Seagull took 6.3 mil from U

[LearLove]

Ex-CEO's take costs US Airways $6.3 million

Wednesday, March 02, 2005

By Dan Fitzpatrick, Pittsburgh Post-Gazette








The 2004 departure of former US Airways chief executive officer David Siegel cost the twice-bankrupt airline a total of $6.3 million -- about a third more than was disclosed at the time, according to the airline's latest annual report filed with regulators yesterday.

Siegel, who was asked to leave last April by airline Chairman David Bronner, received a $4.7 million severance payment triggered by his resignation, slightly higher than was reported at the time.

But he also received a 3 1/2-month salary of $198,462, $65,000 in legal fees, $75,000 in accrued vacation and a $773,133 payout in defined contribution benefits, the 10-K filing with the Securities and Exchange Commission shows.

Former chief financial officer Neal Cohen, who left the airline later the same month, received more than $2 million, including a severance of $1.52 million, $338,458 in defined contribution benefits, $128,889 in salary for four months of work and a $50,000 monthly consulting agreement that was scheduled to last for at least three months, according to the filing.

Siegel still has more than 1.1 million shares of restricted stock, which he can exercise at any time, and Cohen has 376,800 shares. The stock at most is worth pennies on the dollar because of the airline's bankruptcy and can be canceled altogether if US Airways re-emerges from bankruptcy and issues new shares, as is typical in a Chapter 11 restructuring.

Current US Airways CEO Bruce Lakefield, who took over for Siegel, collected $286,058 in base salary during his 8 1/2 months at the helm last year, according to the 10-K filing. The board set his $425,000 annual salary according to the median CEO compensation at low-fare carriers AirTran Airways, America West Airlines, JetBlue Airways and Southwest Airlines.

In addition to his salary, Lakefield received $128,251 in other compensation related to the fees he collected as a US Airways board member, his temporary living expenses in the Washington, D.C., area, and travel, the filing shows.

He also received 288,800 stock options and 471,200 shares of restricted stock that are scheduled to vest in 25 percent increments starting April 19. But as is the case with Siegel's holdings, that stock could also be wiped out as a result of US Airways' bankruptcy restructuring.

Lakefield, who did not receive a bonus or retirement contributions in 2004, still makes less than his counterparts at many of the nation's largest airlines.

When he took the job, former Continental Airlines chief executive officer Gordon Bethune had just finished a year making $882,000 and United Airlines Chief Executive Officer Glenn Tilton had just collected $746,000. American Airlines CEO Gerard Arpey is making $513,000 and Delta Air Lines chief Gerald Grinstein is making $500,000, although Grinstein did agree to forgo $125,000 of his salary last year to cut costs.

Lakefield angered some union officers and employees last year for not taking a pay cut while asking labor to accept deep concessions for the third time in two years. When the former head of Lehman Bros. European operations was asked last October why he didn't take a pay cut, Lakefield said he would have given up his salary to save the $7 billion airline, but "it's a pimple. The money does not mean anything to me."

 

[LearLove]

Another U article from PIT POST Paper

Piecing together the US Airways puzzle

US Airways could become a mosaic of carriers as the airline seeks money, partners for post-bankruptcy world

Sunday, February 27, 2005

By Dan Fitzpatrick, Pittsburgh Post-Gazette








Odds are good that US Airways will make it out of bankruptcy again this summer, defying predictions of its imminent demise.


http://www.post-gazette.com/images/blank.gifBut if it survives, US Airways will likely do so with a new set of owners. The Arlington, Va.-based airline expects to land as many as two "substantial" investors and another $100 million to $275 million beyond the contribution of regional carrier Air Wisconsin Airlines, which recently agreed to put up $125 million in exchange for an air services partnership and a nearly 25 percent stake in a newly restructured US Airways.

