nimtz
Well-known member
- Joined
- Dec 5, 2001
- Posts
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The title was sacrasm, so don't flame please...
American Air's Carty -- chastized but vindicated?
Wednesday February 4, 3:45 pm ET
By Jon Herskovitz
DALLAS, Feb 4 (Reuters) - When the poster children of
corporate chicanery were rounded up at the end of the
year, former American Airlines Chief Executive Don
Carty's name was at the top of several lists.
Carty, 57, was forced to step down from American's
parent AMR Corp. (NYSE:AMR - News) in April 2003, as
employees fumed over disclosures of executive perks
that came out while workers were voting on massive
wage cuts needed to keep the airline from bankruptcy.
His legacy will include the blunder that cast him from
power, but Carty may be vindicated for leading a
restructuring plan that pulled American from the brink
of bankruptcy and turned it into one of the more
buoyant airline stocks on Wall Street. AMR shares are
now trading at about $15 on the New York Stock
Exchange (News - Websites) after falling under $2 in
March 2003.
Carty and other top managers kept American out of
Chapter 11 with a $4 billion a year cost-cutting plan,
likely the largest mutual restructuring agreement for
a U.S. company with a heavily unionized labor force.
In a recent interview with Reuters, Carty said it was
his responsibility to step aside in order to keep the
restructuring plan on track. The perks included
retention bonuses for top executives and about $40
million in funding in pensions for senior mangers that
would have been paid even in bankruptcy.
"As the CEO, I did, and should take responsibility for
errors," he said.
There are some in the company who said that by Carty
falling on his sword, the workers could vent their
anger at one man as they swallowed wage cuts of 16
percent to 23 percent, in addition to the loss of
thousands of jobs.
Brinksmanship sealed deals by which union members
would reduce their annual wages by about $1.6 billion.
The airline was ready in March and April of 2003 to
file for bankruptcy.
Carty was despised by many workers at American after
they agreed to concessions. A few flight attendants
tore his picture out of in-flight magazines and gate
agents complained openly about pay cuts.
Union officials would not comment, but some workers at
the company say they will never forgive Carty, while
others grudgingly acknowledge his contribution to
keeping the carrier flying.
ANOTHER $1 BILLION IN CUTS
Chief Executive Gerard Arpey, Carty's successor, had
to immediately mend fences with the flight attendants
union in order to get them to agree to concessions. He
also had to quickly implement new contracts that would
change the way almost everyone got paid and did their
job at the airline.
"We actually benefited by the misfortunes of some of
our colleagues, by United going under and various
things. It was a hard lesson, but it made it credible
that it could happen to us," Carty said.
The bankruptcy filings of United's parent UAL Corp.
(OTC BB:UALAQ.OB - News) and US Airways (NasdaqNM:UAIR
- News) demonstrated to employees that they would be
worse off with a company in Chapter 11 than they would
be through concession deals that kept the carrier
solvent.
Carty said that because of the concession deals,
American has emerged as the strongest of the
traditional airlines.
He cautioned that due to increased competition in the
industry, especially among low-fare carriers such as
Southwest, American needs to trim its annual operating
costs by about another $1 billion over the next three
to four years.
"Employees are feeling a growing sense of confidence
in the company," Carty said.
He had high praise for Arpey and the new leadership at
American for implementing and refining the
restructuring plan, working to better relations with
employees as well as winning the trust of Wall Street
that American is on the right path.
Ray Neidl, an airline analyst at Blaylock & Partners,
called Carty a brilliant strategist who will be
remembered in the industry for the restructuring plan.
"It was his plan that was implemented, accepted and it
has not only saved the company," said Neidl, "but
American may prosper before any of the other legacy
carriers."
As for Carty, he maintains an office in Dallas, where
he is busy with board work for several companies and
charities. While he has toyed with the idea of
returning to a full-time job, he says he has not been
tempted by the thought of working for another airline.
What would he like his legacy to be?
"What I would like it to be is to have credit for that
plan that turned the corner at that company," Carty
said. "I probably will never get that credit because I
left before the evidence of it was in. But for me, I
have the self satisfaction of it."
