Where's Crandall and Cranston when you need them. Sears track record under the new guy was less than desirable Al ----- Original Message ----- From: "Bill Hough" <psa188@xxxxxxxx> To: <AIRLINE@xxxxxxxxxxxxxxxxx> Sent: Friday, April 25, 2003 9:29 AM Subject: SF Gate: American Airlines CEO resigns; company tries to salvage labor deals ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2003/04/24/fina ncial0134EDT0011.DTL ---------------------------------------------------------------------- Thursday, April 24, 2003 (AP) American Airlines CEO resigns; company tries to salvage labor deals DAVID KOENIG, AP Business Writer (04-24) 22:38 PDT FORT WORTH, Texas (AP) -- On one of the most turbulent days in American Airlines' history, the embattled chairman and chief executive resigned, the board met in emergency session and the company's unions split over concessions designed to slash labor costs. After all the scrambling, the world's biggest carrier was right where it started Thursday: staring down the barrel of a potential bankruptcy filing. Gerard Arpey, the company's president, will replace Carty as CEO, while board member and former Sears CEO Edward A. Brennan will take over as chairman. It was not clear, however, whether the combination of Carty's resignation and the more generous labor deal would be enough to prevent a bankruptcy filing. Unions representing pilots and ground workers agreed to the company's latest concession offer, but leaders of the flight attendants' union balked. George Price, a spokesman for the Association of Professional Flight Attendants, said the group objected to the duration of the concessions -- now five years -- the "lack of incentives" for employees and specific items affecting attendants. Late Thursday night, Arpey invited four national officers of the union to his office to discuss the impasse, Price said. "The APFA is committed to working with the company to avoid bankruptcy," Price said. "Discussions are ongoing." The union might not have much time to make a decision. Company officials have said American would file for Chapter 11 protection in New York unless all three unions accepted the wage and benefit concessions, and the chief financial officer flew there late Thursday. The new deal shortens the length of concessions by nearly one year to five years and provides bonuses of up to 10 percent of wages for meeting company-performance goals that will be the same for labor and management, said officials of the pilots' and ground workers' unions. The original concessions package was approved by workers last week but unraveled when employees learned of previously undisclosed executive perks, including bankruptcy-proof pensions and huge bonuses. Employees harshly criticized Carty, who had said management was sharing in the sacrifices to strengthen AMR. Carty apologized for not telling workers sooner about the executive benefits. The company eventually canceled bonuses for the top seven executives but left in place the $41 million in pension funding for 45 executives. Two unions announced plans for new elections on the concessions, which American had hoped to avoid. "It is now clear that my continuing on as chairman and CEO of American Airlines is still a barrier that, if removed, could give improved relations -- and thus long-term success -- the best possible chance," Carty, 58, said in a statement. Arpey, who will remain president, said he would work to "restore the confidence of all employees in their great company." Arpey, 44, has held a variety of management jobs at the airline since 1982, including chief financial officer, executive vice president of operations and president and chief operating officer of American and AMR since April 2002. Brennan, 69, retired as chairman and CEO of Sears in 1995. Some shareholders had demanded his resignation because of the retailer's flagging fortunes and its sales or spinoff of successful side businesses. He joined the AMR board in 1987. "It's a very good team that's been put in place, and I'm very supportive of it," said board member David Boren, president of the University of Oklahoma, who had called for Carty's removal. Airlines have been hit hard by a downturn in travel caused by the weak economy, the 2001 terrorist attacks, fear of new terrorism around the Iraq war, and the SARS outbreak. Competition from low-fare carriers has also restrained fares. On the Net: AMR: www.amrcorp.com ---------------------------------------------------------------------- Copyright 2003 AP