AMR Board to discuss Carty''s Future with AA


Aug 20, 2002
AMR Board Addresses CEO's Future

American Airlines' parent, AMR Corp.(NYSE:AMR) (AMR), posted a staggering loss of $1.04 billion in the first quarter, but the world's largest airline has a potentially bigger problem: the future of Chief Executive Donald J. Carty, Thursday's Wall Street Journal reported.
AMR's directors met yesterday by telephone and are scheduled to meet in person in Texas today. Directors will discuss the status of Mr. Carty, who has apologized repeatedly for failing to give unions details about large bonuses and pension protections for American executives while he was asking workers to approve huge pay cuts.
People close to some directors said the board appears deeply divided. One camp, made up of current and former CEOs, supports Mr. Carty, thinks unions are simply out to scuttle contract concessions and believes the best course for AMR at this stage might be a bankruptcy-court filing. The other thinks he is too tarnished to lead and, in fact, misled directors by telling them he had fully briefed unions about the executive compensation packages the board approved.
Yesterday, four U.S. congressmen from Texas called Mr. Carty together with union leaders to try to salvage cost-cutting deals. Every available consideration that could avert a bankruptcy filing by American Airlines was looked at, Rep. Pete Sessions, a Dallas Republican who took part in the negotiations, told the Associated Press. Mr. Sessions said a possible bankruptcy filing would be on the board's agenda today.
While AMR's board isn't known for standing up to management, outsiders believe it is possible Mr. Carty could be ousted as soon as today.
Union leaders, workers and some of his own managers say Mr. Carty has lost so much credibility that it would be difficult for him to engineer a turnaround at the struggling airline. Ironically, when he took over five years ago from the combative Robert L. Crandall, he pledged to rebuild trust with workers.