American Airlines CEO Horton Stays the Course on Restructuring Plan
By James Shillinglaw
July 22, 2012 10:15 PM
American Airlines Chairman, President and CEO Thomas Horton didn't seem like an executive eager to merge his airline with any other carrier, including US Airways, in his remarks at the GBTA Convention in Boston on Sunday, July 22. Horton, in an onstage discussion with Michael McCormick, executive director and chief operating officer of the Global Business Travel Association (GBTA), said American, which is currently operating under bankruptcy protection, is now eight months into its restructuring and is making good progress.
Horton said his two objectives were first to run a first-rate airline and second to execute American’s restructuring in the right way. He pointed to second quarter results, which saw American record a profit, at least if bankruptcy restructuring costs were excluded. He also said American had recorded record revenues and record load factors in the second quarter, and that the operating metrics for the airline were the best it had ever seen. "We move forward from here," he said.
Even though Horton reportedly met with US Airways CEO Douglas Parker at a breakfast meeting last week to discuss a possible deal, the American CEO seemed adamant that he won't be rushed into a merger with US Airways or any other carrier and would proceed with his airline's restructuring. While most airline analysts believe that American's best bet for survival remains a merger with US Airways, Horton appears to think otherwise.
"We'll keep on going with the restructuring," he told attendees at the GBTA conference, pointing out that American just signed a labor agreement with its flight attendants that will apparently provide concessions to the airline. Other American Airlines labor unions have signed similar pacts.
Horton, a 20-year veteran of American who became CEO on the same day the airline filed for bankruptcy in November 2011, said his own experience is helping because he knows the company and its people. He also gained a "fresh perspective" in restructuring a company outside the airline industry when he worked for AT&T in 2002 in between his two stints with American, and implied that his experience with that company would help him avoid some of the same pitfalls that his fellow executives in the airline industry have experienced.
"I'm a pretty intense competitor," Horton told GBTA delegates. "I want to see this company as a winner again." He admitted that he was as patriotic to American as he was to America. "We're going to make this company successful," he said. "We're going to make sure our products are the best in the world."
At the same time, Horton said consolidation overall has been good for the U.S. airline industry, but he pointed out that rather than being the last airline to adopt a merger strategy, American actually was one of the first with its purchase of TWA. "I do think there will be more restructuring of the airline industry," he said. "American will be careful considering that."
The assembled corporate travel professionals at the GBTA Convention this week have a particular interest in American's fate, because the airline has long been a favorite of business travelers. Indeed, at its peak, GBTA's McCormick said, American was the airline for business travelers. "We are very focused on our business customers," Horton responded.
Horton pointed out that his airline continued to have a great network, a great alliance, a new fleet that is getting newer and excellent people. He boasted that American still has the best hubs in North America, it has one of the best alliances in oneworld; which he said was particularly well suited to business travelers; and it will soon have one of the youngest fleets in the world with 550 aircraft on order, including new Boeing 777-300s and new Boeing 787s. He also said American is refitting its 767-300s with lie-flat business class seats.
Beyond modernizing the fleet, Horton said American also will soon be announcing a update to its familiar brand. He pointed out, for example, that the new 787s, which are built of composite material, which can't duplicate the shiny polished metal of American's current fleet. That means American will soon unveil a new look to its airplanes. New advertising and video campaigns also are in the works. "American will have the youngest fleet in the skies in five years," Horton said.
When asked by McCormick what his vision was for American, Horton said it was nothing less than to be number one. "American Airlines is America's flag carrier." Earlier this month, Horton had seemed open to considering a merger, but his words at the GBTA conference didn’t sound like an executive who is going to agree to a deal with another airline anytime soon.