"Remarks of David N. Siegel
President & Chief Executive Officer, US Airways
To the Greater Washington Initiative Annual Meeting
May 28, 2003
Thank you for the kind introduction, but more importantly, thank you for the invitation to speak with you here this morning.
I have been at US Airways just over a year now. 14 months to be exact. And, it’s been 14 months of experiences I could not have predicted. I knew the challenges of being a CEO. But I wasn’t fully prepared for all that was in store for me as we pursued our restructuring. I’ve learned to walk a tightrope without a net. I’ve gotten pretty good at bronco bull riding. I’ve honed my decision-making at 180 miles per hour in ways that would make Richard Petty proud. There were even a couple of days when I felt like I was shot out of a cannon.
The one thing I know for certain is that being an airline CEO in this day and age isn’t for the faint-hearted. At US Airways, it was made all the more challenging by the fact that we were forced to lead the industry in being the first major US carrier to restructure. At the beginning of 2002, many industry analysts were writing us off for dead. We had the weakest cash position and the highest costs, and many were predicting that we would be liquidating by year-end 2002.
Thanks to the hard work of many – including our very dedicated employees – those predictions were proven wrong. According to BankruptcyData.com, we completed the fastest-ever-successful Chapter 11 restructuring of a major U.S. corporation.
We are certainly not out of the woods, given the macroeconomic problems facing the industry. A stagnant economy. The lingering after-effect of war. Weak business travel demands coupled with over-capacity. The threat of terrorism. SARS. But today we are in a better position with a competitive cost structure, reduced debt, and a well regarded business plan to make us a vigorous competitor.
Now that we have completed the financial equivalent of the iron-man triathlon, I am looking forward to implementing our business plan. We have been building some very positive momentum over the past few weeks, having recently announced a big order for new, regional jets, and a marketing alliance with Lufthansa Airlines to complement our existing partnership with United Airlines. This coming weekend, the CEOs of the world’s premiere airline alliance, the Star Alliance – anchored by United and Lufthansa – are meeting here in Washington. We are very optimistic about their affirmative vote on our application to become a Star partner. We are finalizing a proposal for a new regional jet terminal at Reagan National Airport so that we can get you out of the wind, rain, snow and heat when you fly our great new regional jets. And I am also excited about becoming an even more active member of the greater Washington community. I am so committed to the success of US Airways that I moved my wife and 12 year old daughter here with the promise that we would stay here at least through high school. While we’ve been a little distracted getting settled, this is clearly a beautiful city with many opportunities and assets.
To be a success, however, we are going to need to rebuild a strong relationship with the Washington business community. I want to offer some constructive commentary so that we can grow and prosper together.
I will be the first to admit that US Airways shares responsibility for a situation I currently view as unacceptable. The last twelve months, of course, we have been completely consumed by our restructuring. And before that, our focus was on our unsuccessful merger with United. So for the past four years, we haven’t done all we could to maintain and build the relationship that is needed.
However, over the course of our history, we have been an active player in this community. We put our name on the old Capital Center and the Board of Trades International Trade Center. We have supported scores of organizations and causes with contributions and in-kind donations. We have invested tens of millions of dollars in the rebuilding of Washington Reagan National Airport. And we have been a partner of the travel and tourism industry that is so vital to our region’s economy.
So it is with all that in mind that I was absolutely dumbfounded that the most important voice of our region – The Washington Post – has taken such an indifferent attitude towards our company. Not once during our restructuring did the Post devote a single word on its editorial page about our airline. Absolutely nothing about how the prolonged closure of Reagan National Airport impacted us more than any other airline. Or that we had put together an impressive restructuring plan that was worthy of a federal loan guarantee. Or that our bankruptcy plan was well thought out. Or even after we had emerged from bankruptcy, some commentary saying, “Gee, we’re glad they made it.” I am not naive enough to expect the Post to be our cheerleaders. I am grateful to Bob Levey who dedicated a column applauding our wonderful employees, but in general, the Post has left me scratching my head more than once.
Now, we are embroiled in the congressional debate to expand service at National Airport. Of course, the way members of Congress view expansion at Reagan is to get more service for their constituents and communities. Over the past 12 years, Congress has allowed new nonstop service beyond the airport’s perimeter rule, opening up direct service to Phoenix, Denver, Las Vegas, Salt Lake, Los Angeles and Seattle. However, the law essentially precludes US Airways from effectively competing for these new route authorities.
