Bob Crandall assesses the situation at American
Following our post yesterday about American Airlines, Terry Maxon, the aviation reporter for The Dallas Morning News and one of our oldest friends in this business, sent us this link to a long letter Robert Crandall wrote to an American pilot.
Crandall, of course was the hard-charging CEO of American for many years. Ever the straight shooting, Crandall has some forthright opinions.
One we disagree with, however, is his defense of Tom Horton. Crandall notes that Horton had been CEO (at the time of Crandall’s letter) for only 10 months and should be given a chance. We note, though, that Horton was CFO from March 2006 before his elevation to CEO 5 1/2 years later. He shares in the decisions made during this time and the responsibility for them.
Crandall absolutely right in his critique of the pilot actions involving sick-outs and frivolous maintenance write-ups, leading to massive delays and cancellations. This drives customers away. We’re a million-miler on American and right now any time we travel, it’s not on American. The pilots are acting like those at Eastern Airlines in their battle with Frank Lorenzo, the scourge of unions at the time. (The International Association of Machinists also engaged in open warfare with Eastern.)
Eastern’s pilots and mechanics destroyed that airline. They would rather have killed Eastern than work with Lorenzo, or in the case of the IAM local, even his predecessor, Frank Borman.
What the pilots at American are doing today is threatening the airline. Some Wall Street analysts are talking about American entering Chapter 7 liquidation, a view with which we so far disagree.
But it’s also clear that Horton and his team are giving short shrift to a possible merger with US Airways if they aren’t the surviving management. The future of American’s thousands of employees is at stake. Management ego shouldn’t be involved.
Aside from Crandall’s defense of Horton, we agree with his critiques.
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Top management’s wallets and expected 8-10% stake in the plan coming out of restructuring is ALL that’s involved. Full stop.
Same management that drove the airline into the ditch through a series of strategic and tactical failures. Why reward failure richly? Why reward it at all?
Like almost every situation, management at AA is not solely at fault here. The mlitant union (APA) at AA also deserve sme of the credit for destroying AA. Maybe the lesson of EA has been lost, forgotten, or never learned by both sides at AA?
All large companies operate the same way, upper brass is immune to wage cuts and most have golden parachutes also. This will never change so attacking management accomplishes nothing.
Pilots,mechanics,ground personnel,flight attendants will all share in the belt tightening but at least AA will continue on and workers will still get a paycheck and benefits. This sure beats losing a job and trying out a new career especially when one is up in years.
Dave siegal at airways got 4.5 million for doing a poor job, then he was hired by another company as ceo,go figure. This is the way big business operates and talking about it will not change it.