American Air's Carty -- chastized but vindicated?
Wednesday February 4, 3:45 pm ET
By Jon Herskovitz
DALLAS, Feb 4 (Reuters) - When the poster children of
corporate chicanery were rounded up at the end of the
year, former American Airlines Chief Executive Don
Carty's name was at the top of several lists.
Carty, 57, was forced to step down from American's
parent AMR Corp. (NYSE:AMR - News) in April 2003, as
employees fumed over disclosures of executive perks
that came out while workers were voting on massive
wage cuts needed to keep the airline from bankruptcy.
His legacy will include the blunder that cast him from
power, but Carty may be vindicated for leading a
restructuring plan that pulled American from the brink
of bankruptcy and turned it into one of the more
buoyant airline stocks on Wall Street. AMR shares are
now trading at about $15 on the New York Stock
Exchange (News - Websites) after falling under $2 in
March 2003.
Carty and other top managers kept American out of
Chapter 11 with a $4 billion a year cost-cutting plan,
likely the largest mutual restructuring agreement for
a U.S. company with a heavily unionized labor force.
In a recent interview with Reuters, Carty said it was
his responsibility to step aside in order to keep the
restructuring plan on track. The perks included
retention bonuses for top executives and about $40
million in funding in pensions for senior mangers that
would have been paid even in bankruptcy.
"As the CEO, I did, and should take responsibility for
errors," he said.
There are some in the company who said that by Carty
falling on his sword, the workers could vent their
anger at one man as they swallowed wage cuts of 16
percent to 23 percent, in addition to the loss of
thousands of jobs.
Brinksmanship sealed deals by which union members
would reduce their annual wages by about $1.6 billion.
The airline was ready in March and April of 2003 to
file for bankruptcy.
Carty was despised by many workers at American after
they agreed to concessions. A few flight attendants
tore his picture out of in-flight magazines and gate
agents complained openly about pay cuts.
Union officials would not comment, but some workers at
the company say they will never forgive Carty, while
others grudgingly acknowledge his contribution to
keeping the carrier flying.
ANOTHER $1 BILLION IN CUTS
Chief Executive Gerard Arpey, Carty's successor, had
to immediately mend fences with the flight attendants
union in order to get them to agree to concessions. He
also had to quickly implement new contracts that would
change the way almost everyone got paid and did their
job at the airline.
"We actually benefited by the misfortunes of some of
our colleagues, by United going under and various
things. It was a hard lesson, but it made it credible
that it could happen to us," Carty said.
The bankruptcy filings of United's parent UAL Corp.
(OTC BB:UALAQ.OB - News) and US Airways (NasdaqNM:UAIR
- News) demonstrated to employees that they would be
worse off with a company in Chapter 11 than they would
be through concession deals that kept the carrier
solvent.
Carty said that because of the concession deals,
American has emerged as the strongest of the
traditional airlines.
He cautioned that due to increased competition in the
industry, especially among low-fare carriers such as
Southwest, American needs to trim its annual operating
costs by about another $1 billion over the next three
to four years.
"Employees are feeling a growing sense of confidence
in the company," Carty said.
He had high praise for Arpey and the new leadership at
American for implementing and refining the
restructuring plan, working to better relations with
employees as well as winning the trust of Wall Street
that American is on the right path.
Ray Neidl, an airline analyst at Blaylock & Partners,
called Carty a brilliant strategist who will be
remembered in the industry for the restructuring plan.
"It was his plan that was implemented, accepted and it
has not only saved the company," said Neidl, "but
American may prosper before any of the other legacy
carriers."
As for Carty, he maintains an office in Dallas, where
he is busy with board work for several companies and
charities. While he has toyed with the idea of
returning to a full-time job, he says he has not been
tempted by the thought of working for another airline.
What would he like his legacy to be?
"What I would like it to be is to have credit for that
plan that turned the corner at that company," Carty
said. "I probably will never get that credit because I
left before the evidence of it was in. But for me, I
have the self satisfaction of it."
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