A post-bankruptcy US Airways also could be a merger candidate and part of a larger alliance that expands its route network to more parts of the United States. Even as the airline focuses on its East Coast and the Caribbean strongholds, talk of consolidation within the battered airline industry is heating up, with some arguing that the financial problems of many may mitigate antitrust concerns in Washington, D.C. -- the same concerns that nixed a proposed United Airlines-US Airways merger in 2001.

Air Line Pilots Association President Duane Woerth pressed that point with reporters last week, saying that many large carriers would like to combine operations but remain fearful of the U.S. Justice Department.

Arguing that mergers would alleviate the industry problem of too many seats and perhaps stop future bankruptcies, Woerth urged the lawmakers to allow failing carriers to merge without barriers.

His comments echoed a similar call made by former Delta Air Lines chief executive officer Leo Mullin in July 2003. Other executives, including former Continental Airlines chairman Gordon Bethune and former US Airways CEO David Siegel, have predicted industry consolidation is inevitable and that, ultimately, the number of major domestic carriers in the country could be reduced to three.

However the industry shakes out, a restructured US Airways could make for an affordable if not attractive partner for another airline and a decent bet for well-heeled investors. In recent bankruptcy documents, the airline valued itself at $250 million before any new equity investments and as high as $650 million if it is able to lure an additional $400 million from outside investors.

For an investor with "discretionary income," it may be tempting to take a gamble on US Airways, said airline analyst Bill Warlick, of Fitch Ratings in Chicago. But, he adds, the temptation to buy an airline also brings with it enormous risks, given the industry's history of bankruptcies, failures and red ink.

While it may be easy to buy into the industry, it can be "very hard to get out" -- and very costly, too, he said. Still, "there always seem to be investors out there, despite the airline industry's poor overall performance, who are willing to take the bet," said Kevin Mitchell of advocacy group Business Travel Coalition.

Spokesman David Castelveter would only say that US Airways is talking to a number of "parties" interested in some type of investment but declined to provide details.

Following is a closer look at some potential investors or partners that observers believe could play a part in US Airways' future:

United Airlines

The industry's No. 2 carrier has been mired in bankruptcy the last two years but CEO Glenn Tilton got people talking on Feb. 17 when he said industry consolidation was inevitable and it would be best for United to participate in a merger. "Tilton put a for-sale sign up," said local airline analyst Bill Lauer.

United and US Airways tried to join operations in 2000, but antitrust regulators opposed the deal, leading to its collapse just a month before 9/11. A union between the two still "is the most compelling" of potential combinations, but given their weakened state, the pair may need a third-party investor to act as deal maker, Lauer said. One possibility, he said, was Texas Pacific Group, the San Francisco investment firm that bid for US Airways in 2003 but lost to an Alabama state pension fund.

Justification for a merger would not be increased market reach, as was the case made by the two carriers in 2000, but the opportunity to lower costs further. Such a deal would allow the combined company to compete more effectively against superefficient Southwest Airlines or JetBlue Airways, the only airlines to post consistent profits recently.

"I think developments along this line are likely," Mitchell said. "I think United is a good candidate."

America West Airlines

The Phoenix-based carrier is No. 8 in the industry, one spot behind US Airways. It is strong in the West, prompting some to speculate that it could be a good match for US Airways' stronghold in the East.

America West Airlines CEO Doug Parker fed the rumor mill when he said in early February that he would "look aggressively" to purchase a rival carrier and that he wanted to add new routes on the East Coast.

He appears, however, to have his eye on airlines smaller than US Airways, saying that the number of low-cost carriers in the United States would shrink from seven or eight to two or three, and he expects America West to be one of the survivors. A spokesman later said that the comments were not specific to any particular airline.

One link between America West and US Airways is John Luth, CEO of New York consultancy Seabury Group, a specialist in aircraft finance and airline restructurings. Luth helped US Airways through its first bankruptcy, and he is doing the same in its second, making at least $15 million in fees for his firm.

