The Plan

Oct 31, 2003
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US board of directors start search for new ceo after chairman Wolf announces retirement after failed merger attempt. Doesn't have a clue now, gets out while there still is a slush fund intact.

Dave is tapped as new ceo. Impresses board with big ego and the "TRUST ME" I will turn this airline around attitude. Being bold enough to say, "THIS IS THE LAST CEO THIS AIRLINE WILL NEED"

Puts plan into place to create LCC MDA. But doesn't reveal anything else to public or employees except (you guessed it employee sacrifices once again.)

Tries to sell plan to Texas Pacific Group for financial backing and " labor friendly attitude ". After reviewing Daves plan TPG becomes troubled at plan, realizing the plan has holes. Revenue projections to high, decimation of mainline route structure. Talk of bankruptcy to get casm down to 10.5 cents from the current 12.8. TPG knowing Lcc is 7.8 cents or lower has doubts. Hey I'm Dave " Trust me " I did it before It'll work.

Enter Bronner, looking to buy something on the cheap and make a mint, and maybe get some jobs for Alabama. Listens to Daves plan. On the edge of his seat after listening says H*ll I got 24 billion, how much it gonna take to get this airline making me money?

Dave S: 500 MILL another 250 MILL coming out of chapter 11.

Dave B: You really think this plan can work?

Dave S: "Trust me " you think you got money now, wait to you see what I CAN DO FOR YOU.

Dave B: I'm in !!!


US enters bankruptcy to lower costs (shaft Lessors, Vendors, Employees, Tampa, State of PA. and everybody else I forgot to mention). Upper management keeps lavish salary and bennies. "Trust me " I've done this before.


Fall of 2002 revenue projections aren't meeting The plan projections. MDA won't be allowed to get of off ground until exiting bankruptcy (additional lost projected revenue)

Dave B: I'm getting a little nervous here, this plan of yours, is it really going to work? I'm waiting on my return, you promised ! I've got 500 mill in this !!!

Dave S: "Trust me" so I was a little off on the revenue side of the plan. No big deal we're still in chp. 11. Hey, how about a round 2 for (you guessed it) employee concessions.

Dave B: Your beginning to irritate me. You said one round would be enough

Dave S: So hey, I was wrong. Just threaten chp. 7 if the employees don't give in. " TRUST ME IT'LL WORK"

Jump to spring 2003, rumors floating around airbus heavy checks to be farmed out, pilots pension to be terminated, Iraq war looming amongst others.

Dave S: We are absolutely making progress and on track for a fast track exit from chp. 11.

Dave B: I don't know Dave. Where's the revenue coming from? Your projections aren't being met and MDA is still a dream.

Dave S: Sit back and watch me work my magic. " Trust me" been there done that.

Exits bankruptcy but not before closing Tampa hangar, rejecting Pittsburgh leases, and putting plans in place to farm out Airbus a/c. Terminating pilot pension plan and additional 5% pay cut for war provision. Dupes government with same plan to secure loan of 1 billion. Bronner ponies up another 250 mill in exit financing.

Dave B: This better work. Just remember I'm not you sugar daddy !!!


Jump to summer 2003. Revenue still falling short. Big order placed for rjs to increase feed for mainline, and increase revenue, that was supposed to be flying in spring 2003.

Dave B: So how's my investment Dave, "Show me the money"

Dave S: Well uuhh, revenue is not what I told you and the government it would be.

Dave B: Remember who's money your playing with here. You better think of something quick.

Dave S: Uuuhhh, oh I know, you wanted jobs in Alabama right ? I'll give you the airbus heavy checks

Dave B: Thats illegal

Dave S: Whats your point

Dave B: What's this going to cost me?

Dave S: Nothing "Trust me" It's yours. Start your hiring now it's in the bank.

Jump to October

Dave B: So hows my heavy checks coming ? I'm all ramped up and ready to go.

Dave S: Just a little bump in the road. Judge said no!!

Dave B: Your beginning to p*ss me off.

Dave S: I'm going to park these a/c. "Trust me" this is going to work.

Dave B: I bought into this company at $ 7.34 and I'm now sitting on 6 and change. I've got a reputation here!!

Dave S: OOHH, and one other little thing I forgot to mention, Southwest is coming to philly.

