- The Washington Times - Thursday, September 16, 2004

David N. Siegel received a $4.7 million payout from US Airways when he resigned in April after two turbulent years as its chief executive, according to documents the embattled Arlington airline filed with the Securities and Exchange Commission last month.

The severance has raised the ire of labor leaders who predict the airline’s managers soon will seek a bankruptcy court’s permission to cut wages for members of its five unions.

Shortly before he resigned, Mr. Siegel told shareholders he was willing to give up his severance package and cut his salary so it was more in line with the salaries collected by executives at the low-cost carriers. “I am not going to cut and run,” he said, according to press reports.

“That’s exactly what he did,” said Joe Tiberi, spokesman for the International Association of Machinists and Aerospace Workers, which represents about 9,000 of the airline’s 31,700 employees.

“After all those promises not to cut and run, he took a golden parachute and fled like a thief in the night,” Mr. Tiberi said.

Mr. Siegel resigned April 19 amid reports of strained relations with Chairman David G. Bronner and the labor unions.

US Airways Group Inc. filed for Chapter 11 bankruptcy protection Sunday for the second time in two years after the Arlington carrier failed to negotiate agreements with its unions to cut labor costs.

US Airways issued a two-sentence statement in response to questions about Mr. Siegel’s payout: “Mr. Siegel’s contract was established under a previous board of directors. The payout was in line with that contract.”

Bruce R. Lakefield, who succeeded Mr. Siegel as chief executive officer, vowed to continue restructuring the airline — the nation’s seventh-largest — into a low-cost carrier during the bankruptcy process.

In May, he told shareholders he would not accept a golden parachute in his contract.

US Airways could ask a judge to void its labor contracts under a provision of the federal bankruptcy code.

Mr. Tiberi’s union, which represents mechanics and ground workers, has pledged to not reopen and renegotiate its contract.

Other unions, including groups that represent pilots and baggage handlers, have refused to agree to pay cuts, saying the airline needs to make operating changes.

In addition to a $4.7 million lump sum, Mr. Siegel’s severance package provides him with health benefits for three years and the right to exercise 660,600 options and 1.1 million shares of restricted stock.

In 2002, Mr. Siegel cut his salary 20 percent to $600,000 and said he would forgo bonuses and pay increases, describing it as his way of sharing the company’s pain with other employees.

Gerald J. Arpey, the chairman, president and chief executive of AMR Corp., the parent of American Airlines, was paid a $535,275 salary in 2003. He received no bonus.

James F. Parker, the former president and chief executive officer of Southwest Airlines Inc., received a $450,000 salary, a $170,000 bonus and $73,016 in other compensation in 2003.

Neal Cohen, who resigned as US Airways’ chief financial officer shortly after Mr. Siegel quit, received a $1.5 million payout, the right to exercise 446,400 options and 376,800 shares.

He worked as a consultant to the airline for three months at a cost of $150,000 and $20,000 in first-class travel, according to the Pittsburgh Post-Gazette.


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