US Airways Bankruptcy End Pushes Out RSA Chief

September 27, 2005 ( - The head of the Retirement Systems of Alabama (RSA), who has served as US Airways Group chair since investing in the troubled airline in March 2003, has lost his post with the air carrier.

David Bronner’s tenure as US Airways chair ended Tuesday when the company emerged from Chapter 11 bankruptcy protection and, by doing so, cost the Alabama fund the $240 million he had pumped in two years ago, the Birmingham News reported (See  US Airways Reaches Tentative Agreements with Unions, RSA ). RSA got a 36% stake for its investment, which has since been written off, and the board post.

Bronner made the investment, betting US Airways was ripe for a comeback after slipping into bankruptcy after the 9/11 terrorist attacks.

Even with the latest developments, Bronner told the News he has no regrets about the move and remains hopeful it will pay some dividends to the state. In any event, the loss doesn’t pose a threat to the pension fund, which has about $25 billion in assets.

“Basically, we got killed because when they came out of the first bankruptcy when we were involved they probably should have stayed in a little longer,” Bronner told the newspaper. “They came out and then the oil hit them and that was that.”

“What I was after was an opportunity to build the airline industry for the state of Alabama,” Bronner told the newspaper. That didn’t stop when US Airways tumbled back into bankruptcy. “We’re working on a couple of other things and have been working on them ever since we wrote the investment off a year and a half ago,” he added. “We could have walked away then.”

Bronner said RSA still holds leases on a couple of US Airways planes and has a small piece in an Air Transportation Stabilization Board loan to the airline, but other than that, there is no additional investment left in US Airways. RSA represents nearly 300,000 current and retired teachers and state government workers.

When all is said and done, Bronner told the newspaper that he is not ready to channel RSA investments into airlines today, but he wouldn’t rule it out in the months or years ahead.

“The key is when you take your gains and you take your losses: Are you ahead or are you behind? When we wrote (US Airways) off, we made $3 billion that year,” he said. “A 1% gamble, you take those every day. Some of them you don’t have any control over, like the Dow or interest rates, which will cost you a lot more than this one.”