US Airways president and CEO David Siegel last week resigned amid financial turmoil and deteriorating labor relations at the seventh-largest U.S. carrier. Bruce Lakefield, chairman of the board of directors' finance and strategy and human resources committees, immediately replaced Siegel. Lakefield previously served as chairman and CEO of Lehman Brothers International until his retirement in 1999. He became a US Airways director in March 2003 upon the company's emergence from bankruptcy protection.
Siegel said his decision stemmed from the "belief that my leaving is in the best interests of the company," and that the airline's "ability to move forward and make additional changes require a change in leadership." He said he hoped his decision marks "the first step in a healing process that will enable the company to complete its restructuring."
Siegel was named president and CEO in 2002, a few months before US Airways filed for Chapter 11. He then guided the company through a rapid restructuring and brought the airline out of bankruptcy last March
(BTN, April 28, 2003). Shortly thereafter, relationships between Siegel and US Airways labor unions soured. The company sought two additional rounds of employee concessions as low-fare competition permeated the US Airways network. By the end of last year, Southwest Airlines announced plans for a frontal assault on US Airways' primary hub in Philadelphia, and the pilots union was calling for Siegel's resignation.
Earlier this year, the airline began examining asset sales as a possible means to make good on debt obligations. Though the carrier since has reworked terms of a loan package backed by the federal government, its financial situation remains precarious. While Siegel's presentation last month to employees was meant to be a rallying cry, it provided few new strategies and offered little optimism
(BTN, March 29). At the time, he told employees he would not jump ship and indicated he would forego bonus compensation. By resigning before the end of this month, however, Siegel pockets a $4.5 million severance package.
US Airways chairman David Bronner accepted Siegel's resignation "with regret," but said he shares Siegel's view "that this should be the start of a healing process for labor and management." Bronner added that Lakefield is "an experienced and seasoned executive." Steve Tracas, the carrier's former vice president of sales, shared that view. "David Siegel did a good job in reducing costs, handling the necessity of bankruptcy and securing the loan from the Air Transportation Stabilization Board," he said. "But change is good and now allows a new leader to come in and work with labor and other members of management to bring US Airways to the next level."
Lakefield has no direct airline management experience but is said to be one of Bronner's closest advisors and an effective liaison between labor and management. His task of returning US Airways to financial stability won't be easy. For starters, it will require more concessions from employees who may be more willing to work with new leadership. Indeed, unions representing pilots, flight attendants and mechanics each issued optimistic statements. According to the flight attendants union, Bronner briefed labor leaders last week and told them that he has "complete confidence" in the rest of the carrier's management team. In a letter to employees last week, Lakefield said US Airways' goal "remains constant" and that "fundamental changes" still are necessary. "Participation again by our employees must be a part of the answer," he wrote, adding that we will work "collegially with our labor leadership."
Lakefield also must find a strategy to contain Southwest's growth in Philadelphia, effectively deploy dozens of new regional jets, convince corporate clients to stay or return to the airline and interface with domestic and international alliance partners. US Airways is scheduled to join the Star Alliance next month.
After leaving Lehman Brothers, Lakefield, a graduate of the U.S. Naval Academy, became a senior advisor with HGK Asset Management and a non-executive director of Constellation Corp. Plc, a human resources consulting firm.
US Airways is the second major carrier this year to replace its CEO with an existing board member. Delta Air Lines on Jan. 1 gave the top job to Gerald Grinstein following Leo Mullin's resignation.