Dave B: YOU @#$%^$#!!!! I thought you said this plan would work!!!

Dave S: Now on his knees, please Dave , "Trust me" this plan will work, I've done it before.

Dave B: Everything is on the table now. Including CCY. I want a return on my investment


Dave S: Now with tears in his eyes, no Dave no not CCY I promised my family they wouldn't have to move again !!!

Dave B: You didn't care about all the employees who lost their jobs, or the countless number of employees who had to move theirs.

Dave S: "Trust me" this plan is gonna work as soon as I figure it out I'll let you know !!


To be cont.

Will management heed or continue to bleed !!!!!
 

robbedagain

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Oct 13, 2003
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That is great and very true! Except I think the employees are also p!$$% at seigel himself! May be the uppers will heed and leave sometime very soon!
 

PITbull

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LOL.... you need to sell movie rights to the above "play". :up:

Let me add to your story and predict the future:


Jump to January 2004.


Bronner: Ok, Dave, have a plan yet? You better start to show a return on my investment or your azzes are out of here.

Dave: Don't worry, Round #3 concessions from the employees, and this one is going to be "doozy".

Bronner: Yea, like what?

Dave: Watch this...you're going to love it.... We will threaten to not be able to pay the installment on the ATSB, and that we may have to liquidate unless we get more concessions to compete with this insurgence. First of all, Bonehead, ahh I mean Dr. Bronner, you should have never insisted we return the damn 5%. I told you we needed that money for your return on your investment early. So, we figure, the IAM has the "heavy maintenance" issue and the courts are not ruling in our favor. Damn that Pennsylvania, so we will threaten to go into BK again or liquidation. we haven't quite decided. We have to gage the employees and see what creates the most fear. Flight attendants and IAM still have their defined pensions, so will threaten to abrogate contracts in BK because, what the hey, their 1113 letters expired January of 2003. We will eliminate more heads by changing f/as contracts to clean all stations and eliminate ground personnel. I am sure we can take everything we need from the employees. It worked before; it will work again. I think we can get mechanics to load bags, along with our pilots, after all, pilots have a 20% stake in this company. All I know from Neal, is we need another $200 Million more, or $300 to be on the safe side. He just forgot to carry over the decimal point last time.

Bronner: Hmmm, sounds familiar. When will you have this all tied up?

Dave: No later than April, as the installment on the ATSB loan is due May which will act as a "bench mark".

Friday Hotline message from Dave:

Hello employees, once again Happy New Year. Hope everyone had a joyous and peaceful holiday. Sorry, we didn't send out any Cheese or cookies this year again, because management has been working around the clock to devise a "NEW" Restructuring plan. Unfortunately, the one we submitted to Judge Mitchell and the ATSB, isn't working, and we need to change it again to adapt to the changing environment that has been created by the insurgence of the LCCs. Even though our holiday season traffic was showing great signs of improvement and the economy is improving in general, don't let that fool you. We are still in deep do-do with all the LCCs coming into PHL.

I cannot impress to you how important it is that we mend the fences and build a bridge and get over the past issues, and work together to ensure the survivability of our airline. We cannot continue to lose $1million a day. Our costs remain too high. Therefore, as we said in November, "Everything is on the table". The ATSB requires we maintain $1 billion in the bank and if the trend continues with our losses, and we can't get the cost savings to compete with SW, and we default on our loan to the ATSB, we will have to go into BK or liquidate.

We will be meeting with all the labor leaders in the very near future to discuss the New and improved restructuring plan. There will also be a "profit sharing" program with this concession as well similar to the other profit sharing plans established in your other agreements.

If everyone steps up to the plate and we receive the costs savings we need, then we will be able to address the revenue side of the equation; like more european distinations perhaps, and a "rolling hub" in PHL, fare simplification, etc.......we'll see.

Remember we are on in this together......Next week, I'll be singing "kumbaya" with Jerry singing base.

PS: Oh, and the employee who found my house in Cancun, all bets are off.



_____________________

Sound familiar?
 

