Editorials and commentaries

[TWAnr]

Michael Boyd: American has no choice but to keep Carty
04/24/2003
By MICHAEL BOYD


The bottom line: American probably has no choice but to keep Don Carty as its chief executive officer for the time being. But going forward, he will need to rebuild employee confidence, and that can be done only on a zero compensation basis, with future rewards tied strictly to performance. If he and his executive team are as committed as he says, they should have no problem with such an arrangement.
...the pension deal remains in place – executives can rest easy knowing their retirement is protected, while the rank and file could end up with pennies on the dollar should American file for bankruptcy.
Mr. Carty claims the suddenly discovered perks were needed to keep his executive team from jumping ship. Oh, please. Mr. Carty might as well put on a cheap plaid jacket and start selling used cars. He has the right credibility for the job.
So, where does American go from here? Ideally, Mr. Carty should be replaced, but from a practical standpoint, that may not be possible in the near term. Besides, American's board of directors, which approved the executive perks that destroyed employee confidence, can't be expected to have the sound judgment necessary in picking a new chief executive.
The ugly, unpleasant reality is that American may have no choice – bringing in a new chief executive might be worse than leaving Mr. Carty in place. First, there would be a learning curve, and American has no time for that luxury. Second, the job isn't exactly glamorous right now. Somebody would need to be under the influence of adult beverages to take the job without millions in upfront compensation.

The damage Mr. Carty and American's board have done will take years to fix, regardless of what happens now. Within the context of a multibillion-dollar airline, the face value of those perks Mr. Carty tried to sneak through is relatively small. But the stunt has inflicted a much higher cost on American: It has defrauded American's employees of their basic trust in the company on which their livelihoods depend. The ultimate cost of that is incalculable, both to employees and the airline.

For the complete article, click here: [url="http://www.dallasnews.com/opinion/viewpoints/stories/0402403dnediboyd.9bbc0.html"]http://www.dallasnews.com/opinion/viewpoin...boyd.9bbc0.html[/URL]

Scott Hamilton: Crandall should ride to American's rescue
04/23/2003
By SCOTT HAMILTON


While I had been critical of Mr. Crandall's leadership in the early 1990s, the indisputable fact is that his leadership, vision and wisdom are beyond reproach. Airlines today have adopted in modified forms the "value pricing" plan of 1992. Mr. Crandall even then knew the abyss toward which the airlines were heading on pricing, labor costs and security issues. But he often was a lone voice in the industry.
Despite his apology this week, Mr. Carty's credibility with the unions probably has been damaged beyond repair. And for the best interests of the company, he should go. Mr. Crandall's return to lead American might not be welcomed in all quarters of labor at the airline, but the membership would have no fear about where the blunt-speaking Mr. Crandall stood or was heading. His honor and integrity are what American needs now.
C'mon back, Bob.

For the complete article, click here: [url="http://www.dallasnews.com/opinion/viewpoints/stories/042303dnedihamilton.9e9a4.html"]http://www.dallasnews.com/opinion/viewpoin...lton.9e9a4.html[/URL]

 

[TWAnr]

Fort Worth Star-Telegram

Vote on Carty is better choice
By Mitchell Schnurman
Star-Telegram Staff Writer

Let's cut through the rhetoric to what matters most in the controversy at American Airlines: Is the company better off with Don Carty or without him?

This week, he's damaged goods, the source of a scandal that has wiped out a quarter of American's market value and threatens the labor deals that so many people worked so hard to get.


Bringing down Carty can't be worth bringing down the whole company.
Maybe Carty will make this moot by resigning. Maybe American's board of directors will force him out. Maybe union leaders can figure out a way to save face and send a message without losing everything else.


But Monday evening, he looked like a defeated man. He called a news conference, broadcast live locally and on CNN, and told the world, "I'm sorry, I'm sorry, I'm sorry."
It was sincere, but it was sad, too.


For the first time, I wondered whether Carty had the strength and stomach to see this through. Can he face another showdown with American's unions, more negotiations with lenders and suppliers?
After the pay perks scandal, Carty says he has to win back the confidence of employees, and that's true even at American's corporate headquarters in Fort Worth.
But Carty's body language said he had lost his own confidence, too.


Carty screwed up, as he admits, but he didn't loot the company. He didn't pump up the stock price and cash in hundreds of millions of dollars. He didn't mislead Wall Street about American's earnings.
What he did was not reveal a couple of lucrative perks for American executives, a serious betrayal by someone who professes to care about trust between labor and management.
That's a big deal, especially at a company with a history of labor-management antagonism. But it's not a corporate version of a capital offense.


