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July 30, 2012

Schnurman: AMR CEO Horton losing the war to keep American independent

MITCH_SCHNURMAN_17761801At least Tom Horton didn’t say he invented the Internet.

The CEO of American Airlines has been stretching the limits of his credibility on a recent publicity campaign. He took credit for starting the industry's consolidation and flip-flopped on the company's interest in a merger. One analyst said he was on a rampage, presumably because US Airways’ Doug Parker has been dominating the coverage of a possible AA-US Air hookup.

Rather than bolstering his bona fides, Horton has muddied American’s message and, at times, made himself look small.

Before reviewing Horton’s comments, it’s important to note why this matters. My take is that Horton is overreaching because he's losing the war for American’s hearts and minds, maybe even with unsecured creditors.

His management team must sense it, and stock and bond markets are also betting on a merger with US Air. Parker has a good shot of running the combination, too, given that he championed the idea and won over American’s labor leaders.

Horton’s initial strategy was to stay focused on a stand-alone business, get through a long Chapter 11 to-do list and stay above the fray. He started out rock solid, unflappable and disciplined. But that’s over.

Horton is now slinging mud and revising history, and it must feel like panic city on Amon Carter Boulevard. Horton has been mocking Parker for campaigning by press conferences. Guess who’s going to be mocked now?

Here’s the quote Horton will never live down: “People said American sat out the consolidation wave of the last decade,” Horton told The Wall Street Journal last week. “No, we didn't. We started it, with the TWA acquisition.”

This is such a stretch that it’s fair to wonder if it was a slip of the tongue. It wasn’t. I’ve heard the same statement from American more than once, during background interviews. This time, Horton went on the record with it -- for the Journal’s national readership, no less.

To outsiders, including those who pulled off successful airline mergers, Horton was claiming to be an architect of modern airline consolidation.

That’s on par with Al Gore and the Internet. Gore never said he invented the ‘Net, but he took a lot of credit, and opponents and comics wouldn’t let it go. The line stuck, because it fit the narrative that Gore would go to any length to impress.

Click here to read the full column published online at Star-Telegram.com on Monday.

-Mitchell Schnurman


Read more here: http://www.star-telegram.com/2012/07/28/4134144/american-airlines-panic-attack.html#storylink=cpy

 

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Comments

jtc@aa

Horton: What a tool.

Gary

Horton can’t be blamed for mergers that didn’t happen when he didn’t run the airline. AMR has a labor cost problem. Buying a bloated dinosaur of an airline wouldn’t have “saved” the company as Vicki Bryan (the bond analyst) claimed. BYT, is there any job with less cache than a bond analysis? Holly Hegeman, the airline blogger?

What would AMR do with US Air? Phoenix is too close to DFW, Charlotte is too close to MIA, Philly is too close to New York.

US Airways pledged concessions to American's labor unions at the expense of the rest of American's creditors. In the end, the creditors will support Horton’s plan for reorganization.

LAX FA

Really? That's strange, because for the last month or so I have been hearing nothing but rebellion from fellow AA'ers and some US Airways friends, too. People are starting to see Parker as obsessed and as Horton says, desperate.

And no one wants to date that desperate, single person just because they are one of the last ones available.

David Barnes

AA's creditors are going to decide what's best no matter how much bloviating either CEO does. It is humorous to expect Horton to sit idly by twiddling his thumbs while Parker embarks on his PR journey in spectacular fashion. The trouble with Parker is that he is all bluster and no bite, evidenced by the lack of closure from the ongoing West vs. East struggle. AA's unions are on a fool's errand to get involved in that mess and Horton knows it. It like watching your children become more and more daring with a touch of carelessness. How far do you let them go before you step in a pull back? Horton clearly had enough.

RL

I think this story is right on the money.

Tom Horton's greed and self-righteous attitude has clouded his ability to run AA.

Richard

Schnurman's point rests on the assumption that Horton is trying to keep American totally independent. I don't think this is the case at all.

I think Horton may actually merge AA, but he wants to do it from a position of strength so that American is the airline doing the acquiring. And US Airways may not be the best merger partner.

We'll probably see American take part in a merger, but likely on its own terms.

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