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October 12, 2012

An interview with AMR CEO Horton, Part V (let's talk about pilots)

With the pilots and American negotiators meeting every day to try to hammer out a new contract, we asked AMR chief executive Tom Horton about the pilots and if he thinks a deal can be reached in Part V of our interview with him on Thursday.

ST: Can you submit a reorganization plan without a pilot contract?

Horton: Oh sure. I mean look, open contracts are you know a fixture in this industry. I think it would be better for the company, I think it would be better for the owners of the company. I think it would definitely be better for our pilots and all of our people if we had a contract. So that’s where we’ve been devoting our energies.

ST: Can you get an agreement hammered out with them by the end of the year?

Horton: Oh sure. I mean we did it in pretty short order last time, so there’s no reason why it can’t be done again.

ST: When you talked to the Star-Telegram in February when you first unveiled American’s restructuring plan, you discussed the fact that parties move faster to get contract agreements if there is a deadline in place. That was why you filed a Section 1113 motion which created a timeline, a deadline if you will, that created pressure to get a deal done. There is no deadline now that the judge has abrogated the contract and you’ve said you don’t have to have a pilot contract in place to file a reorganization plan. What motivation is there to get a deal done by the end of the year? In some ways, it is to your advantage to not have a contract in place.

Horton: No, that’s not the way that I look at it, Andrea. I think that it would be best for the company, for the pilots, for all the people of American if we made a consensual deal you know that addressed our pilots’ priorities but also has to be within the economic parameters in order to make the company successful so I think that’s the most important thing to do. I would say that you know we did it once together with the APA, unfortunately it was voted down. That’s a democratic process I respect and so now we’re back at it. I think two parties working in good faith with a common objective which is a successful company that creates security and opportunities for all of our people and our pilots ah I think we can reach an agreement. I do. But you’ll have to stay tuned. It develops day by day.

ST: When the tentative agreement was voted down by 61 percent of the pilots, there was a lot of emotion involved in the vote. What did you learn from that experience in terms of how to approach your pilot group and their emotions towards the company?

Horton: I spend a lot of time with pilots so I think I have a pretty good sense of the way they feel. I understand that. I understand the views. I understand the history of the last decade which has been very hard on this company and a lot of lingering emotions and views from that. I understand it. I ride in the cockpit a lot. I flew back from LaGuardia on Monday, I rode cockpit both ways and you know it’s good to get a couple of hours of input. It’s helpful to listen and I do that a lot. So, yes, I think there was a lot of emotion around it. But I think also, Andrea, that one of the big elements of the last tentative agreement was the equity, 13 ½ percent of the company which would have been accrued to our pilots. And that was worth a lot of money. You know it was something that was sort of hard negotiated with the creditors committee, but I don’t think it was properly valued or articulated in the process of getting the contract ratified. So I think that’s an important opportunity the next time around.

ST: Are you offering the pilots an equity stake again?

Horton: Well, that’s not up to me as you know. I’m one voice in the process. And the creditors committee will have to weigh in on that.

ST: There was a period of time wasn’t there? When that contract was worked out and the equity stake provision was worked out, there was a period of time when the creditors committee said it would go along with it.

Horton: Yes. But they have supported it. They have supported it and that was well known in the ratification process.

ST: Some of the criticism heard out of union leaders is that management is not married to American while the pilots are married to the company. They can’t leave American and easily find another pilot job while executives with MBAs can if the carrier does not emerge from bankruptcy. How do you respond to that criticism?

Horton: It’s not a criticism, it’s a fact. I choose to be here. I choose to be here because I believe in this company and I want to make it successful. This is a challenging job right now. But I choose to do it. And it’s not because it pays a lot.

ST: You’re still working under your CFO contract, is that correct?

Horton: Yes.

ST: For some pilots it has become personal where they do not want to see you in the management seat and they’d rather see someone else running the company, it doesn’t matter what American offers them in the tentative agreement.

Horton: Have you talked to pilots who have told you that?

ST: I have had a couple yes, but I’ve also had some who don’t have an issue with you as CEO.

Horton: That may be, I can’t respond to that. All I can tell you is that my objective here is to make this company successful and profitable and growing which will benefit the people of American Airlines. The track the company was on was a very bad track and I think we all know where that track was going to lead. The track the company is on now is one that will lead to a successful, profitable company. It’s not about me. It’s about that mission.

-Andrea Ahles


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ST:“There is no deadline now that the judge has abrogated the contract and you’ve said you don’t have to have a pilot contract in place to file a reorganization plan. What motivation is there to get a deal done by the end of the year? In some ways, it is to your advantage to not have a contract in place.”

Exactly, the pilots are now facing an 18% pay cut from what was offered on the TA with no legal claim to equity in the new airline for loss of their pensions and no profit sharing. The APA posted two contradictory messages yesterday about the state of the negotiations:

“No Agreements-In-Principle (AIPs) were reached in any areas--none. If this current rate of progress continues, we should have an industry standard TA to send to you by NEVER.” –LAX Domicile Reps

“Enough progress has been made to justify the continuation of negotiations next week.” -Your APA Negotiating Committee

I see the pilots leaving BK with no contract and AMR without US Airways.

Thomas One

the people of american airlines clearly does not include shareholders. Pilots and management will never get retirees and savers to back the company- once shafted is enough. Does Horton feel in any way responsilble to shareholders.

Alex in TX

I have to agree with Gary about the pilots leaving bankruptcy without a contract.

After all, they haven't shown the least interest in working toward their own benefit, so why start now?

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