In town hall meetings, when he was pushing the concessions, an unhappy employee would occasionally criticize him. Carty would listen respectfully, but if the speaker crossed the line, he took on the critic head-on -- and workers in the audience cheered him.
Watching his news conference Monday, as reporters harped on about the pay perks, I was waiting for him to show some of that fight.
He could have said he made a mistake, he gave up the money to make things right and he won't do it again.
Now get over it.


Carty cares what workers think about him, probably too much. He set his own trap, not only by keeping the pay perks secret, but by holding himself up as an example of "shared sacrifice."
Now Carty may have to sacrifice everything: his salary, his perks, his career.
But if Carty goes, who loses more -- him or American Airlines?

For the complete article, click here: [url="http://www.dfw.com/mld/dfw/business/special_packages/american_airlines/5696694.htm"]http://www.dfw.com/mld/dfw/business/specia...nes/5696694.htm[/URL]

 

[TWAnr]

TheStreet.com

The Five Dumbest Things on Wall Street This Week

What caught our eye at the lab was how Carty kept insisting the problem wasn''t the special treatment of executives approved by AMR''s board, but the timing of the compensation disclosures. "The board''s actions were proper," Carty told reporters Monday. "Because I failed to fully communicate the details in advance, I inadvertently created a perception that there was something improper."
We suspect Carty was missing the point. The problem wasn''t that poor timing created "a perception that there was something improper." The executive compensation revelations would have made a stink no matter what day they were revealed. The real problem was the perception that AMR executives don''t give a flying Fokker about employees'' welfare.

As Carty said himself on Monday, to regain trust he''ll need to persuade employees that "the sacrifices they were asked for and agreed to make are indeed shared, and that we are all in this together."
Yes, timing is immaterial. When you''re dining with the captain aboard the Titanic, is there any good time to be told that he''s got a lifeboat and you don''t? To us, it doesn''t make a difference if the news comes before he sticks you with the check, or after.

For the complete article, click here: [url="http://www.thestreet.com/_mktw/tech/georgemannes/10082870.html"]http://www.thestreet.com/_mktw/tech/george...s/10082870.html[/URL]

 

[TWAnr]

The Oregonian

American Airlines: teamwork
04/23/03
But following a close vote on the concessions, the company disclosed that it was providing huge bonuses and pension protections for company executives. The regulatory filings were delayed until after the union votes so that auditors could sign off on the company books without qualifications.

Plausible? Perhaps. But it doesn''t inspire trust. American Airlines cannot have been unaware how contentious its perks would be: Similar compensation plans came under heavy fire at Delta Air Lines earlier this spring.

And the bankruptcy protection for management pensions is especially galling. Workers have little protection in the event of bankruptcy. This kind of weighting in favor of management and failure to disclose full information gave rise to a lot of the rancor that followed the Enron collapse.

Amazingly, American Airlines CEO Donald Carty says he didn''t see anything out of line with the company''s compensation plan. He apologized and admitted delaying the disclosure was "dumb." But the company has declined to give up the extra pension insurance for 45 top executives.

Management seems incapable of seeing how this is perceived by employees and the public: While company executives exhorted employees to sacrifice, they were stashing extra rations for themselves.

Betrayal is a poor way to inspire employee trust. Under the circumstances, one would have to wonder why a management that bungles so badly would be worth retaining.

It is probably in employees'' better interest to avoid bankruptcy by accepting concessions.

Still, the whole mess stinks. Rank-and-file workers pulled the company out of a tailspin, but management may have blown out all the engines and put holes in all the flotation devices.

For the complete article, click here: [url="http://www.oregonlive.com/editorials/oregonian/index.ssf?/base/editorial/105109953751420.xml"]http://www.oregonlive.com/editorials/orego...09953751420.xml[/URL]

 

[Winglet]

Carty disgraced himself and his profession. Don''t kid yourself. He knew exactly what he was doing. Carty isn''t stupid. He''s smart and has a bevy of lawyers as near as his telephone.

What is he sorry about???

1. GETTING CAUGHT.
2. MISJUDGING THE REACTION OF THE UNIONS.
3. MISJUDGING THE REACTION OF THE PRESS.
4. NOT GETTING MORE WHILE HE HAD THE CHANCE.

