Interesting Reading


Sep 11, 2002
The following information was posted on a web board. Do not know who wrote it, but thought it might be interesting reading for all.
> A few words about Dr. Bronner:
> Getting up before 0600 this morning was well worth the effort. Dr Bronner and an associate, Bruce Lakefield started the presentation at about 0710. Bronner referred to Bruce as his "right hand man" and said he could speak for him. Bruce is a former Naval Academy graduate and submariner who eventually went to work on Wall Street and is a former CEO of Lehman Brothers, Europe. Bruce Lakefield is currently on the US Airways BOD and it was made clear that management works for them.
> To anyone sitting in the meeting room, these guys immediately commanded respect. They are the real deal and I could not discern anything disingenuous or phony about either of them.
> Bronner made some remarks about himself and he doesn't mind talking about himself at all. Some consider him cocky and some supremely confident, which he is in spades. He is a man who drives a $25 billion portfolio, has dealt with several governors who come and go while he stays, is currently involved in a pissing contest with the current governor of Alabama and is winning in spades. It's obvious he doesn't tolerate fools well and doesn't at all mind getting into a fight. He does, however, know when he doesn't belong in a fight.
> His father ran a pool hall, to which he attributes part of his vocabulary and his manner of speaking directly. He identifies with the little guy because he once was one; who worked as a switchman on the railroad to earn money for college. He is a self made man who went from the pool hall to a PhD and a law degree. He once started a criminal investigation on the word of a janitor. He has an impressive list of people he doesn't like, which is just about everyone he considers a quick buck artist. He can't stand the guys from WorldCom and Enron or Donald Trump. He has forced corporate big wigs to come to Alabama to testify in lawsuits. He deplores American jobs going overseas and doesn't like managers who send them there. He is not pleased with the "WalMarting" of American jobs.
> He makes about $325,000 a year as a "bureaucrat." So when he closes a billion dollar deal, he doesn't make an extra dime. He admitted to feeding his ego in lieu of money. He wants to protect the beneficiaries of RSA and considers policemen his favorite people. He is not one because he can't afford to be. This drives his affection for people of moderate means, for whom he as a big heart.
> Bronner is a big promoter of Alabama and he is, above all else, a guy who gets things done for RSA and Alabama. That's why he is going to outlast every governor there until he chooses to retire.
> Oh yes, what about US Airways?
> Bronner made it clear that we are 1% of his portfolio and that is why we don't command all of his attention. The value of RSA goes up or down a million dollars every time the stock market goes up or down a point. RSA is currently about 50% invested in the stock market. So while US Airways isn't his focus, it is important to him because he made, what he admits might have been a bad decision, to invest here. Bronner just isn't the kind of guy to walk away IF there is hope. In short, he is a long-term investor.
> He gave examples of multi billion dollar holding companies, one that controls about 42 small newspapers and one that controls TV stations. Both started quite small and both are now worth respectively about $2.5 and 4.5 billion. He stayed with these investments because he wasn't looking for a quick buck. He gave other examples I can't remember, including a couple where he lost money by investing in "extremely safe" entities. So he knows that sometimes long shots pay off. As an aside, he wanted to take US Airways private, but that didn't work out. The MEC couldn't tell us that because it was confidential.
> One reason he invested in US Airways is that he does not like TPG, which he puts in the quick buck category. Interestingly, at the Council 90 meeting where some of our more astute rocket scientists treated Duane Woerth with extreme rudeness, Duane told us TPG would have put US Airways into liquidation prior to emerging from Chapter 11. Well, we are extremely lucky Bronner doesn't like them.
> Bronner stated that Wall Street has shut off money to the legacy carriers but opened the spigots to the LCC's. So they have not only an operating advantage but also a very large financial advantage. Imagine for a moment that US Airways could sell a billion dollars worth of stock………. Or borrow all the money we needed at good rates……… SWA can do that, we can't.
> He stated two things without equivocation and in very plain English:
> 1. He will pay back the ATSB loan, period, no choice, take it to the bank, end of story.
> 2. He will not allow US Airways to bleed to death.
> He stated these two things in the context of black numbers are good and lead to good things. Red numbers are bad and, over time, will kill you.
> Bronner is not a quitter and gave us an example of a building in NYC where he met with all the creditors. They would not bail out the building, so he bought them out for 29 cents on the dollar and made a huge profit. He saw value where the others wanted to bail.
> He said growth solves most problems and that we need to get into the black very quickly. While some people have a vested interest in our success, primarily suppliers, there are lots of people who have a vested interest in our failure. He opined that failure is not a crime, but aiming low is.
> He said that we have four immediate problems, any of which could cause the other "dominoes" to fall.
> · ATSB loan covenants
> · Standard & Poors Credit rating
> · GE Capital
> · Upcoming auditors report (are we a going concern?)
> We have to become profitable very soon or we will be in violation of the ATSB loan covenants, and they can then call the loan. If S&P lowers our credit rating again (we are on a credit watch) we will lose GE financing for our EMB170's. GE can also withdraw their financing now as well as other assets if they choose and they can shop around leases to other carriers. If our Auditor deems us something less than a going concern in March, that may trigger the other dominoes.
> When asked why we didn't hedge more fuel, Bronner was clearly annoyed. He said that hedging requires us to put money up front in escrow and we don't have it. It's that simple. SWA can hedge all day long with no escrow because of their strong financial position.
> When asked about putting more information out to employees he responded that this is difficult in a public company. That point was driven home later when the Corporate Counsel, who was monitoring everything he said, made five corrections to his statements and pleaded with us not to talk to the press after the meeting.
> He and Bruce stated that they would serve as arbitrators if we reach a stonewall in negotiations with management.
> Bruce, in explaining the revenue shortfall, said that management kept trying to "manage around the edges" to make up for the shortfall, but, in the end, all of our revenue projections proved to be wrong.
> Bruce also stated that, in getting started on restructuring the airline, we are late getting started but he hopes we are not too late.
> My impression is that these guys are on board for the long haul. However, if things don't change quickly, they will lose control. The $1 billion ATSB loan is bound by strict covenants and we are either going to stop bleeding very soon or there will be no choice other than pulling the plug.
> Bronner spoke for about 35 minutes then he and Bruce answered questions for another hour. I wish the entire pilot group could have been there.

