Last month, David Siegel pledged to fight for the airline's future. Resigning now, he can collect millions in severance.
By STEVE HUETTEL
Published April 20, 2004
US Airways Group Inc. chief executive David Siegel, who took the airline through a painful bankruptcy reorganization and angered many employees with demands for deeper cost cuts, resigned Monday.
Bruce Lakefield, a US Airways board member and former Lehman Brothers International chief executive, will take over as CEO of the nation's seventh-largest carrier. Lakefield is close to chairman David Bronner, whose Retirement Systems of Alabama owns a controlling stake in US Airways.
In an address last month in which he urged employees to support more wage and benefit cuts, Siegel pledged to fight to save the airline instead of exercising an escape clause that allowed him to leave his job this month. By quitting now, he will collect severance of as much as $5-million under the contract.
On Monday, Siegel acknowledged in a statement that his continued leadership was an obstacle to US Airways' recovery.
"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. "I hope that today's announcement is the first step in a healing process that will enable the company to complete its restructuring."
US Airways had long struggled with high costs from a veteran work force and an East Coast route network of pricey short-haul flights. Siegel led the airline through a Chapter 11 bankruptcy filing a year ago, squeezing out nearly $2-billion in annual costs, more than half from labor groups.
But he lost the support of employees and many creditors along the way. Siegel told US Airways mechanics at Tampa International Airport the airline would keep the maintenance hangar there open, then closed it days before Thanksgiving 2002. Some 300 workers lost their jobs or had to relocate.
"It hurt the whole Tampa Bay area when he did that," said Louis Miller, the airport's executive director.
Once the largest airline at Tampa International, US Airways has cut its schedule in half and is a distant No. 3 to Delta Air Lines and Southwest Airlines. The airline now employs about 180 workers locally. By last fall, Siegel began saying that a sputtering economy and increased competition from low-fare carriers meant the airline had to look for more ways to reduce costs.
The Air Line Pilots Association called for his removal in December. Other labor groups also rejected Siegel's pitch for another round of cost cuts. At the same time, union leaders warmed to Bronner, chief executive of the pension program for Alabama state employees. The pilot union on Monday praised his choice of Lakefield and cheered Siegel's departure.
"We've heard a lot from Dave Siegel but haven't seen a lot of performance," said Jack Stephan, spokesman for the union. "Bruce Lakefield will be compensated not by rhetoric but by performance."
Michael Roach, an associate with transportation consultants Unisys R2A, said the change comes at a perilous time for US Airways.
The airline had to restructure a $900-million government-backed loan last month to avoid a possible default. Auditors and analysts say the company could be headed for another bankruptcy filing. Low-fare king Southwest is arriving in US Airways' key hub city of Philadelphia on May 9.
"This indicates deep turmoil at the top of the company," Roach said. "This is the last thing they need at this point."