How is Carty hurt by this? Well, his reputation I suppose. But, if he cared about that, he''d wouldn''t have dipping in the cookie jar, while he told the employees there were no more cookies. A nice fat paycheck and protected pension, plus all the other secret deals go a long way to heal one''s self-image.

Don''t kid yourself. He walks away rich from his association with American Airlines.

He is just symptomatic of a wide and deep corruption in corporate American. Ultimately it''s going to severely damage the core of our economic system which is built on a modicum of TRUST.

 

[atabuy]

It seems that ceo''s want their cake and eat it too.

The business community declares that ceo''s are entitled to large paychecks because of the huge profits that companies make, but don''t think they should have their paychecks reduced when the company loses money.

Ceo''s feel the same way. What Carty did is very selfish and underhanded. The biggest problem for us is that all of these guys in these positions feel the same way and sit on each others boards.

Even though this seems criminal, I think the worst offense is the excuse that they need retention bonuses to keep these guys from leaving the company.

They are supposed to be stewarts of the investors, but really have only self interest working for them.

 

[TWAnr]

Fort Worth Star-Telegram

Dramatic finish
Like Greek tragic figure, Carty gets labor peace he sought at cost of his job
Mitchell Schnurman commentary


For Carty, the past few months have played out like a Greek tragedy. He overcame long odds to get the new labor pacts, only to see the deals -- and his career -- ruined by his own miscalculations.
No amount of apologizing could stop the spiral.


Oh, we haven't forgotten that these new contracts still stink, that they slash pay and benefits and jobs. But they're not as ugly as they were a week ago, before Carty became one of the great PR bunglers of all-time, and the contracts' potential upside is significantly better now.
Executives often justify their hefty pay packages by saying that's what the market will bear. It's sweet to see the same dynamics turn in the unions' favor.
Give union leaders credit for making the most of the opportunity. They raised enough stink to keep the story on the front page but didn't overreach and plunge American into bankruptcy.


Union leaders took a hard line, stressing the double standard that Carty had created with his secret pay perks. That had to embarrass American's board of directors, some of whom are outspoken proponents of corporate ethics and fair play.


But they still may get to keep some of this week's gains. The most important: the chance to revisit the contracts much sooner and the linking of bonuses for executives and workers.
By tying the pay programs, union workers can make sure that everybody lives under the same house rules. Execs can't make out like bandits, unless workers are sharing in the booty.
There's a touch of Ben & Jerry's in that management style, a share-the-wealth approach that would have seemed impossible at American a decade ago.


When Carty became American's CEO five years ago, his primary goal was to improve labor relations and make American a more trusting, collaborative place.
Maybe he achieved that.
But it's a bittersweet legacy: He had to resign in disgrace to get it done.


For the complete article, click here: [url="http://www.dfw.com/mld/dfw/business/special_packages/american_airlines/5723013.htm"]http://www.dfw.com/mld/dfw/business/specia...nes/5723013.htm[/URL]

 

[TWAnr]

Los Angeles Times

COMMENTARY
Pensions for Execs, Shaft for Workers
By Arianna Huffington, Arianna Huffington writes a syndicated column.

Take American Airlines. While preparing to make a rough landing in Bankruptcy Court, executives last week extracted from workers $1.62 billion in wage and benefit concessions that the bosses claimed were needed to keep American aloft. At the same time, the execs secretly safeguarded themselves with a glittering collection of golden parachutes, including massive cash bonuses and a $41-million trust fund to guarantee their pensions should the airline crash financially.

Even after the secret package hit the fan, the company held fast to its priorities. It canceled the cash bonuses. It tossed CEO Don Carty onto the tarmac. But it refused to relinquish the fund protecting its executives'' nest eggs, while the workers were forced to go along with a deal that will lead to thousands of layoffs and pay cuts of between 15% and 21%.

Besides making one reach for the nearest airsickness bag, the American Airlines debacle highlights the growing disparity between the ways corporate America is preparing for the golden years of its executives and for its rank-and-file employees. In the lofty confines of American boardrooms, the sky is the limit.

It''s time to level the lopsided pension situation. Let''s start with those pension-protecting executives at American Airlines. If their future is worth safeguarding, then so is their workers'' present. Just think how many jobs the $41 million they put into that trust fund could save.

For the complete article, click here: [url="http://www.latimes.com/news/opinion/commentary/la-oe-huff30apr30,1,5370793.story?coll=la%2Dnews%2Dcomment%2Dopinions"]http://www.latimes.com/news/opinion/commen...ment%2Dopinions[/URL]