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October 16, 2013

American CEO: we're open to a "sensible, common sense settlement" with the DOJ

American Airlines chief executive Tom Horton talked to reporters after the carrier announced its new service from DFW to China.

Here are a few thoughts from Horton on the government shutdown, the debt ceiling, cancelling its Tokyo Haneda service and possibly settling with the DOJ on its antitrust suit against American's merger with US Airways

Q: Has the government shutdown had an affect on business travel for American?

Horton: It has had some affect on demand but we haven’t quantified it.

Q: How many new airplanes have you received but have been unable to put into service because the FAA inspectors are on furlough and unable to certify your aircraft?

Horton: We’ve got a couple of airplanes that are pending certification. It’s not, at this moment, a big issue but obviously we have a lot of airplanes being delivered so if the shutdown continues for a long period of time it will be an issue.

Q: Media reports said you have an Airbus plane in Hamburg, Germany at the factory waiting for certification. Does the shutdown affect your Boeing aircraft as well?

Horton: It affects both.

Q: How many new aircraft has it affected?

Horton: I don’t know the exact number. We’ve got two or three sitting over at DFW in the eastside hangar.

Q: Does that include Boeing? 

Horton: I know of Airbus. I don’t know if we have any Boeing aircraft affected at this moment. We’re taking a lot of airplanes this year so it’s not helpful to us. We’re not unique. It’s not helpful to the whole industry. But we’re obviously doing a much more dramatic fleet renewal than anybody else.

Q: In addition to announcing new China routes today, American said it is shutting down its service between New York's JFK airport and Tokyo's Haneda airport. Why did you end the Japanese flights?

Horton: As you know we had started flying into Haneda because that is the close-in airport in Tokyo, but the big value of that was also hitting some connections with our partner, Japan Airlines. But because of the flight window we have to operate in which is very very restrictive, we don’t really hit any connections on that end. We lobbied very hard with the Japanese government and we’ve enlisted the US government and we were unable to get that changed so as a consequence it was very unprofitable flight and we had to go ahead and make that change and we regretted that because with the right flight times that could have been a very successful flight.

Q: There is a new round of Haneda slots being allocated. Could you not wait for these slots?

Horton: If there were an opportunity for us to get better slot times at Haneda, we would consider going back to it, but right now it was not a profitable flight and we couldn’t tolerate that any longer....We worked very closely with JAL to advocate for a more balanced allocation of the slots in Haneda and you’ve seen the results, it was not a balanced result. We thought a balanced result would have been more in the interest of travelers, consumers and the Japanese public and argued that, but we were not successful. But there will be another opportunity.

Q: Will you have connecting issues with your Chinese flights out of DFW?

Horton: We are particularly excited about the connections it provides on this end, not just to the southeastern part of the United States but to Mexico, central America and into Latin America. That is the very unique routing we can offer that doesn’t really exist in the marketplace today. When we talked to the Chinese Aviation Board, the CAAC, about that, they instantly gravitated to that point and I think that was viewed as very attractive to them and as a consequence they are being very cooperative.

Q: Have you discussed the new China service with your oneworld partner, Cathay Pacific?

Horton: We talked to Cathay about this and they were very encouraged by it because the Dallas/Fort Worth area is, as you know, the 4th largest metro area in the U.S., it’s growing. It’s a very powerful pinpoint in the network.

Q: What are your thoughts on the possibility that the U.S. may reach its debt limit? 

Horton: Well it’s not good. There’s nothing good about this for the United States or for the business community. We’re just hopeful that we’ll get together and find the right compromise and make a deal.

Q: Are you currently talking to the DOJ about a possible settlement of the antitrust suit?

Horton: I just don’t think it would be appropriate for us to comment on the discussions with the DOJ. I wouldn’t have a comment on that.

Q: Could the government shut down delay the trial?

Horton: At this point we have no indication of that. The judge affirmed the trial date for nov. 25. And back on the settlement, we do remain open to a sensible common sense settlement, we do, and we’re being very thoughtful about that.

-Andrea Ahles

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