ease with Bronner and Lakefield at the helm. "I have tremendous confidence in Bruce and the highest regard for his character, integrity and commitment," said Pollock, the pilots union leader. "And we have continued appreciation for Dr. Bronner's interest in the success of our airline and the leadership of the board of directors."
By Keith L. Alexander
Washington Post Staff Writer
Wednesday, April 21, 2004; Page E06
US Airways plans to take on Southwest Airlines in Philadelphia next month with lower fares and add more direct flights between other key East Coast cities as part of a concerted strategy to protect its territory and stave off competition from low-fare carriers.
The Arlington-based carrier is finalizing plans to reduce walk-up fares by as much as 40 percent and eliminate Saturday-night-stay requirements for its Philadelphia flights, people familiar with the plans said yesterday. It also plans to replace some turboprops with jets and add more direct flights out of Washington's Reagan National, Boston and New York to capitalize on the large concentration of high-paying business travelers in those markets.
The changes, expected to be announced as early as next week, will be the first significant test for US Airways' new president and chief executive Bruce R. Lakefield, who was appointed Monday after the abrupt resignation of David N. Siegel.
"When it comes to competing with low-cost carriers, we have beach-front property," said Christopher L. Chiames, US Airways' senior vice president of corporate affairs.
Chiames and other US Airways officials declined to comment on the proposed fare changes.
"What I've seen of the plans so far, I'm very optimistic about its prospects for success if properly implemented," said Bill Pollock, head of the US Airways pilots union and a US Airways board member.
Early next month, the airline will resume concession talks with its pilots, one of the airline's largest unions. Lakefield is expected to resume his key negotiating role just as he had been during the past few weeks in an effort to smooth relations between the unions and senior management.
The airline, which secured more than $1.2 billion in pay and benefit cuts from its workers during its bankruptcy reorganization, says it needs to cut costs by an additional 25 percent. The airline has to show substantial cost reductions this summer to meet the terms of its agreement with the Air Transportation Stabilization Board, the federal panel that agreed to back $900 million of US Airways' loans.
Lakefield, 60, settles into his Arlington office for the first time today. Siegel's fate was sealed at the company's regularly scheduled board meeting earlier this week at a hotel just outside of Mobile, Ala., people familiar with the situation said. Chairman David G. Bronner serves as head of Retirement Systems of Alabama, US Airways' largest investor, located in Montgomery, Ala.
In recent weeks, Bronner had grown increasingly frustrated by workers' unwillingness to engage in meaningful negotiations on concessions with Siegel, the sources said. The former chief executive had lost the trust of the unions, stalemating the carrier's efforts to reduce costs enough to prevent it from defaulting on its federal loan guarantee and eventually return to profitability.
While the board was conducting its business in one part of the hotel on Monday morning, Bronner and Siegel were meeting elsewhere. Siegel had previously raised the possibility of his resignation in talks with close colleagues and he had not yet renewed his contract, which expired last month, the sources said.
Bronner and Siegel, 42, discussed whether Siegel was the best person to lead the struggling carrier through this critical phase, given the resentment he engendered among most union leaders.
Bronner said that Siegel should resign, and both men agreed that his departure was in the best interests of the company, sources familiar with the discussions said. What's more, if Siegel stepped aside before April 30, he was entitled to nearly $5 million in severance.
Bronner then summoned the board members and announced at an early afternoon meeting that Siegel had stepped aside. He proposed that the board choose Lakefield as Siegel's replacement, and Lakefield was unanimously elected, the sources said.
Calls to Bronner and Siegel were not returned.
"It seemed sort of all of a sudden, but it didn't entirely seem out of character or unreasonable of Dr. Bronner," said one official present at the meeting.
Siegel, Bronner and a handful of executives then passed along news of the changes to the airline's major creditors, including G.E. Capital and the Air Transportation Stabilization Board.
By Monday evening, Siegel had directed executives at the airline's headquarters along the Potomac to prepare a memo for employees and the media.
While surprised by the move, one of US Airways senior officials said Siegel should be admired for his accomplishments in the past two years. He noted that Siegel undertook a massive restructuring of the airline as he guided it through seven months of bankruptcy. But now it was time to move on, he said.
"Bruce is a great successor to Dave. Timing is everything. The time for Dave to be CEO ended and the time for Bruce began Monday," said the executive, who spoke only on condition he not be named. "The senior management team deeply admires Bruce Lakefield and enthusiastically supports him."
Employees at the airline said they were more at ease with Bronner and Lakefield at the helm. "I have tremendous confidence in Bruce and the highest regard for his character, integrity and commitment," said Pollock, the pilots union leader. "And we have continued appreciation for Dr. Bronner's interest in the success of our airline and the leadership of the board of directors."
ClueByFour
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They will never learn, apparently.BoeingBoy said:
In essence, they are going to match WN's fares and fare rules out of PHL. No huge suprise, and it almost has to happen.
The part about LGA, BOS, DCA having "high-paying business travelers" indicates to me that fares in LGA, BOS, and DCA won't be rationalized. They still don't get it.
With B6 in BOS and WN at BWI and B6 in both JFK and soon to be LGA, the existing model of bilking the "business flyer" (their characterization, not mine--see the TomBascom explaination from a few months back) is simply not going to continue to work.