DCAflyer

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Aug 27, 2002
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The above scenario is not quite the way things happened. Bronner OUTBID The Pacific Group. TPG was very much on board with the initial plan and I dare say that if Bonehead had been precluded from investing Alabama money, our future would be much brighter. TPG has the EXPERIENCE of turning airlines into gold. Just take a look at two of their success stories, Continental and AmericaWest, both of which had all but been put out to pasture. TPG clearly knows what it takes to turn a flaining airline around, Bronner doesn't. TPG did not pull out of the deal and in fact very much wanted in. My belief if that we would have turned a profit this quarter, shown a small loss in the first quarter of next year, shown a small profit in the second quarter and a fairly substantial profit in the third and fourth quarters. I also believe that a merger with AmericaWest would have been penned at this point. Unfortunately, greed got in the way. Bronner thought he had what it takes to run an airline... clearly he doesn't.

Boeing was ALMOST right about one thing. Dave is the last CEO our company will HAVE. I am sorry to say unless there is some miracle, it's close to lights out for US Airways. I guess we will have some satisfaction of knowing that that will be Dave's legacy to follow him... that and he has nobody to blame but himself. As my mother always says, "You lie down with dogs, and you get fleas!"
 
OP
S
Oct 31, 2003
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DCAFLYER,

The brief synopsis was a tongue in cheek rundown. But you are correct about Bronner outbidding the TPG. I also agree with you on the point of TPG having a good turnaround track record. But if the plan that upper management was putting into place was a very viable plan then why didn't TPG up their bid to outbid Bronner ? I would have to go back and research the numbers but wasn't the difference somewhere in the 150 - 200 mill range ? Actually a small price to pay in business for a huge percentage gain on down the road. Also once profitable with a viable plan, now commanding a possible premium for an asset now profitble in a industry ripe for consolidation. I tend to feel that maybe TPG had
some doubts.

Again when Dave did the horse and pony show after filing bankruptcy when asked what casm would be brought down to in the end , his statement was 10.5 cents. Now I'm no Harvard graduate, but at the time Soutwests casm was roughly 7-8 cent range. Problem no. 1. Problem no. 2, did management really think that the rest of the industry was going to sit idly by and let US and then UAL work the judicial system to lower cost and do nothing ???

So after the a** whooping all the employee groups took you tell me where we are as a company and what our current leadership has done for us ???


Will management heed or continue to bleed ???
 

usfliboi

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Aug 20, 2002
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whats hilarious is that u guys really believe that story........ Coming from a buisness stand point (including Bronners I might add) Dave is , i repeat, is on the right track ! He cant help it we have been screwed over time and time again by other mgt ! I still have faith in Dave > Mr D does not control the industry and has to make nasty choices that we dont like. In the end it will become clear. For those who dont believe that this team doesnt have an over all view of whats going on is shear nuts,,,,
 

DCAflyer

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Aug 27, 2002
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seeking the truth said:
DCAFLYER,

The brief synopsis was a tongue in cheek rundown. But you are correct about Bronner outbidding the TPG. I also agree with you on the point of TPG having a good turnaround track record. But if the plan that upper management was putting into place was a very viable plan then why didn't TPG up their bid to outbid Bronner ? I would have to go back and research the numbers but wasn't the difference somewhere in the 150 - 200 mill range ? Actually a small price to pay in business for a huge percentage gain on down the road. Also once profitable with a viable plan, now commanding a possible premium for an asset now profitble in a industry ripe for consolidation. I tend to feel that maybe TPG had
some doubts.

Again when Dave did the horse and pony show after filing bankruptcy when asked what casm would be brought down to in the end , his statement was 10.5 cents. Now I'm no Harvard graduate, but at the time Soutwests casm was roughly 7-8 cent range. Problem no. 1. Problem no. 2, did management really think that the rest of the industry was going to sit idly by and let US and then UAL work the judicial system to lower cost and do nothing ???

So after the a** whooping all the employee groups took you tell me where we are as a company and what our current leadership has done for us ???


Will management heed or continue to bleed ???
Seeking,

You may very well be correct that TPG didn't like the plan (my recallection at the time was that they did), but as our sponsor, they would certainly be able to change/adjust/tweek it in any way they choose. TPG has never been a silent partner and there is no indication that in U's case they would be silent. That lends to my conclusion that if TPG had outbid Bonehead, we would be in much better shape right now. TPG does not loose, and until now, until getting in WAY over his head, I don't think Bronner has, either.

