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American CEO Wants Airline to Go It Alone

American CEO Wants Airline to Go It Alone

When American emerges from bankruptcy, should it remain an independent airline, or merge with US Airways?

The answer depends on whom you ask.

American’s unions — in particular the pilots union, which will end up with a 13.5 percent stake in the restructured carrier — have come out strongly in favor of merging with US Airways. (US Airways chief Doug Parker will be meeting with American’s pilots next week.)

American’s passengers for the most part dread the prospect of a merger with US Airways, which is widely viewed as a particularly customer-unfriendly operation.

American’s creditors favor a merger as the best route to financial stability.

So, what about American’s management team?

When US Airways made its first merger overtures, American was politely but vehemently opposed.

Although the company’s public pronouncements on the subject would suggest a gradual softening of management’s aversion to a merger, it now appears that at least the company’s top executive, CEO Tom Horton, remains wedded to the idea of a go-it-alone future for American.

According to a story in The Miami Herald, Horton met yesterday with representatives of the pilots union to argue his case for independence and against a merger with US Airways.

His entreaties were in vain. Three hours later, the union reiterated its preference for a merger and, presumably, a change in the airline’s leadership.

The story doesn’t end there, however. No single group will have the final say in American’s future.

The merger scenario remains the most likely outcome, but management’s continued opposition can’t be discounted. Although management’s power to set the direction of a company operating under Chapter 11 bankruptcy is limited, Horton and his cohorts still have a say in determining which road American goes down. The bankruptcy court will have to give their proposal serious consideration.

American’s customers may have few kind words for American’s managers, which after all bear responsibility for the company’s current predicament. But flyers and the airline’s executives are allied in at least one key respect: They both want American to remain independent.

Reader Reality Check

What’s your desired outcome for American: independent airline, or merger partner with US Airways?

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  • http://twitter.com/joeypore Joey Pore

    HATE the idea of a US airways merger. I’ve flown AA for almost 20 years now, and I had the terrible experience of flying on a US Airways flight. TERRIBLE airline. AA, especially with the new planes and restructuring, CAN make it, but with US airways, they’re going to become a crappy airline… 

    AA has one of the best premium products for the US, and a very nice International product. Don’t let US airways ruin it! Let’s get real pilots, people are going to stop flying AA if US Air merges. I know I’ll start looking at Delta or United as a carrier of choice.

  • http://twitter.com/joeypore Joey Pore

    HATE the idea of a US airways merger. I’ve flown AA for almost 20 years now, and I had the terrible experience of flying on a US Airways flight. TERRIBLE airline. AA, especially with the new planes and restructuring, CAN make it, but with US airways, they’re going to become a crappy airline… 

    AA has one of the best premium products for the US, and a very nice International product. Don’t let US airways ruin it! Let’s get real pilots, people are going to stop flying AA if US Air merges. I know I’ll start looking at Delta or United as a carrier of choice.

  • Martin De Luca

    Agreed. 18 year AA flyer here. Highest frequent flyer status for 6 years in a row now with 120,000+ miles per year. Please, please DO NOT let US Airways get their hands on AA. It’s nice to see the media is beginning to acknowledge that us, the customers, do not want US Airways anywhere near AA. 

  • Martin De Luca

    Agreed. 18 year AA flyer here. Highest frequent flyer status for 6 years in a row now with 120,000+ miles per year. Please, please DO NOT let US Airways get their hands on AA. It’s nice to see the media is beginning to acknowledge that us, the customers, do not want US Airways anywhere near AA. 

  • dynamo56

    The thing that I don’t understand is:

    a) US Airways pilots union is dysfunctional  The litigation with American West pilots has been going on forever, and it’s not a pretty story really for the US Airways pilot union. Who wants to be a part of that story?

    b) Your CUSTOMERS don’t want this. Wait a bit, and you can probably pick up US Airways a lot more cheaply. Or join up with some other carrier to expand size. 

    My big hope is that united untangles it’s integration with CO by the time this happens. That will give folks another option to go to. 

  • dynamo56

    The thing that I don’t understand is:

    a) US Airways pilots union is dysfunctional  The litigation with American West pilots has been going on forever, and it’s not a pretty story really for the US Airways pilot union. Who wants to be a part of that story?

    b) Your CUSTOMERS don’t want this. Wait a bit, and you can probably pick up US Airways a lot more cheaply. Or join up with some other carrier to expand size. 

    My big hope is that united untangles it’s integration with CO by the time this happens. That will give folks another option to go to. 