Not quite. Reducing fares out of PHL affects every other city. Instead of booking DCA-SEA, for example, using a fare published for DCA-SEA, you book DCA-PHL-SEA using two fares. The system still treats it as a connection when you check-in. I do this all the time to take advantage of the PHL-SEA A fares.
To comment on the work of Dave Siegel...
I cannot disagree with employees that Dave Siegel lied to them and cheated them quite a bit. I am very close with many people that worked in TPA maintenence, and it will disgust me for the rest of my life that Dave closed the TPA hanger in the manner in which he did. It was the holiday time in 2002, and the employees were blindsided by the padlocks being put on the door. Shame on Dave for that. I still get teary eyed everytime I fly into TPA and I see both the DL & US hanger's sitting side by side. Generally, there is a SONG A/C sitting in front of DL's hanger, while the US hanger only has the proud flag logo on it's old building reminding fliers that they once completely dominated TPA. What makes it worse is that this was SUPPOSED to be the place, as promised by MGMT, where the Airbus S-checks would take place.
Shame on Dave for laying off thousands of workers at other stations at the last minute. I know that MCO, for example, was extremely hard hit when one day there were X amount of employees dealing with close to 100% load factors early in 2003, and the next day half of the staff was laid off. On the same day, the staff at IAH (as an off-the-top-of-the-head example) also was shrunk by close to 40%. I flew to IAH for the super bowl this past year... I was so impressed by US employees, but it made me so upset to see that they had to do so much with so little.
Shame on Dave for rejecting the PIT leases at the 11'th hour as well. It is my belief that these moves effectively ruined any chance he had to survive as the long term CEO of US Airways.
While I've basically called him a pathetic liar above, things could have been differnt if he had been open and honest from the get go. If he had at least given advance warning, maybe senior US employees would have had some time to at least consider transfers to other stations. Dave Siegel always portrayed himself as an honest guy who each week said "hi it's Dave and its Friday _____). Dave was far from honest with both labor and ACAA, and that was most certainly his downfall.
I'm sorry to see that things turned out in the manner in which they did. I have no doubt that David Siegel is an extremely intelligent man, and that makes things even worse. If only he could have been honest, relations with unions would probably be 10X better. Why cause the need for grievences? Why not either abide by contracts, or tell the unions what you want? There may never be an answer to this question.
Siegel was a brilliant businessman, in terms of numbers. I dare anyone on this baord to find me another person who could cut costs 2 billion dollars while in bankruptcy for such a short period of time. You simply can't.
Ahhh... what could have been! Maybe, however, Siegel's fiscal cuts may turn out to be a Godsend for US in the future.
I cannot disagree with employees that Dave Siegel lied to them and cheated them quite a bit. I am very close with many people that worked in TPA maintenence, and it will disgust me for the rest of my life that Dave closed the TPA hanger in the manner in which he did. It was the holiday time in 2002, and the employees were blindsided by the padlocks being put on the door. Shame on Dave for that. I still get teary eyed everytime I fly into TPA and I see both the DL & US hanger's sitting side by side. Generally, there is a SONG A/C sitting in front of DL's hanger, while the US hanger only has the proud flag logo on it's old building reminding fliers that they once completely dominated TPA. What makes it worse is that this was SUPPOSED to be the place, as promised by MGMT, where the Airbus S-checks would take place.
Shame on Dave for laying off thousands of workers at other stations at the last minute. I know that MCO, for example, was extremely hard hit when one day there were X amount of employees dealing with close to 100% load factors early in 2003, and the next day half of the staff was laid off. On the same day, the staff at IAH (as an off-the-top-of-the-head example) also was shrunk by close to 40%. I flew to IAH for the super bowl this past year... I was so impressed by US employees, but it made me so upset to see that they had to do so much with so little.
Shame on Dave for rejecting the PIT leases at the 11'th hour as well. It is my belief that these moves effectively ruined any chance he had to survive as the long term CEO of US Airways.
While I've basically called him a pathetic liar above, things could have been differnt if he had been open and honest from the get go. If he had at least given advance warning, maybe senior US employees would have had some time to at least consider transfers to other stations. Dave Siegel always portrayed himself as an honest guy who each week said "hi it's Dave and its Friday _____). Dave was far from honest with both labor and ACAA, and that was most certainly his downfall.
I'm sorry to see that things turned out in the manner in which they did. I have no doubt that David Siegel is an extremely intelligent man, and that makes things even worse. If only he could have been honest, relations with unions would probably be 10X better. Why cause the need for grievences? Why not either abide by contracts, or tell the unions what you want? There may never be an answer to this question.
Siegel was a brilliant businessman, in terms of numbers. I dare anyone on this baord to find me another person who could cut costs 2 billion dollars while in bankruptcy for such a short period of time. You simply can't.
Ahhh... what could have been! Maybe, however, Siegel's fiscal cuts may turn out to be a Godsend for US in the future.
USA320Pilot
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Anticipate significant BOS, LGA, & DCA expansion to the tune of about 200 additional flights per day. Expect more point-to-point long haul flying from these markets.
Regards,
USA320Pilot
Regards,
USA320Pilot
Walmartgreeter
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I pray you are right on these additions. I would only ask..why has U waited until NOW to do this...perhaps poor management? Greeter.USA320Pilot said:
ClueByFour
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"Long haul" ex-DCA and LGA will be relative, I guess. Caveat perimeter.
ClueByFour
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Question: can a -170 qualify for "commuter" status at DCA?
