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By ERIC TORBENSON / The Dallas Morning News
After three years of running the world's largest airline, Gerard Arpey's list of accomplishments runs long.
[Click image for a larger version] RICKY MOON/Special Contributor
RICKY MOON/Special Contributor
For all his successes at American, CEO Gerard Arpey's legacy is still up in the air.
The chairman, chief executive and president of American Airlines Inc. has forged a collaborative way of working with unions that's considered groundbreaking in the industry.
He's turned American's three maintenance bases into profit centers, capitalizing on the outsourcing trend by taking on overhauling work from other carriers.
Mr. Arpey has overseen hundreds of changes that have simplified American's once-dizzyingly complex operations, and he's beefed up the carrier's balance sheet.
Yet for all of Mr. Arpey's successes, American still isn't profitable, largely because of skyrocketing fuel costs. And it's far from making the kind of money it needs to buy new planes and reinvest in itself.
"Performance has got to be your reality," Mr. Arpey said after an employee meeting last month at the carrier's giant maintenance facility in Tulsa, Okla.
"You can't take much satisfaction in losing money," he said.
"Our goal is to make the company sufficiently profitable so it can replace its assets and grow."
As Mr. Arpey sees it, he needs American's labor unions at his side in order to make money and expand.
Indeed, he's staked his stewardship of American on the Working Together approach that links employees and managers at all levels of the carrier.
Other carriers have tried some levels of cooperation with labor, but American's effort is unique in how deeply it extends through the airline.
"This will be his legacy, if successful," said Tommie Hutto-Blake, president of the Association of Professional Flight Attendants that has 16,000 members at American. "There is no doubt this model will be a much more challenging course, rather than stripping the company of debts and obligations via the bankruptcy courts."
Despite not having the power to set aside leases, contracts and pensions, American has posted better results than United Airlines Inc., which recently emerged from a three-year stint in bankruptcy where it terminated its employee pensions.
Lost opportunity
Mr. Arpey said he considers the incident over and is focusing instead on how to improve productivity. The average American employee understands how the payout situation played out and has moved on, he said.
But Mr. Arpey's relationship with the flight attendants and pilots has begun to resemble the traditional adversarial situation he inherited three years ago. And contract talks are right around the corner, which historically have added tension between unions and managers.
The flight attendants' union says it won't participate in meetings that management has held around the country discussing productivity improvements. And the pilots union has filed contract grievances over new sick-leave policies it says breaks the contract.
Aviation consultant Bob Mann says Mr. Arpey lost a "golden opportunity" to win over workers and unions by forcing managers to take much less or take none of the payout. That kind of move might have exposed the airline to lawsuits because the payouts are considered deferred compensation, not discretionary bonuses.
"A lot of 'attaboys' were just erased from the blackboard with one move," said Mr. Mann, who has done work with American's pilots union. "He probably would have lost five or 10 or 15 managers, but he would have absolutely cemented his relationship with 50,000 people who touch American's customers every day."
Mr. Arpey underestimated the big payouts' impact on employee trust, said Sam Mayer, who represents American's pilots based in New York and who is among management's most vocal critics.
"I heard from guys on this payout issue that I hadn't head from in years – line guys who usually never take much interest," he said.
"Listen, I really do think that Arpey gets it," Mr. Mayer said. "My problem is that he inherited a bunch of assistant coaches from the previous head coach, and three years later, there's been no real change in the lineup. A lot of these guys don't share his vision."
story here
By ERIC TORBENSON / The Dallas Morning News
After three years of running the world's largest airline, Gerard Arpey's list of accomplishments runs long.
[Click image for a larger version] RICKY MOON/Special Contributor
RICKY MOON/Special Contributor
For all his successes at American, CEO Gerard Arpey's legacy is still up in the air.
The chairman, chief executive and president of American Airlines Inc. has forged a collaborative way of working with unions that's considered groundbreaking in the industry.
He's turned American's three maintenance bases into profit centers, capitalizing on the outsourcing trend by taking on overhauling work from other carriers.
Mr. Arpey has overseen hundreds of changes that have simplified American's once-dizzyingly complex operations, and he's beefed up the carrier's balance sheet.
Yet for all of Mr. Arpey's successes, American still isn't profitable, largely because of skyrocketing fuel costs. And it's far from making the kind of money it needs to buy new planes and reinvest in itself.
"Performance has got to be your reality," Mr. Arpey said after an employee meeting last month at the carrier's giant maintenance facility in Tulsa, Okla.
"You can't take much satisfaction in losing money," he said.
"Our goal is to make the company sufficiently profitable so it can replace its assets and grow."
As Mr. Arpey sees it, he needs American's labor unions at his side in order to make money and expand.
Indeed, he's staked his stewardship of American on the Working Together approach that links employees and managers at all levels of the carrier.
Other carriers have tried some levels of cooperation with labor, but American's effort is unique in how deeply it extends through the airline.
"This will be his legacy, if successful," said Tommie Hutto-Blake, president of the Association of Professional Flight Attendants that has 16,000 members at American. "There is no doubt this model will be a much more challenging course, rather than stripping the company of debts and obligations via the bankruptcy courts."
Despite not having the power to set aside leases, contracts and pensions, American has posted better results than United Airlines Inc., which recently emerged from a three-year stint in bankruptcy where it terminated its employee pensions.
Lost opportunity
Mr. Arpey said he considers the incident over and is focusing instead on how to improve productivity. The average American employee understands how the payout situation played out and has moved on, he said.
But Mr. Arpey's relationship with the flight attendants and pilots has begun to resemble the traditional adversarial situation he inherited three years ago. And contract talks are right around the corner, which historically have added tension between unions and managers.
The flight attendants' union says it won't participate in meetings that management has held around the country discussing productivity improvements. And the pilots union has filed contract grievances over new sick-leave policies it says breaks the contract.
Aviation consultant Bob Mann says Mr. Arpey lost a "golden opportunity" to win over workers and unions by forcing managers to take much less or take none of the payout. That kind of move might have exposed the airline to lawsuits because the payouts are considered deferred compensation, not discretionary bonuses.
"A lot of 'attaboys' were just erased from the blackboard with one move," said Mr. Mann, who has done work with American's pilots union. "He probably would have lost five or 10 or 15 managers, but he would have absolutely cemented his relationship with 50,000 people who touch American's customers every day."
Mr. Arpey underestimated the big payouts' impact on employee trust, said Sam Mayer, who represents American's pilots based in New York and who is among management's most vocal critics.
"I heard from guys on this payout issue that I hadn't head from in years – line guys who usually never take much interest," he said.
"Listen, I really do think that Arpey gets it," Mr. Mayer said. "My problem is that he inherited a bunch of assistant coaches from the previous head coach, and three years later, there's been no real change in the lineup. A lot of these guys don't share his vision."
story here