David Siegel's worst moment at US Airways came April 19, 2004 -- the day chairman David Bronner asked him to resign.
![]() A year after his departure from US Airways, David Siegel is elsewhere in the industry, running the airline catering company Gate Gourmet. |
A year later, Siegel is elsewhere in the industry, running the airline catering company Gate Gourmet. But his influence is still palpable at the nation's seventh-largest airline as it struggles to survive a second bankruptcy.
Not only are some of the people Siegel hired still in top positions, but much of what the Harvard Business School graduate started is being carried out today -- the lower labor costs to compete with discount carriers, more flying between big cities on the East Coast, the ramp-up in Fort Lauderdale, Fla., more flights to the Caribbean and Latin America, the draw-down in Pittsburgh and even the merger talks with America West Airlines.
"They still followed my plan," Siegel said in his first in-depth public comments since leaving last year.
Siegel, according to former US Airways executives, started the conversations with Phoenix-based America West as long as 18 months ago and also had conversations with Chicago-based United Airlines, which has been in bankruptcy since 2002.
In the interview, Siegel declined to discuss any conversations he had with other airlines.
But in January 2004, when he was still CEO, he acknowledged hiring investment bank Morgan Stanley to explore potential asset sales and "strategic alternatives" and noted that "if there are some strategic partnerships that would enhance our standing, we need to look at those."
The following month, Siegel predicted the industry would eventually shrink to three large carriers and argued that US Airways must lower its costs to avoid becoming the "awkward teenager at the school dance" who goes home "disappointed and lonely."
Siegel now believes US Airways has a "reasonable chance at survival." The board, he said, understands that for the airline to be a long-term player, it needs to participate in industry consolidation.
He considers America West to be a "good partner for them," providing lots of "synergy" and offering an "outstanding management team" led by Chief Executive Officer Doug Parker. While at US Airways, Siegel had recommended Parker for the America West post.
While Siegel talked up consolidation during his time at US Airways, Siegel successor Bruce Lakefield has said little on the subject. He denied to a group of pilots last June that the airline, while asking for more than $1 billion in new concessions, was dressing itself for a sale to another airline.
"To who?" asked Lakefield, according to a transcript of the June meeting, held at the Hyatt Pittsburgh International Airport. "I don't know of any."
But Siegel knows well the difficulties faced by Lakefield, who asked fatigued employees to take deeper cuts in pay and benefits only a year after they had granted more than $1 billion in concessions to Siegel. "It is a thankless job," Siegel said.
"It is very tough. I wouldn't wish the job on anybody. I tried to do what was needed for the company to survive and had to prescribe some bitter medicine. But it was reality."
Siegel had hoped that his exodus would help the airline avoid a second bankruptcy by giving union leaders the political cover they needed to sell the rank-and-file on more cuts. But five months after he left, the airline still landed back in Chapter 11 again, unable to wrest all the cost cuts it said it needed.
"It was really tough to watch the employees having to constantly battle," Siegel said, adding that he hopes US Airways can pull through its current crisis and ease the sting for the 25,000 workers who have remained -- some 19,000 have been cut since 2000.
"Homes have been broken and lives have been changed," Siegel said. As a group, the remaining employees "are sort of like a cancer survivor. They have been through so much hell, they deserve to live and have some success."
Siegel said he still hears from a lot of US Airways employees and claims 99 out of 100 messages are friendly and appreciative that he took on a tough challenge. The only dissent, he said, comes from the "odd employee" who "gets confused between the messenger and the message. "
But US Airways pilots union chairman Bill Pollock, who asked for Siegel's resignation in December 2003, said he never made the mistake of confusing the message with the messenger.
Instead, he claims Siegel and former chief financial officer Neal Cohen did not live up to their promises. Siegel, he said, pledged to do all he could to restore funding for the pilots defined benefit pension plan by working with Congress and Pension Benefit Guaranty Corp. But, "when it came time to do that," it was a "half-hearted effort."
That and other events led to a "total loss of trust and faith" among pilots.
Pollock, also a US Airways board member, is worried that Siegel might return to the airline if a deal with America West happens. Siegel's company, Gate Gourmet, is owned by investment outfit Texas Pacific Group, which made a bid for US Airways in 2002 and happens to own a controlling stake in America West.
"I haven't forgotten some of the credibility problems Siegel had when he was here," Pollock said. "Siegel was a very bright guy, there is just no question about it. But there is more to running a business than just academic smarts."
Before leaving US Airways, Siegel said he was willing to stay for lower pay while giving up his right to a golden parachute payment. But the pilots union and the board, he said, wanted him gone.
In the end, he "reluctantly" left US Airways with a $4.7 million severance payment triggered by his resignation, along with a payout of more than $773,000 in defined contribution benefits.
Some union officials are still upset about the amount of money Siegel collected, given what he asked employees to give up.
"Nobody stuffed money in his pocket," said International Association of Machinists spokesman Joe Tiberi. "He took it willingly after saying he wouldn't. It's like the captain on the Titanic hitting the iceberg and then taking the only lifeboat, leaving everyone to fend for themselves."
Airline chairman Bronner could not be reached for comment.
Siegel, in the end, said he does not expect "any sympathy" but noted that "we all made our relative sacrifices" and emphasized that "I tried my best" to keep US Airways alive.
His biggest regret is watching employees suffer through pain and hardship. "You can step back and say casually that this is the way the world works," but "it is really tough, very painful."