Donald Carty resigns at American, new team named
By Phil Magers
Gerard J.
Arpey. Arpey was named Chief Executive Officer and
President of American Airlines.
Former Chairman,
President and Chief Executive Officer of
American Airlines, Donald Carty.
DALLAS (UPI) American Airlines Chairman and Chief Executive Officer Don Carty resigned last Thursday in a management shakeup as the world's largest airline desperately worked with labor unions to avoid a bankruptcy filing.
Carty's resignation and the appointment of a new management team was announced after a daylong meeting of AMR Corp.'s board of directors. He had been the target of union anger since he failed to disclose details of executive perks before the labor groups approved concessions last week.
Edward A. Brennan, the retired chairman
of Sears, Roebuck and Co., and an AMR board member, was named
executive chairman and current President and Chief Operating Officer
Gerard J. Arpey was named chief executive officer.
American has been seeking a $1.8 billion
concession package to avoid bankruptcy and its status was in doubt
late Thursday. The carrier has said it needs approval from all
three major unions in order to avoid bankruptcy.
A sweetened concession package was worked out in meetings moderated
Wednesday by four Texas congressmen. Only the Allied Pilots Association
and the Transport Workers Union have apparently accepted the deals.
James Little, director of the TWU's air transport division, said his union and the APA had approved the agreements.
"These improvements are contingent on honoring the results of last week's votes," he said. "We and the pilots are prepared to go forward on this basis. However, in the event any union puts their agreement out for revote, the board of directors has voted to declare bankruptcy."
The third union, the Association of Professional
Flight Attendants, did not immediately announce if it had accepted
the new agreement. Last week they had decided to submit the agreement
to another vote, by mail.
Memberships of all three unions approved concessions last week
and then learned that the company had concealed information about
executive retention bonuses and a special pension trust to protect
the retirement of more than 40 executives if bankruptcy was filed.
Carty apologized to employees and union leaders and then canceled the retention bonuses but he did not cancel the pension trust. Angry union leaders later decided to either vote on the concessions again or not sign the agreements.
Thursday's emergency meeting of the 12-member board of directors came after AMR reported a first quarter net loss of $1.04 billion. The directors met all day at an undisclosed location but only announced the management changes.
Brennan, on behalf of the AMR directors, thanked Carty for his years of service and dedication to the company, especially his service during what the company called "the most difficult years in aviation history."
Carty praised his successors and said the appointments of Brennan and Arpey would "begin to build a bridge back to the path that promised a new culture of collaboration, cooperation and trust."
Arpey promised to work to rebuild trust in management throughout the company and said he looks forward to the value Brennan's counsel will bring to the company.
Arpey joined American in 1982 as a financial analyst, later serving as chief financial officer of AMR from 1995 to 2000 when the company experienced strong profitability. He also led the successful efforts to spin off Sabre from AMR.
"I will continue to lead by example," Arpey said. "Actions, of course, speak louder than words. And you can expect me to ensure my actions are consistent with the high standards we set for all employees of American Airlines and American Eagle."
Shares of AMR gained 24 cents, or 6.32 percent, to close Thursday at $4.04 per share on extremely heavy volume of 23.4 million shares traded on the New York Stock Exchange. On an average day, AMR trades 10.2 million shares on the NYSE.