Luth also was a close adviser to America West in the days after 9/11, when the airline nearly collapsed. Luth helped the airline restructure its debts and win financing backed by the federal government. Some believe Luth's dealmaking could still bring America West and US Airways together. A Seabury spokeswoman could not be reached for comment.

Richard Branson

The British entrepreneur and operator of Virgin Atlantic is trying to launch a new U.S. carrier, Virgin America.

Delayed by a search for investors in the United States, the airline may not start its San Francisco-based operations until 2006. Branson's company has looked at US Airways before, and some believe he could do so again.

Observers said Branson could be seeking airline assets; he may want to act as an equity investor; or he may want to purchase a spare operating certificate from US Airways, which might make it easier for him to get his U.S. operation off the ground. A Virgin spokeswoman in London did not respond to a set of questions for this article.



David Bronner and the Retirement Systems of Alabama


A big question among airline observers is whether Bronner, who runs the $25 billion Alabama state pension fund that bailed US Airways out of its first bankruptcy, is willing to bet more of the fund's money on an airline that lost $611 million last year and has predicted privately that it could lose another $280 million in 2005.

The fund, after pouring $240 million into the airline in 2003, became the airline's majority owner and appointed most board seats, installing Bronner as chairman. Bronner said last year that he would not put any more money in if US Airways filed for bankruptcy again, but some observers believe he could change his mind.

Bronner told Bloomberg News in December that he would consider spending more money to help US Airways acquire new planes if its reorganization plan looked like the smaller, more efficient JetBlue Airways. That plan is due to be filed by March 15.

Bronner has written off his investment in US Airways but still was able to earn $2.4 billion for his pension fund last year. The normally loquacious Bronner has not been available for comment in recent weeks.

Air Wisconsin Airlines

The Appleton, Wis.-based carrier has positioned itself as a major player in US Airways' future with a $125 million loan that could turn into equity if US Airways makes it out of bankruptcy.

As part of its agreement, Air Wisconsin will be able to appoint three board seats and place 70 of its regional jets within the US Airways network, flying under the US Airways Express banner and taking fees from US Airways.

The deal is an insurance policy for the regional carrier, which may lose its feeder business with United Airlines this year.



Mesa Air, Chautauqua Airlines and other regional carriers


Some observers believe that US Airways, in its search for more investors, will look to its other affiliate carriers -- some of which are independent and some of which it owns -- that carry US Airways passengers to smaller cities and receive fees in return.

Lauer, the local analyst, believes that US Airways could sell the carriers it owns -- PSA Airlines or Piedmont Airlines -- to raise cash. Or, it could ask other regional carriers with feeder contracts, such as Mesa or Chautauqua, to invest in US Airways as Air Wisconsin did and receive guaranteed service in return.

"In the quest for exit financing," Lauer said, US Airways "has zoned in on this whole area of the regional contracts." Chief executives at Phoenix-based Mesa and Indianapolis-based Chautauqua could not be reached for comment.

(Dan Fitzpatrick can be reached at [email protected] or 412-263-1752.)

 

[Dave Siegel]

Ex-CEO's take costs US Airways $6.3 million

Wednesday, March 02, 2005

By Dan Fitzpatrick, Pittsburgh Post-Gazette

Lakefield said he would have given up his salary to save the $7 billion airline, but "it's a pimple. The money does not mean anything to me."

If it doesn't mean anything to you, then you should have given it up. My dad is now sitting as a reserve F/O in CLT, and when he has a scheduled deadhead, it's at half-pay.

I can't stand the spinelessness of ALPA just bending over and taking it. Why do you think I picked Dave Siegel as my user name? That clown robbed US Airways and helped destroy the careers of some really good people. My dad's too old to go somewhere else, but he told me to try to get hired with Southwest, because they're the only airline that "gets it". Obviously, the sarcasm is lost on some of you.

 

[737 Pylt]

Why do you think I picked Dave Siegel as my user name?

Maybe its because you just like being a jerk!
737