As an airline with a long-standing commitment to Washington Reagan, we can’t allow ourselves to be shut out, nor should we be shut out. We have invested in slots, planes and airport facilities from which the airport and the region have benefited. Now we need the community to invest in us by making its voice heard in Congress, because in spite of our enormous investment in Reagan National, we continue to be negatively impacted by Congressional actions. Next week, both the House and Senate will consider legislation to provide carriers with little or no investment in the airport the right to add even more flights inside and outside the perimeter. US Airways stands to get nothing. For both your sake and ours, we should be able to use a few of our existing slots to provide service to cities such as San Francisco and Los Angeles, so that the hometown carrier can offer the same nonstop service Congress is giving our competitors. US Airways’ proposal is advantageous to you because we would add no additional flights or slots, create no additional noise, and use no equipment other than what we currently are using at DCA
One of the most exciting things I have done in our restructuring is our regional jet order. You will be thrilled when you see our new 76-seat aircraft with six-and-a-half feet of headroom, full-sized storage bins, a first class cabin, and two-by-two seating in coach. That is, if you ever get to see them at National. In this same airport legislation, we are trying to change the definition of a commuter slot so that we can offer you these new generation aircraft – which are quieter, more fuel efficient, and certainly more comfortable than a turboprop. Currently, the law only allows those carriers which have been given slots for free over the past several years to fly regional jets of up to 71 seats, while we are limited to jets with 56 seats. Does that make sense to you? We need to have these valuable slots made useable for the new technology of the new jets. The community must speak up if we are ever going to be able to deliver on what we want to offer you.
The airline industry is a tough enough business on its own. We can’t be successful if we don’t have the support of our hometown partners. We all remember with great clarity the negative economic consequences of the Reagan National shutdown after September 11. That was a great example of how we worked together for a common goal, and we are certainly appreciative of your support. But fast-forward some eighteen months later and I am struggling to determine where US Airways fits in within the broader fabric of the greater Washington business community
Our new majority owner – the Retirement Systems of Alabama – would love to find an economic justification for moving our corporate headquarters to Montgomery. As of now, they understand the benefits of our staying here, but they clearly would like to see Alabama benefit from their investment in our company.
That has gotten the Charlotte business community’s attention, because they have long courted us to relocate to North Carolina, and they are engaged in an active effort to make sure that we know we are loved and wanted in Charlotte.
Most recently, the governor of Pennsylvania has suggested that we should relocate to that state as part of our negotiations to maintain our hub in Pittsburgh.
So after years of being the geeky kid at the school dance, things are looking up. We got the braces off our teeth and the acne has cleared up. We’ve got a new hair style, and wardrobe. We’re starting to look pretty good to people. I admit that I like the fact that people are actually vying for our attention. So far, I really don’t get that feeling from the Washington community, however. Maybe it’s because we have been so inwardly focused since I came to US Airways. But if we had died, rather than successfully restructured, would the community have even come to the funeral?
The reality is that every one of our major competitors has a hometown advantage. Atlanta works closely with Delta, and vice versa. Houston with Continental. Dallas-Fort Worth with American. Chicago with United. If we went to O’Hare to propose a project, I know darn well that nothing would get done without United’s approval. United opposes changes at Reagan National, in an effort to shield their hub at Washington Dulles from competition. Quite frankly, I don’t understand why United’s opinion should matter more than ours with regard to how we want to improve service at Reagan National Airport. You’ve built that Illinois company some great facilities at Dulles. They ought to pipe down and let us work with MWAA on how we can now further improve National. And the local community should tell them so.
We have had some constructive talks with MWAA, and I have every reason to believe they will work with us to bring our customers and the region better air service. Our local congressional delegation has done an outstanding job over the years, but it’s an uphill battle as they try to mitigate the efforts of their counterparts from all across the country who think that Reagan National is an open target. We simply can’t allow members of Congress to undermine our restructuring efforts and put our airline at a competitive disadvantage. Giving other airlines the right to fly long-haul service from National Airport and writing the law to exclude us is simply unacceptable. The only way we are going to be successful, improve our service to our customers, and pay back the $1 billion loan that is guaranteed by you, the taxpayers, is to give us the competitive tools we need. As business leaders of this community, I hope you agree and will help our congressional delegation. And the Washington Post – and for that matter, the Washington Times – should think so too.
Thanks for your indulgence in letting me get some things off my chest. We really do hope for great things for our airline, our employees and our community, and I look forward to working with you. "