Amer­i­can CEO faces tur­bu­lence

New com­pany head look­ing for a quick exit from bank­ruptcy

The Washington Times Daily - - Business - BY DAVID KOENIG

FORT WORTH, TEXAS | It took Thomas W. Hor­ton 26 years to reach the corner of­fice, but the pro­mo­tion came with a catch:

His com­pany was go­ing into bank­ruptcy pro­tec­tion.

Mr. Hor­ton was el­e­vated from pres­i­dent to CEO of Amer­i­can Air­lines par­ent AMR Corp. on a latenight phone call in Novem­ber. On the same call, the com­pany’s board ap­proved the decision to file for Chap­ter 11 the next morn­ing. Mr. Hor­ton says he got lit­tle sleep, know­ing he would have to ex­plain the move to thou­sands of in­vestors, em­ploy­ees, busi­ness part­ners and re­porters.

The fil­ing wasn’t a sur­prise. Amer­i­can, once the world’s big­gest air­line and known for in­no­va­tions such as the fre­quent-flier pro­gram, had lost more than $10 bil­lion since 2001. Fuel and la­bor costs soared, com­peti­tors grew big­ger and tougher, drop­ping Amer­i­can to third place in the U.S. air­line in­dus­try. The com­pany seemed to lack fresh ideas. In­vestor pa­tience with CEO Ger­ard J. Ar­pey was run­ning out.

Mr. Hor­ton, 50, a de­voted run­ner who trains for marathons, wants to set a fast pace and push Amer­i­can through bank­ruptcy. He says the com­pany can’t af­ford to move slowly in Chap­ter 11 un­less it wants to be sold to a ri­val or bro­ken up. He’s will­ing to make un­pop­u­lar moves — he wants to cut 13,000 jobs.

Mr. Hor­ton sat down for an in­ter­view with the As­so­ci­ated Press in his sixth-floor corner of­fice, with a view of Dal­las-fort Worth In­ter­na­tional Air­port on the hori­zon. Here are ex­cerpts from the in­ter­view, which was edited for length:

Q: Did the board think AMR needed a new face as CEO go­ing into re­struc­tur­ing?

A: I think Ger­ard has said pub­licly that his view was that maybe I was bet­ter wired for this task. I don’t know if that’s true or not. Time will tell.

Q: What’s it like to lead a com­pany dur­ing this kind of tur­moil?

A: I’ll get back to you in about a year.

Q: Do you hear from [for­mer AMR CEOS] Ger­ard Ar­pey or Bob Cran­dall?

A: This is a com­pany that hasn’t had many CEOS, and it’s unique in that re­gard. That is hum­bling. . . . I feel the weight of the of­fice and I do talk to these folks. I hear from Bob, and I talk to Bob of­ten, and I hear from Ger­ard.

Q: Do they of­fer ad­vice or do they just say, “Hang in there?”

A: I would say they’re pretty good about of­fer­ing ad­vice when asked for it.

Q: They don’t of­fer it un­so­licited? A: Not of­ten. Q: How long will the bank­ruptcy process last?

A: I want to go as quickly as we can. We must do this right. We must do it only once, and we must be sure that the com­pany is prof­itable, suc­cess­ful and grow­ing com­ing out the other side. I’ve given our team a tar­get to have that done by the end of the year. I will ad­mit that is an ag­gres­sive tar­get by prior stan­dards. There’s no rea­son why we can’t do it.

Q: Re­cently, you’ve opened the door to a pos­si­ble merger but not while you’re still in bank­ruptcy pro­tec­tion. Is that a new po­si­tion?

A: No, noth­ing new at all. For years I’ve said that I think con­sol­i­da­tion ... can be healthy and con­struc­tive for the U.S. air­line in­dus­try. But right now we are in the midst of a very com­plex re­struc­tur­ing, and so our fo­cus is sin­gu­larly on re­turn­ing the com­pany to prof­itabil­ity and growth. The idea of do­ing the two to­gether strikes me as a bridge too far.

Q: Will Amer­i­can need a merger part­ner at some point?

A: I think Amer­i­can needs to be big­ger, which is why our busi­ness plan in the re­struc­tur­ing is all about re­newal and growth. We’ve got 460 new nar­row-bod­ies [midrange air­craft] on or­der with 465 op­tions on top of that. Largest air­craft or­der in his­tory. It came with $13 bil­lion in man­u­fac­turer fi­nanc­ing, so that is a great op­por­tu­nity for our com­pany not only to be on the path to hav­ing the youngest fleet in the in­dus­try, but also it gives us great ca­pac­ity to grow where it makes sense. I don’t think Amer­i­can is com­pelled to do a com­bi­na­tion, but the point I have made is we don’t rule any­thing out.

AS­SO­CI­ATED PRESS

Thomas W. Hor­ton, who was el­e­vated from pres­i­dent to CEO of Amer­i­can Air­lines par­ent AMR Corp. on a late-night phone call in Novem­ber, says the com­pany can’t af­ford to move slowly in bank­ruptcy pro­tec­tion.

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