David Siegel Gone

[Flying Freddie]

Press Release Source: US Airways Group, Inc.


US Airways Announces the Resignation of David Siegel as President and Chief Executive Officer
Monday April 19, 5:35 pm ET
Board of Directors Names Bruce Lakefield Chief Executive


ARLINGTON, Va., April 19 /PRNewswire-FirstCall/ -- The US Airways Group, Inc. (Nasdaq: UAIR - News) Board of Directors today announced the resignation of President and Chief Executive Officer David N. Siegel, effective immediately.

Bruce R. Lakefield, chairman of the Board of Directors' Finance and Strategy, and Human Resources committees has been named the chief executive officer, effective immediately.

Siegel said his decision to exercise his contractual rights to resign reflects a "belief that my leaving is in the best interests of the company, as management seeks to secure the necessary changes to make the airline competitive."

"I have great affection for the airline and its outstanding employees, and I want to see the company succeed. 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," Siegel said. "I hope that today's announcement is the first step in a healing process that will enable the company to complete its restructuring."

Dr. David G. Bronner, US Airways chairman, complimented Siegel's leadership of the company. "Dave has done an admirable job leading the company through a critical period, securing necessary cost cuts and new financing, making the tough decisions that needed to be made in a restructuring, and building a business plan that has put the company back on the right path. We accept his resignation with regret, but share his view that this should be the start of a healing process for labor and management."

"The Board is fully committed to seeing this company thrive, but there are many difficult decisions that still confront the Board, the management team, and the employees," said Bronner. "Bruce Lakefield is an experienced and seasoned executive who will work tirelessly for the airline and its customers, business partners and financial backers, employees and shareholders. They all should embrace the fact that we recognize that the airline marketplace has changed dramatically, and that we are confronting those realities, rather than hoping they will go away."

Lakefield, 60, served as chairman and CEO of Lehman Brothers International from 1995 to 1999, when he retired. He has served as a senior advisor to the Investment Policy Committee of HGK Asset Management since 2000, and also serves as a non-executive director of Constellation Corp., PLC.

Certain of the information contained herein should be considered "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect the company's current views with respect to current events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment which may cause the actual results of the company to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the company to operate pursuant to the terms of its financing facilities (particularly the financial covenants); the ability of the company to obtain and maintain normal terms with vendors and service providers; the company's ability to maintain contracts that are critical to its operations; the ability of the company to fund and execute its business plan; the ability of the company to attract, motivate and/or retain key executives and associates; the ability of the company to attract and retain customers; the ability of the company to maintain satisfactory labor relations; demand for transportation in the markets in which the company operates; economic conditions; labor costs; financing availability and costs; aviation fuel costs; security-related and insurance costs; competitive pressures on pricing (particularly from lower-cost competitors) and on demand (particularly from low-cost carriers and multi-carrier alliances); weather conditions; government legislation and regulation; impact of the Iraqi war and the Iraqi occupation; other acts of war or terrorism; ongoing market acceptance of the company's new common stock; and other risks and uncertainties listed from time to time in the company's reports to the United States Securities and Exchange Commission. There may be other factors not identified above of which the company is not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The company assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law.

 

[a320drivr]

Did he get that 5 million dollar severance package or what ever it was?

 

[wms]

Remember This?

Scrutinizing Siegel: CEO of ailing U.S. Airways is being closely monitored
The rank-and-file's performance isn't the only part of US Airways to fall under the microscope. The ailing airline's CEO is being closely monitored, too.
Sunday, March 07, 2004

By Dan Fitzpatrick, Pittsburgh Post-Gazette

Could David Siegel's days be numbered at US Airways?

The airline's chief executive officer is 3 1/2 weeks from being able to walk away from the Arlington, Va.-based carrier for any reason and collect $4.5 million in severance pay. This window, built into his contract during bankruptcy last year, is available for only 30 days, starting April 1.

Siegel maintains he is not going anywhere in April -- at least not voluntarily. "While my contract contains protections should I resign from my position in April, I ... intend to stay and work with the board and our employees to complete our restructuring."

Whether others want Siegel to stick around longer isn't as certain.

His future really is in the hands of US Airways' chairman and largest stockholder David Bronner, who backed his highest-paid employee when the pilots union late last year called for Siegel's ouster. More recently, however, the Alabama state pension fund chief has told people privately that he is reconsidering the management issue as US Airways inches closer to Bronner's summer deadline for a turnaround.

Another potential check on Siegel's future is the pilots union. Although it backed off from its public call for Siegel's resignation, the pilots are using their recent agreement to reenter concessionary talks as leverage to change the "corporate culture" of the nation's seventh-largest airline, implying the removal of the CEO.

Asked about Siegel this week in an interview, Bronner said Siegel's job was safe -- for now. "You can't consider it at this time with the difficulties you are in," he said, adding it would be "foolish on my part to say any more than that." Bronner also made it clear he would be watching Siegel closely and grading him on his performance.

"If he is successful and he wants to stay, you absolutely stay with him forever," he said. "If he is not successful, you have to make a change. No different than any other organization. It is just the real life in the real world we all live in."

The dynamic between Bronner and Siegel is an interesting one. They have never been close personally or had all that much in common -- other than unexpected detours into the airline business.

Bronner, who has been running the Alabama state pension fund for the last 30 years and paid $240 million for a majority stake in US Airways, portrays himself as a hard-working, cigar-chomping, Southern-style executive who worked his way up the ladder the hard way, helping his dad run a pool hall as a teenager and then working through college as a janitor.

