Siegel was asked to resign, sources say
CEO, chairman both agreed move would help smooth labor talks
TED REED
Staff Writer
Although he told US Airways employees in late March that he wanted to lead the airline's fight to survive, chief executive David Siegel four weeks later agreed to the chairman's suggestion that he resign, sources say.
The resignation came Monday morning at a meeting between Siegel and airline Chairman David Bronner that preceded an afternoon board meeting. Neither Siegel nor Bronner would comment.
Siegel was replaced by Bruce Lakefield, Bronner's longtime friend and confidant.
Bronner suggested that Siegel step aside to make it easier to negotiate concessions of hundreds of millions of dollars from the airline's unions, said sources familiar with the principals. They spoke on the condition they not be named.
Siegel, who was entitled to collect a multimillion-dollar severance package if he left by April 30, concurred with the suggestion.
"Bronner can't change the union leadership," a source who spoke with Bronner said. "So then it's a matter of `How do I initiate something to break the logjam?'
"It was all very gentlemanly, very orderly," the source said. "It was done in the context of here's what's best for the company, with (Siegel's) full participation."
Siegel was not expecting that his resignation would be discussed, but he was not surprised, the source said. "He was disappointed (because) he came here to do a job. His desire was to ride this out," the source said.
No longer a board member, Siegel didn't attend the Monday afternoon meeting in a hotel near Mobile, Ala. Retirement Systems of Alabama, which Bronner heads, is the airline's principal shareholder.
After his resignation, Siegel joined Lakefield in calling key stakeholders -- including Bank of America, the Air Transportation Stabilization Board and GE Capital -- to tell them of the change. A public announcement was delayed until late Monday afternoon so the phone calls could be completed.
It's far from clear how much of an impact the change will actually have on labor talks.
The powerful pilots' union has said it is far more comfortable with Lakefield than with Siegel, but other unions have seemed less impressed. Various union leaders have said they welcome Siegel's departure -- but remain unwilling to make concessions.
For instance, the International Association of Machinists, which represents mechanics, baggage handlers and other workers, "believes we can help the carrier without requiring our contract to be amended," spokesman Joe Tiberi said. And Teddy Xidas, president of the Pittsburgh local of the Association of Flight Attendants, said: "If the plan is the same, what's the difference?"
Pilots believe that with Lakefield replacing Siegel, "trust is no longer an issue," said Jack Stephan, spokesman for the US Airways chapter of the Air Line Pilots Association.
"It will at least be easier for other unions to listen to what this man has to say," he said. Siegel lost the pilots' trust because he made conflicting statements on various issues such as the pilots' pension plan and other contract matters, he said.
Vast differences between Bronner and Siegel likely contributed to the change, Stephan said. He called Bronner "a corporate Robin Hood (who) doesn't like anybody in corporate America making sweetheart deals at the expense of labor. He takes great pride in representing the pensions of bus driver and policemen and people like that."
By contrast, Stephan said, Siegel is "a Harvard mathematician (who) loved running an airline but missed the human element. Not that Dr. Bronner doesn't see the numbers, but somehow when Bronner and Lakefield see the color of the ink, they also see the texture of the people involved."
The severance package may also have been a factor. The decision to go was probably an easy one, said analyst Helane Becker of brokerage firm Benchmark Co. "He got paid a lot of money," Becker said.
Siegel was entitled to the package only if he left in April, according to an agreement negotiated before Retirement Systems of Alabama became principal owner of the airline. The package has been valued at about $4.5 million, including three times Siegel's annual salary of $600,000 and a prorated annual bonus. Siegel may also receive noncash compensation linked to the performance of US Airways stock. The full amount will not be disclosed until the release of the annual proxy statement in 2005, the company said.
Siegel, 42, is expected to take some time off before deciding on his next move. Before joining US Airways in March 2003, he worked for Continental Airlines and Avis Rent-A-Car.
Siegel spent Wednesday and Thursday at US Airways' headquarters in Arlington, Va., clearing out the office that Lakefield will eventually occupy.