You ask me why TPG didn't get into a bidding war with the Alabama Slammer. Think about the timing. This all went down just months after 9/11... the economy was in the dumper and nobody really knew when or if airline revenues would return. It was pretty evident that UAL was going to follow us into Bankruptcy, and AA wasn't far from the brink. We didn't know if there would be another industry-altering terrorist attack. Americans still had not returned to the sky. U's predominent route structure is such that it is oftentimes easer and faster for the public to drive or take a train, and at the time our bread-and-butter customers were doing just that out of fear of flying and avoiding airport lines. The potential for TPG to really take a bath on this one was very real. I submit that TPG's dropping out had less to do with the "Plan" (if for no other reason than they would certainly be able to bring in their own plan or adjust the plan as they see fit) than it did pure, simple economics.

There is no doubt in my mind that we have the wrong management team in place right now. I didn't believe that at first, but I do now. You are completely correct in your observation about Southwest's CASM as opposed to ours. But the CASM in the 10-11 cent range certainly looked healthier than it did pre-BK and was in line with other legacy carriers. He can only reduce costs so much, and he will never get them down to SWA levels... it just ain't gonna happen so he needs to quit obscessing about it. Without a doubt, we have (or had, at the time) other benefits to offer our customers... a fairly vast route structure including international routes; a frequent flyer program, club lounges, assigned seating, etc. etc. At the time, we were still looking to our business customers to generate significantly higher per-passenger revenues than our leisure passengers. That gap has tightened significantly since our bankruptcy filing and we have management that does not know how to respond, other than to beat the employees down even further and insult our best customers. Clearly they don't know what to do and feel trapped. Trapped by a route structure that is insufficient by legacy-carrier standards. Trapped by high fixed operating costs. Trapped by labor groups that, justifably so, refuse to give one more red cent. Trapped by newer airlines that can do things better, faster, cheaper, and easier than we can. Trapped by the discovery of their own lies and deceit, and their own ineptitude.

I don't believe Siegel is incompetent and I don't believe he WAS the wrong person for the job. He is now only because he has lied too much and shifted too much so that nobody can ever trust him again, and because I feel he has completely lost focus and is centering too much on cost issues and not on revenue. I don't believe the "plan" WAS bad, but it is now because the industry has changed too significantly and every billionaire wants to build a low-cost airline... some will succeed but most will not. I do believe Siegel's initial plan was not far-reaching enough, but I don't believe it was all that bad at the time. There WERE ways to build a great airline with the assets and strengths we already had, where customers would pay a premium... not be gouged mind you, but pay a premium. We NEEDED a midwest hub every bit as much as we needed small jets. We NEEDED to make Philly a rolling hub (and perhaps all of our hubs should be rolling). We NEEDED to figure out how to utilize our aircraft so that they are in the air longer and flying farther. We NEEDED to figure out a way where our crewmembers weren't sitting at airports for three-hour stretches. Our customers have always come to us because they like the airline and love the employees. Siegel COULD have built on those strengths, but chose to alienate the employees even more than we had been in regimes past. That is why I don't believe he will be effective.

Even if Siegel left today, who else would be willing to take over? We are in such dire straights because the year and a half was wasted on not building the airline to fly out of the recession that I don't think we have a plethora of airline executives waiting in our wings to take over. Siegel/Bronner were given the tools to rebuild this airline... time was of the essence and time was wasted. I don't see how we are going to get out of this situation.
 
Jun 20, 2003
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robbedagain said:
That is great and very true! Except I think the employees are also p!$$% at seigel himself! May be the uppers will heed and leave sometime very soon!
My question is,

How much leeway does Dave have when it comes to the New Business Plan…??

Upon exiting from BK he had to present a viable business plan, it had to be approved by everyone who had a stake in the old USAirways. That was the plan and now he can change it without anyone’s approval…???

Heck, he could have promised everything just to get out of BK and delivered nothing. Where is the accountability to the court and to those who agreed this would work in the first place…??

