From combined dispatches
US Airways President and Chief Executive Officer David Siegel, whose demands for cost cuts created animosity with union leaders, resigned yesterday from the Arlington airline.
He will be replaced by Bruce Lakefield, a member of US Airways’ board of directors and a close ally of Chairman David Bronner, who has enjoyed better relations with labor groups.
Mr. Siegel said his resignation from the nation’s seventh-largest airline reflects a “belief that my leaving is in the best interests of the company, as management seeks to secure the necessary changes to make the airline competitive.”
“I have great affection for the airline and its outstanding employees, and I want to see the company succeed. Unfortunately, the past two years have been difficult for all of us, and I believe our ability to move forward and make additional changes require a change in leadership,” Mr. Siegel said. “I hope that today’s announcement is the first step in a healing process that will enable the company to complete its restructuring.”
Mr. Siegel led the company out of bankruptcy protection a year ago after an eight-month stay in Chapter 11. The company cut costs by nearly $2 billion a year, including about $1 billion in concessions from labor groups.
Unions were critical of Mr. Siegel’s leadership. Late last year, the Air Line Pilots Association called for his resignation.
“We’ve been on the record asking for a change in leadership around here and didn’t think that Dave Siegel was the person who shared the same vision that the airline pilots had,” Jack Stephan, a spokesman for the union, said yesterday.
When Mr. Siegel said earlier this year that another round of cost cuts of more than $1 billion would be needed to keep the company afloat, nearly all labor groups balked at entering a new round of talks.
His departure “tells you the situation there is getting down to the wire,” said Dan Kasper, an airline economist at consulting firm LECG Inc. in Boston. “If something doesn’t happen fairly quickly, US Airways is going to be in deep trouble.”
The company this year won changes from a federal loan guarantee board to avoid defaulting on a $1 billion loan that helped the company emerge from bankruptcy. US Airways must meet by June 30 certain earnings-related terms of the loan, $900 million of which is guaranteed by the U.S. government.
“Now that union leaders have a scalp, maybe that will be enough to get them to the bargaining table and give them the cover they need to do a deal,” Mr. Kasper said.
Mr. Bronner and Mr. Lakefield assumed their roles on the board as US Airways emerged from bankruptcy last year. Mr. Bronner leads the Retirement Systems of Alabama — an agency with a history of relatively unconventional investments for a public pension fund — which bankrolled US Airways’ emergence, with the help of the government loan.
Mr. Siegel was eligible for a payment of as much as $4.5 million if he left before the end of this month, under an amendment last year to his employment agreement, according to regulatory filings by the airline.
Mr. Lakefield, 60, served as chairman and CEO of Lehman Brothers International from 1995 to 1999, when he retired.
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