Analysis of Public Remarks made by David Bronner and Dave Siegel
Remarks of Dave Siegel to the Potomac Officers Club on February 25:
US Airways Chief Executive Officer Dave Siegel said, “It is also inevitable – just like in railroads, steel, autos, and other mature industries – that the airline industry will eventually consolidate. I see a world where there are three strong hub-and-spoke carriers providing international service and broad networks that connect small, medium and large markets, and then a swarm of low-cost carriers battling it out in high density markets. But either way, the airlines that survive and thrive will be the ones that find a way to offer customers what they want, at prices they are willing to pay, and at costs lower than those prices. Pretty simple stuff.
As CEO of US Airways, my goal is to make sure that our airline continues to utilize those assets. The painful question we are trying to answer is whether they will be served by our employees, or by another airline that has competitive costs. We certainly hope that we get there with our employees.
Siegel concluded, this is a brutally competitive industry. In fact it’s a daily battle for survival. That is why I frequently cite the comments of Charles Darwin, who in his classic book “The Origin of the Species†wrote: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.â€
US Air Needs To Cut Costs By Yearend To Survive LCCs Battle
Yesterday Steve Lott of Aviation Daily reported Siegel also said that domestic consolidation is "inevitable" during the next few years. He predicts a U.S. market with two or three strong hub-and-spoke carriers providing international service with broad networks, and then a "swarm" of low-cost carriers battling it out in high-density markets.
After his speech, Siegel said the US Airways assets "will participate in the consolidation process," but not much else unless the airline is able to lower its costs to competitive levels. If it can't cut costs, "we will be the awkward teenager at the school dance, hoping someone will come talk to us, but going home disappointed and lonely."
USAir pilots agree to help reformulate airline:
Ted Reed of the Charlotte Observer reported last Friday US Airways chairman David Bronner discussed veral other future scenarios for US Airways. The Observer wrote Bronner said it's too early to tell whether the airline will sell assets after retaining investment banker Morgan Stanley to seek offers. But to maintain credibility with Morgan Stanley and bidders, it's important to make a decision within a few months, he said. "If you stay in the red, you sell assets," he said. "Once you get in the black, it's a new game."
Retirement Systems of Alabama, which gained control of the airline during its bankruptcy, won't put more money into US Airways now. "You never want to throw good money after bad ... to save something that's bleeding," he said.
But if the airline turns profitable, it could invest in acquiring more assets.
Bronner emphasized that he is not a typical corporate investor who is "in to get anything and everything we can."
USA320Pilot comments:
This is the fourth time Bronner has publicly commented on other airline assets being purchased presumably by RSA for US Airways. Moreover, there is reason to believe that with a competitive cost structure US Airways could be the surviving business entity in the pending corporate transaction, however, this will only occur if all stakeholders participate in the “Going Forward Planâ€. Thus, without across-the-board cost cuts, from this observer’s perch, Siegel’s comment that US Airways assets "will participate in the consolidation process," but not much else unless the airline is able to lower its costs to competitive levels, is probably true.
Regards,
USA320Pilot
Remarks of Dave Siegel to the Potomac Officers Club on February 25:
US Airways Chief Executive Officer Dave Siegel said, “It is also inevitable – just like in railroads, steel, autos, and other mature industries – that the airline industry will eventually consolidate. I see a world where there are three strong hub-and-spoke carriers providing international service and broad networks that connect small, medium and large markets, and then a swarm of low-cost carriers battling it out in high density markets. But either way, the airlines that survive and thrive will be the ones that find a way to offer customers what they want, at prices they are willing to pay, and at costs lower than those prices. Pretty simple stuff.
As CEO of US Airways, my goal is to make sure that our airline continues to utilize those assets. The painful question we are trying to answer is whether they will be served by our employees, or by another airline that has competitive costs. We certainly hope that we get there with our employees.
Siegel concluded, this is a brutally competitive industry. In fact it’s a daily battle for survival. That is why I frequently cite the comments of Charles Darwin, who in his classic book “The Origin of the Species†wrote: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.â€
US Air Needs To Cut Costs By Yearend To Survive LCCs Battle
Yesterday Steve Lott of Aviation Daily reported Siegel also said that domestic consolidation is "inevitable" during the next few years. He predicts a U.S. market with two or three strong hub-and-spoke carriers providing international service with broad networks, and then a "swarm" of low-cost carriers battling it out in high-density markets.
After his speech, Siegel said the US Airways assets "will participate in the consolidation process," but not much else unless the airline is able to lower its costs to competitive levels. If it can't cut costs, "we will be the awkward teenager at the school dance, hoping someone will come talk to us, but going home disappointed and lonely."
USAir pilots agree to help reformulate airline:
Ted Reed of the Charlotte Observer reported last Friday US Airways chairman David Bronner discussed veral other future scenarios for US Airways. The Observer wrote Bronner said it's too early to tell whether the airline will sell assets after retaining investment banker Morgan Stanley to seek offers. But to maintain credibility with Morgan Stanley and bidders, it's important to make a decision within a few months, he said. "If you stay in the red, you sell assets," he said. "Once you get in the black, it's a new game."
Retirement Systems of Alabama, which gained control of the airline during its bankruptcy, won't put more money into US Airways now. "You never want to throw good money after bad ... to save something that's bleeding," he said.
But if the airline turns profitable, it could invest in acquiring more assets.
Bronner emphasized that he is not a typical corporate investor who is "in to get anything and everything we can."
USA320Pilot comments:
This is the fourth time Bronner has publicly commented on other airline assets being purchased presumably by RSA for US Airways. Moreover, there is reason to believe that with a competitive cost structure US Airways could be the surviving business entity in the pending corporate transaction, however, this will only occur if all stakeholders participate in the “Going Forward Planâ€. Thus, without across-the-board cost cuts, from this observer’s perch, Siegel’s comment that US Airways assets "will participate in the consolidation process," but not much else unless the airline is able to lower its costs to competitive levels, is probably true.
Regards,
USA320Pilot
