When David Bronner jumped into US Airways' cockpit as its lead investor and chairman, the Alabama state pension fund chief called his $240 million stake a "hell of an investment. ... It'll be the strongest airline in the world financially," he said in November 2002.
But a mere 14 months after Bronner agreed to rescue US Airways from bankruptcy, that bullish prediction is in doubt as Bronner struggles to steer the nation's seventh-largest carrier out of trouble.
The Arlington, Va. company has lost $175 million since emerging from bankruptcy on March 31 and is in danger of defaulting on $900 million in government-backed loans it received as part of its back-from-bankruptcy recovery plan.
Bronner, as chief executive officer of the Retirement Systems of Alabama, controls a 37 percent stake in the airline, and to protect that investment he is contemplating a variety of options, including the sale of gates or hub assets, to meet the company's financial commitments and pay back its loans.
As a fund manager, Bronner "is much more capable of looking at this situation cold-bloodedly," said local airline analyst Bill Lauer. He warned workers not to dismiss Bronner as a dispenser of empty rhetoric, saying he thinks "this guy's in the process of giving up."
But Bronner is also not your typical buttoned-down fund manager, and if Bronner, who told a reporter last week that "I want to make this airline work," is able to save the airline without liquidating chunks of it, this would not be the first time he defied expectations.
As a person who invests money on behalf of 281,000 cops, judges and teachers in Alabama, Bronner shocked people in late 2002 with his interest in a bankrupt airline that employs about 8,000 in the Pittsburgh area and nearly 29,000 overall and accounts for the majority of traffic at Pittsburgh International Airport.
Outbidding a Texas investment company, the 6-foot-3 redhead provided $500 million in interim financing, $240 million for an equity stake, $75 million in at-risk financing and a refinancing of $340 million in US Airways jet leases held by the Retirement Systems of Alabama. That commitment got him the chairmanship and control of the company's board.
Gambling on US Airways attracted national attention to a man who already wields tremendous political power in Alabama and revels in his celebrity status.
Lee Sentell, Alabama's tourism director, refers to Bronner as one of the "two or three most respected people in the state." When asked who would be No. 1, the only person Sentell can think of is deceased -- the late University of Alabama football coach Paul "Bear" Bryant, the checkered-hat-wearing disciplinarian who led the Crimson Tide to six national titles in the 1960s and '70s. As with Bryant, "people who underestimate [Bronner] don't necessarily win," Sentell said.
Bronner, who likes to talk while chomping on a cigar, comes across as a swashbuckling, straight-talking Southerner. His office in Mobile is in the cradle of the old Confederacy, but Bronner is actually a Yankee by birth. His father owned a pool hall in Minnesota, and Bronner grew up wanting to be a police officer and even worked as a bouncer during his teenage years.
He went to college in Minnesota, but left to attend graduate school in Alabama. After getting a law degree from the University of Alabama, he became head of the state's pension fund in 1973, taking over a small, $500 million portfolio.
Bronner, wanting excitement in a job not known for it, yawned at the thought of investing solely in stocks and bonds. So he poured money into golf courses, hotels, office buildings, TV stations and newspapers.
He earned his reputation for toughness when he bought a 54-story office building in Manhattan and stood up to mobsters who asked him to pay exorbitant garbage fees, leading to an undercover sting operation and two convictions.
Back home in Alabama, he took it upon himself to improve the state's standing nationally. To that end, he built a string of 21 golf courses known collectively as the Robert Trent Jones Golf Trail and opened the courses to everyone, hoping to deflect the fallout from a PGA Championship held at an all-white Alabama country club in 1990.
He formed Raycom Media, which now owns 36 TV stations, and Community Newspaper Holdings Inc., which owns 115 daily papers across the United States. He used both companies to run free advertising promoting the state. "I'm trying to do in my lifetime what other states have done in a 100 years," he once told The Washington Post.
Some have criticized Bronner's risky investments, questioning if they were made in the best interests of state employees, but Bronner has defended them by saying that everything he does is designed to benefit Alabama. The state pension fund, which had only $500 million in assets when Bronner joined, now has a portfolio worth $24 billion and is one of the largest in the country.
The fund is so big that Bronner's risky investment in US Airways represents only 1 percent of the fund's total exposure.
Now Bronner is trying to use the US Airways connections to bring more business to Alabama, too.
The state recently announced that US Airways is now the "official airline of Alabama tourism," and the governor has encouraged the state's residents to fly US Airways, which is not even the largest airline in the state.
US Airways receives free advertising on the TV stations and newspapers owned by the state retirement system, and in return, US Airways is plugging Alabama on its Web site, its in-flight magazine and in special promotions aimed at golfers who might like to try the Robert Trent Jones Golf Trail.
Bronner also is insisting that Alabama business have an opportunity to compete for US Airways' business. Already, a Mobile company has landed maintenance work on 10 narrow-body Airbus jets, a move that has been challenged by the airline's machinists.
But the benefits to Alabama will be small indeed if Bronner cannot turn the airline around.
Bronner began ringing the alarm in December, when at a board meeting, he fended off suggestions from the pilots union that Chief Executive Officer David Siegel resign and then hired New York investment bank Morgan Stanley to scour the company's assets and determine if any could be sold to raise cash.
Talking to the Post-Gazette a week after the Dec. 10 meeting, Bronner said US Airways was approaching a "critical junction of survival over the next 30 to 90 days" and warned that if the company did not come up with a plan that "works and makes money," the covenants imposed by $900 million in government-backed loans would be at risk. Hinting at a possible asset sale, he said, "I would rather take cash and pay off the government than sit here and bleed to death slowly."
Bronner's frank talk may be working.
The labor unions, which had been resisting any talk of more concessions on top of those made over the last few years, appear to be warming up to the company's need for more cuts to take on low-fare rivals such as Southwest Airlines and JetBlue Airways.
Last week, the pilots agreed to open concessionary talks on the issue of regional jets, a move that could allow the company to save money by reducing the number of regional jets on order and selling some to other US Airways Express carriers such as Phoenix-based Mesa Air. On Friday, leaders from seven unions sat down with senior management to discuss ways to help save the airline without selling any assets.
When asked a month and a half ago if US Airways even had a future, Bronner said, "It has that potential." But if unions make it clear they are "not willing to put in another penny, in that case, you have what you have had with other airlines. It dissolves. It goes away. What I am fighting for is the survival of it. In order to survive, it has to compete against a whole new brand new world that wasn't there a year ago."
But, as Bronner noted, "Everything changes. That is what I learned about the airline industry. Whatever I tell you today is outdated in a week."
Dan Fitzpatrick can be reached at firstname.lastname@example.org or 412-263-1752.