Dave doesn’t have to worry about LCC… if his plan changes too many times and no results are seen, I smell a lawsuit on behalf of all of those involved in allowing USAirways to come out of BK based on Dave’s promises. :huh: :huh:

SL
 

DCAflyer

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Aug 27, 2002
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Smart,

I believe the board can change the Plan till Kingdom Come. The board does have a fidiciary duty to its shareholders, but Bronner has control of the board, so what he says goes. But the argument can always be made that the Plan was changed to reflect changes within the industry. In fact, it would be foolhardy to stick to a plan for the sake of sticking to a plan that was approved by the creditors committee if industry changes make the original plan outdated.

I just want to expand on my earlier post and make it clear that I don't think it's too late for US Airways. I just don't think it's likely that Siegel and Bronner will suddenly do an about-face and make things right with the employees and with Allegheny County and the State of Pennsylvania. They are so focused on slashing costs that they won't even step back and see how out of line they are and how much that will ultimately hurt the airline and irreparably damage its reputation. If they had stuck with the focus of making U a "WORLD CLASS CARRIER OF CHOICE" while cutting costs, and built on our strengths, I think we would be doing rather nicely right now.

-DCAflyer
 

PITbull

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Dec 29, 2002
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usfliboi said:
whats hilarious is that u guys really believe that story........ Coming from a buisness stand point (including Bronners I might add) Dave is , i repeat, is on the right track ! He cant help it we have been screwed over time and time again by other mgt ! I still have faith in Dave > Mr D does not control the industry and has to make nasty choices that we dont like. In the end it will become clear. For those who dont believe that this team doesnt have an over all view of whats going on is shear nuts,,,,
I don't believe its too funny. I don't think you know what "track" Dave is on. If you do, enlighten us please.

We have never been screwed by any management, but this one. Other management's may have made bad business decisions, but never has any management team deliberately decimate their employees in the fashion that this new one has. AND WE STILL CAN'T MAKE A DOLLAR!
 
OP
S
Oct 31, 2003
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DCA Flyer,

As far as the TPG, RSA debate the "economics" was the same for both investment firms post 9/11. I must agree that TPG, had they won the bidding process, the company would be in a better position today. Not out of the woods but on a less slippery slope. Buying the cheapest is usually not the best thing to do in most cases, because in the long run you end up paying more because the "cheaper" product broke and needs replaced or never lived up to the buyers expectations. The exact opposite in the case of TPG, RSA. Though the bid was higher from RSA, in the long run the company might have faired better with the "cheaper" bid. In any case Siegel has made his bed and now has to sleep in it.

In my previous post there was an error, I used the word leadership, that needs corrected, the word should've been management. Leadership to me is someone in front of the employees paving the way to a brighter future. The leader does this by coming up with a vision of where the company wants to be say 5 years down the road. The plan is put together with the rest of the leadership team along with all the good ideas from the various departments of the company who will be making the plan work. Once the plan is formalized the leader lets all employees know what the vision of the plan is. Basically, The ultimate goal. This is done through motivating the employees, keeping them informed of the progress or possible setbacks due to unforseen problems. Yet always having enough integrity to say when things are not meeting the defined goals and the reasons and all possible solutions.

Telling the employees one thing then turning around and doing the exact opposite. Or keeping the employees in the dark wondering what the next step is going to be, because they can, is my definition of management.

We are on the same page as far as the rest of your response to me. The we needed too's in your post are my thoughts exactly, you beat me to the punch !!!! Kudos


HERB kelherer , okay we know that aint gonna happen !!!!

I know I'll catch some heat on answering your last question, but here goes. First off It depends on how much of an ego Bronner has, as in, this is the way I want it done, because it's my money and I control the board of directors. But if he was flexible, Gangwal minus the Wolfman. My reasoning if your still reading : He left, just up and resigned, no proof on my part but I suspect it was a split between him and Wolf on the direction of the company. Wolf being chairman had final say and there was a parting of the ways. He had vision. He knew where the LCCs where headed from his slide shows to employees dating back to 96. Who's plan at the time for the global carrier of choice again don't really know, but once Wolf started talking to UAL about the merger, the global carrier plan slid right off the globe. Wether you liked Gangwal or not I thought he had integrity. Outside of the parity contracts ( again not sure who's brainstorm that was ) what did he blatantly lie to the employees about ??? On the issue of his resigning one more thought, had he stayed on awhile longer he could have walked away with his pockects alot fuller, he didn't. Ask yourself with this current management team what they would do if given the same option ???