American CEO faces turbulence
New company head looking for a quick exit from bankruptcy
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.
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.