  • http://profile.yahoo.com/ZFLP6ZI2ZXDSZAK7LRNX7HBGBM LordKenT

    The pilots now want to dictate what terms AA should continue. But these are the very same guys who are responsible for much of AAs past Financial woes, eg: 4 Pilots on SA Routes requiring 2 First Class Suites blcoked off. Most airlines manage very well with 3. On TATL 767 they required 3 Pilots with 2 Business Class sleeper seats blocked and unavailable for sale. BA fly most TATL with2 Pilots. Now they are looking for a Large chunk of shares in a forced merger…NO..NO and THRICE NO

  • http://profile.yahoo.com/ZFLP6ZI2ZXDSZAK7LRNX7HBGBM LordKenT

    The pilots now want to dictate what terms AA should continue. But these are the very same guys who are responsible for much of AAs past Financial woes, eg: 4 Pilots on SA Routes requiring 2 First Class Suites blocked off. Most airlines manage very well with 3. On TATL 767 they required 3 Pilots with 2 Business Class sleeper seats blocked and unavailable for sale. BA fly most TATL with2 Pilots. Now they are looking for a Large chunk of shares in a forced merger…NO..NO and THRICE NO

  • Adarsh Yadlapalli

    I am new to all the flying thing but not to the corporate world.

    If there is even a slight chance that the board has more members agreeing to the merger, and if Horton still seems to be a nail in their shoes, they will simply vote him down.
    Unfortunately, creditors do not care about customers.

    It is what it is. Irrespective of any number of pleas, initial opposition from the management, they will spike out a deal with Horton in the end, if they don’t push him out to just merge.

    I just hope they don’t crack down on too many routes and improve the end-product better than what US airways is now.

    Peace.

  • Adarsh Yadlapalli

    I am new to all the flying thing but not to the corporate world.

    If there is even a slight chance that the board has more members agreeing to the merger, and if Horton still seems to be a nail in their shoes, they will simply vote him down.
    Unfortunately, creditors do not care about customers.

    It is what it is. Irrespective of any number of pleas, initial opposition from the management, they will spike out a deal with Horton in the end, if they don’t push him out to just merge.

    I just hope they don’t crack down on too many routes and improve the end-product better than what US airways is now.

    Peace.

  • Ken Free

    I’ve flown AA for business since 1986 and have been EP for over 10 years.  I have seen how hard everyone has worked to make AA a success during the ups and downs of the last years and with the addition of new planes, upgrades in service, etc. I think they are on right path to be profitable and return to a leadership role within the industry.  I think that a merger with US would be a big mistake and will take the airline backwards.  Unfortunately I don’t think the customer’s voice/opinion is going to sway management from their current path, but one can have hope.

  • Ken Free

    I’ve flown AA for business since 1986 and have been EP for over 10 years.  I have seen how hard everyone has worked to make AA a success during the ups and downs of the last years and with the addition of new planes, upgrades in service, etc. I think they are on right path to be profitable and return to a leadership role within the industry.  I think that a merger with US would be a big mistake and will take the airline backwards.  Unfortunately I don’t think the customer’s voice/opinion is going to sway management from their current path, but one can have hope.

  • http://www.facebook.com/edgar.numrich Edgar Numrich

    History tells us pilots are hired to fly the planes, and neither manage nor micro-manage the company that employs them.

    Likewise, veteran travelers can see what happened to United when the employees were given a big ownership stake.

    Sadly, the legacy carriers have been raped and burned at the stake by greedy and incompetent CEOs for sometime now.  Tom Horton doesn’t appear to have that tag.  If correct, applaud him!

    And, considering Pacific Southwest Airlines was gobbled up by what has become USAir (as was Western by Delta) needs no further comment as to the latter.

  • http://www.facebook.com/edgar.numrich Edgar Numrich

    History tells us pilots are hired to fly the planes, and neither manage nor micro-manage the company that employs them.

    Likewise, veteran travelers can see what happened to United when the employees were given a big ownership stake.

    Sadly, the legacy carriers have been raped and burned at the stake by greedy and incompetent CEOs for sometime now.  Tom Horton doesn’t appear to have that tag.  If correct, applaud him!

    And, considering Pacific Southwest Airlines was gobbled up by what has become USAir (as was Western by Delta) needs no further comment as to the latter.

  • MHI354

    MR. HORTON:  TREAD CAREFULLY.  AA HAS BEEN SLIDING DOWNHILL FOR QUITE A WHILE BUT STILL ONE OF THE WORTHY CARRIERS.  A MERGER WITH US AIRWAYS CAN ONLY INFUSE AA WITH USAIRWAYS DREADFUL CUSTOMER RELATIONS.  IT CAN SPREAD LIKE A BAD VIRUS.  STAND UP FOR WHAT THE OLD AA WAS WE WILL STAY WITH YOU.