He deplores the Wal*Martization of American jobs, but that seems to be the business plan for US Airways!
"Deplores American jobs going overseas"????? I guess its acceptable for foreigners to come to Alabama to work on U's A/C. After all the salary they will be paid will be spent in the US........yea right!!!!!!!! I have seen the ratio of licensed vs "other" at STS, now how about US citizen vs Green Card?
Seems like a nice guy.

Did anyone ask him any hard questions, like outsourcing of mx, decline in pay and morale, the status of the w/o's?
Don't know who wrote it ... I can tell ya who wrote it, sounds like his press man, or someone who wants to present him in a certain light-a good light, I woudn't doubt if Dr. B wrote it himself, about himself. Doesn't he sound like a modern day hero. Give me a break. Sounds like he is trying to portray himself in a light more likeable to the "common man" to me!
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Light Years said:
He deplores the Wal*Martization of American jobs, but that seems to be the business plan for US Airways!
Just out of curiosity, how many on this board shop at Wal-Mart? When you do, you are lining the pockets of 5 people (Sam Walton heirs) who are in the top ten billionaires in the world.

Recently, the United Food and Commerical Workers ended a bitter 4 1/2 month strike against 3 Southern Calif. grocery stores. The reason the companies accepted the strike was due to "the growing competition from low-cost, non-union operators such as Wal-Mart Stores Inc."

Many on this board criticize the "greed" within the Executive Offices of CCY and corporate America as a whole. Yet, each time one of us ventures into a Wal-Mart to do the shopping, we are ignoring the plight of those union workers at supermarkets in our cities. I am sure the Walton's are laughing all the way to the

I refuse to give anything thing to Walmart and that also includes Sam's. After reading some of their business practices I have been on a "Walmart Ban" for 6 months, having not set foot in the store.
Mr. Bronners comments are very nice and obviously meant to be disseminated according to plan. "Pleaded with us not to talk to the press" Oh, please. This one is so transparent it's ludicous.

And the only thing Seigle can think of is to cut employee compensation and outsource once again, because they are devoid of any revenue enhancing ideas. Just another pep-talk from a "straight-shooter" right out of the management playbook. Did they have an employee "focus group" right after??

Only a couple dozen things wrong here, such as:

1. Talk is cheap. Let's see some real ideas.

2. If Seigle and his management team were competent, the airline would be improving, not getting worse.

Maybe Seigle is hoping that the government will come through and save him as it gets close to the election, but in the meantime look for those bonuses to increase.
It's looking like Mr. Bush's jobless "healthy" economy is only healthy for his well-heeled friends and not the average worker . . . . and, of course, illegal Mexican aliens who are making more here illegally than they could in Mexico.

There is still probably 15% too much capacity in the nations airline system right now, which has driven the severe deflation in prices and catastrophic unemployment among airline workers. That isn't going away soon.
Thanks Lindy for posting that.

I too am glad that Dr. Bronner is taking a more hands on approach to
the company.

However, I must also add the following : Did Dr. Bronner know or not
know what Siegel has been doing here for the last 18 months ?

Was Siegel acting on his own like the lone ranger or was he acting
on someone's orders from above.

To me, one phone call from Alabama, and management would be
working more with the employees.

In other words Siegel has extracted a windfall of
W - 2 and benefits from all employee groups and the pilot's pension.

I think it is safe to say that the line employees are not very fond of

What were Siegel's chances of getting any more from the employees ?

Not as good as Dr. Bronner coming along and meeting with the pilot
and F/A leaders.

Not trying to rain on Dr. Bronner, but to me, Siegel was the bad cop
and Dr. Bronner is the good cop.

Do I think the company is in trouble ? Yes.

Do I think something has to be done ? Yes.

But for the last 18 months we have been saying to increase mainline
and fly more point to point and Increase International flying.

They have a revenue problem.

Why not fix it ?

They don't need our approval to increase mainline.

Boardings are up for all air carriers in PIT as an example. We've
hardly participated in that increase.

Why ?

This is where we need to be very careful.

What really is the plan for our company ?

Is it really to increase mainline - which could be done at any time ?


Is it to decrease mainline and get Mid Atlantic up and running.

Actions speak louder than all the talk.

By not increasing the size of mainline, now they return to the
employees and want more relief.

Is this temporary relief with snapback provisions ?

Please speak with your reps and convey your thoughts.



If you go back far enough, several on this board foresaw this very thing a year ago.

So far, I am dismayed, but unsurprised.

AP Tech said:
"Deplores American jobs going overseas"????? I guess its acceptable for foreigners to come to Alabama to work on U's A/C. After all the salary they will be paid will be spent in the US........yea right!!!!!!!! I have seen the ratio of licensed vs "other" at STS, now how about US citizen vs Green Card?
And he has no comment on the outsourcing issue. Or the outsourcing to MESA.

Yup, whatever is convenient for his portfolio and the rest is blah, blah, blah,...