US Air names Siegel as CEO

Air industry veteran most recently at Avis

Wolf is still chairman

March 07, 2002|By Paul Adams | Paul Adams,SUN STAFF

David N. Siegel, who led a post-Sept. 11 restructuring at Cendant Corp.'s Avis Rent A Car unit, was named chief executive of US Airways Group Inc. yesterday as the airline struggles to rebuild after its failed merger with United Airlines and a year of record losses.

Stephen M. Wolf, who has led the Arlington, Va.-based airline since Rakesh Gangwal unexpectedly resigned as president and chief executive in November, will remain as chairman. However, the airline said, Wolf, 60, will no longer have a hand in day-to-day operations and Siegel - unlike his predecessor - will report directly to the board, rather than to Wolf.

Analysts praised the appointment, calling it more evidence that US Airways, the second-biggest carrier at Baltimore-Washington International Airport, is gaining momentum with a sweeping restructuring plan first outlined in August and acceler- ated after the Sept. 11 terrorist attacks.

The airline has cut flying capacity by more than 20 percent and eliminated nearly 11,000 employees in a bid to reverse last year's $1.9 billion loss. It has cut its Baltimore operations by more than half and recently gave up 29 of its 42 gates at BWI.

"At this point in time, I'd say for all intents and purposes US Airways has aimed itself out of the woods," said Michael Boyd, an Evergreen, Colo., aviation consultant who is familiar with Siegel's work. "He [Siegel] wouldn't go there otherwise."

US Airways shares rose 33 cents, or 5.4 percent, to $6.48 in trading yesterday.

Before joining Avis as chairman and chief executive in September, Siegel, 40, held a number of executive positions in the airline industry. He is described by colleagues and analysts as a good-humored, no-nonsense executive with a feel for people. He was president of Continental Airlines Inc.'s Continental Express carrier from 1995 to 1999 and also served as Continental's vice president of planning and scheduling. Before that, Siegel was director of corporate planning at Northwest Airlines.

"David is smart, analytical and knows the airline business," said David Bonderman, who serves on the board of Continental Airlines and led an investor group that brought Continental out of bankruptcy in the early 1990s. "If anyone can deal with the extraordinarily difficult situation at US Airways, it would be David."

Continental Chief Executive Officer Gordon Bethune credited Siegel with engineering the airline's revamped scheduling in the mid-1990s and doubling profits at Continental Express, which grew into one of the industry's largest express carriers.

Analysts say Siegel faces a daunting task. US Airways was just beginning to regroup after the failed attempt of Wolf and Gangwal to merge the airline with United when the Sept. 11 terrorist attacks sent the industry into a tailspin. The nation's seventh-largest airline was especially hard hit by the tragedy because federal aviation officials shut down its lucrative hub at Reagan Washington National Airport for three weeks.

The airline is attempting to restructure by introducing more efficient regional jets and refocusing on its hubs in Pittsburgh, Philadelphia and Charlotte, N.C.

But so far, the airline's management and pilots have been unable to agree on the introduction of more small jets. A spokesman for the pilots union said talks are continuing this week, but the two sides remain far apart.

Siegel has faced difficult labor and restructuring issues during the past six months as Avis has reduced its staff and car fleet by about 20 percent to cope with a downturn in the travel industry.

"I have long viewed US Airways as an airline with a strong franchise and tremendous potential," Siegel said in a statement.

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