    MORT-NYC

  • MHI354

    MR. HORTON:  TREAD CAREFULLY.  AA HAS BEEN SLIDING DOWNHILL FOR QUITE A WHILE BUT STILL ONE OF THE WORTHY CARRIERS.  A MERGER WITH US AIRWAYS CAN ONLY INFUSE AA WITH USAIRWAYS DREADFUL CUSTOMER RELATIONS.  IT CAN SPREAD LIKE A BAD VIRUS.  STAND UP FOR WHAT THE OLD AA WAS WE WILL STAY WITH YOU.

    MORT-NYC

  • http://profile.yahoo.com/HAJOSNCR66N7T3DNSFZBWFVPJ4 Audrey K

    The idea of AA merging with US Air has me scrambling to select a new preferred carrier and take my elite status elsewhere.  I just hope it doesn’t come to that.  What could the pilots be thinking????

  • http://profile.yahoo.com/HAJOSNCR66N7T3DNSFZBWFVPJ4 Audrey K

    The idea of AA merging with US Air has me scrambling to select a new preferred carrier and take my elite status elsewhere.  I just hope it doesn’t come to that.  What could the pilots be thinking????

  • Rob_AR

    As a passenger, I prefer the AA product, but a business survives on profits. AA is bankrupt.  US is profitable. I favor the combination as the best way to save AA.

    Past AA merger strategies failed to anticipate the current industry consolidation.  Rather than build on acquisitions like Reno Air & TWA, AA essentially closed them down.  

    AA’s network remained reasonably competitive so long as they faced 6 major hub & spoke domestic carriers each with just a couple of hubs. Betting on funneling most traffic through 2 major hubs wasn’t a dumb strategy at the time, but now it has been overcome by events.

    What started as a cost problem has been turned into a problem of cost AND scale by a changed industry. To succeed as a stand alone, AA must do more than execute well. They must hope UA or DL screw up. May yet happen, but betting AA’s future on a competitor’s stupidity sure increases risk for AA stakeholders – including us passengers. If all 3 hub & spoke carriers execute equally well, UA & DL have a head start, superior scale and better route networks. If I were an AA creditor, employee or supplier, I’d worry.  

    I can understand why AA employees favor combining with US. They’re asked to give up a lot, yet accept a model that leaves AA the weakest among remaining hub & spoke carriers. Most of us fly to get someplace. There will always be flyers willing to go from Washington to Charlotte via Dallas, but more travelers pick the network before the brand. If AA emerges from bankruptcy without the scale needed to take on UA & DL, it is a missed opportunity.

    US may not be AA’s preferred suitor, but that die was cast years ago when AA delayed the restructuring their competitors have already undergone. Trying to play catch up limits choice. How does AA regain competitive scale against bulked up competitors without US?  I can’t see a better alternative.

  • Rob_AR

    As a passenger, I prefer the AA product, but a business survives on profits.  AA is bankrupt.  US is profitable.  I favor the combination as the best way to save AA.
    Past AA merger strategies failed to anticipate the current industry consolidation.  Rather than build on acquisitions like Reno Air to TWA, AA essentially closed them down.  AA’s network remained reasonably competitive so long as they faced 6 major hub & spoke domestic carriers each with just a couple of hubs.  Betting on funneling most traffic through 2 major hubs wasn’t a dumb strategy at the time, but now it has been overcome by events.  What started out as a cost problem has been turned into a problem of cost AND scale by a changed industry landscape.To succeed as a stand alone, AA must do more than execute well.  They must hope UA or DL screw up.  May yet happen, but betting AA’s future on a competitor’s stupidity sure increases risk for AA stakeholders – including us passengers.If all 3 hub & spoke carriers execute equally well, UA & DL have a head start, superior scale and better route networks.  If I were an AA creditor, employee or supplier, I’d worry.  I can understand why AA employees favor combining with US.  They’re asked to give up a lot, yet accept a model that leaves AA the weakest among remaining hub & spoke carriers.Most of us fly to get someplace.  The network is the key to competitiveness. If AA emerges from bankruptcy without the scale needed to take on US & DL, it is a missed opportunity.   US may not be AA’s preferred suitor, but that die was cast years ago when AA delayed the restructuring their competitors have already undergone.  Trying to play catch up limits choice.  How can AA gain competitive scale without US?  I can’t see a better alternative.

  • Lovetotraveltoo

    I do not want a merger with US Airways (aka US Airworse).  I’m quite pleased with AA as it is, and I have over 2 million miles with AA.  My most concern with a merger is what would happen with my “Platinum forever” status.  My husband and I enjoy the perks that come with this status.

  • Lovetotraveltoo

    I do not want a merger with US Airways (aka US Airworse).  I’m quite pleased with AA as it is, and I have over 2 million miles with AA.  My most concern with a merger is what would happen with my “Platinum forever” status.  My husband and I enjoy the perks that come with this status.

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