Siegel, born in North Brunswick, N.S., and a graduate of Brown University and the Harvard Business School, comes across as a member of the East Coast-Ivy League business establishment who had "all the credentials," as Siegel put it in a Feb. 25 speech, and yet "went off the yellow brick road and wound up in the weeds and thorns of the airline industry."

Bronner was not Siegel's first choice as savior of US Airways. He had wooed David Bonderman, a wealthy Texas investor who turned around Continental Airlines while Siegel worked there in the 1990s and picked Siegel to lead that airline's Continental Express division.

But after Siegel solicited a $200 million bid from Bonderman's Texas Pacific Group in 2002, Bronner stepped in with a better offer. He also argued that the relationship between Siegel and Bonderman constituted a "sweetheart deal" and cast doubt on whether US Airways could fairly evaluate competing bids.

Siegel, said local airline analyst Bill Lauer, is in an "awkward position of working for a company whose largest shareholders are strangers to the original engagement." Bronner's "definition of success may be very different than what David Bonderman's might have been."

After one of his first meetings with Siegel, in September 2002, Bronner said he was "very impressed ... I think he is very capable of making US Air successful." He let Siegel run the airline without any interference from the top and, according to Bronner, there were "long months'' when the pair did not talk at all beyond regular board meetings after the airline emerged from bankruptcy last spring.

Only in recent months have the two men started to talk on a more regular basis, with Bronner in the last two weeks assuming more of a leadership role usually reserved for the CEO. He convinced the pilots to join negotiations following months of rancor between that union and management, and offered fellow US Airways board member Bruce Lakefield as a potential liaison between the two sides.

In winning over the pilots, Bronner tried to convince them that his pension fund did not invest $240 million so that Bronner could make a lot of money personally -- striking a contrast between himself as two other airline investors, Carl Icahn and Bonderman, Siegel's old boss.

He also admitted that mistakes had been made by management, a frank admission that surprised some pilots. After the Feb. 20 meeting, the pilots quickly granted authority to enter wide-ranging contract negotiations with the company.

"In one two-hour presentation, Bronner solicited more action from the pilot group than David Siegel has in all his presentations," said pilots spokesman Jack Stephan.

The rare outreach by a chairman to unions showed that "Bronner is willing to take his own management and hang them out to dry," said Lauer, the local airline analyst.

Bronner is showing a "willingness to take management as a group and taint them as a mutual enemy," and the pilots' overtures to Bronner have "resulted in marginalizing management and David Siegel,'' Lauer said. The pilots "wanted him gone. In many respects, they now have him gone. They are dealing right with the voice from Alabama on this."

Asked in an interview to assess Siegel, Bronner said Siegel "has done magnificently" in a crisis situation and "I think we have a spectacularly great management team.

"Did they make some mistakes from an outsider point of view? Of course. Everybody makes mistakes." But, "when you look at the financial things they have been able to pull off, it is incredible."

Siegel, Bronner said, has "certain areas where (he is) better than in other areas." He said he realizes that Siegel, who declined to discuss his relationship with Bronner, is as frustrated as the unions are. But, he added, at some point both management and labor need to put aside their disappointments and deal with the situation.

As an example, he cited the labor techniques of Minnesota meat-packer George A. Hormel, the subject of a Bronner college thesis. Hormel, who built a national business from a plant in southern Minnesota in part though good relations with employees.

Bronner admitted that he and Siegel come from different perspectives. "He is younger, hard-driving and he works his people really hard," Bronner said.

By comparison, Bronner described himself as a "confused bureaucrat" who is more of a public official than he is a deep-pocketed investor. His hero, he said, is former Manhattan District Attorney Robert Morgantheau, who took on the mob in New York.

Bronner, through an assistant, declined comment about Siegel's contract, which allows him to leave for any reason in April and still receive $4.5 million in severance plus three years of pension and health benefits.

The April provision, added to Siegel's three-year contract during last year's bankruptcy, gives Siegel more freedom to leave the company if he wishes to do so.

Prior to that, to collect his severance, he would have to be fired, have his duties diminished or his salary reduced involuntarily.

Siegel, who signed a three-year contract in 2002, makes $600,000 a year in salary, down from the $750,000 he agreed to originally due to a voluntary cut in pay. He also has more than 1 million in stock options that do not vest until 2006.

If Siegel stays, he and Bronner still have a lot to work out.

The money-losing airline currently is in danger of defaulting on $900 million in loans it received as part of its back-from-bankruptcy recovery plan, and Bronner said there are discussions under way with the federal Air Transportation Stabilization Board, which backed the loans that lifted US Airways out of bankruptcy last March. "We are working on something that basically allows us more flexibility and allows them to get some of their money back," Bronner said.

The chairman is giving the airline until summer to straighten things out, or he may have to consider more drastic actions, such as the sale of some assets. The company already has solicited bids that range from $250 million to $400 million.

But JetBlue Airways Chief Executive Officer David Neeleman, who expressed an interest in the assets, last week said he doesn't think "US Airways is serious about selling any of their assets" and is using such talk to pressure unions into more concessions. The pilots and the company are scheduled to start wide-ranging contract talks Tuesday

 

[Heavy Set]

He's going to take $4.5 million and run as the Titanic sinks? Not confidence inspiring...

Sorry to say it, but I think the lights will be turned off in the not too distant future...