Here's an edited transcript of remarks Tuesday by AMR Corp.'s new chief executive, Tom Horton:
Q: Why file for bankruptcy now?
A: It was a difficult decision, of course, for the board. I would say it was really the thinking that now is the time to get on with restructuring the company to make it competitive and successful for the long term. As for the timing, we've been talking for some time about our cost gaps in the industry, which have widened in the view of us and the board. (It) has become untenable, and that was just a fact.
Obviously, we have been working very hard to address that in a consensual fashion, and, at the same time, we're facing a very uncertain economic climate in the U.S. and abroad, combined with high and volatile oil prices. So when you take all of that into account, the board decided it was time to get on with the full restructuring of the company.
Q: What are you telling customers who have booked tickets on your carrier for the holidays?
A: Business as usual. We have 80,000 employees of American Airlines, and they are going to do the very best to do the best customer service. All of our flights will go as scheduled.
Q: How long do you expect to be under bankruptcy protection?
A: It's too early to tell what the timetable will be. The duration has been a wide range over the past several airline restructurings. The last couple were, I think, Delta and Northwest. … (Both) were under 15 months. We would certainly look to do better than that.
Q: What about the 460-plane order that American made in July?
A: Rock solid. That is very much a foundation of our restructuring and very much a foundation of the company going forward. We have already had conversations with Boeing and Airbus and GE, and our intent is full steam ahead on that airplane order. It's all about the future of the company and having the youngest fleet in the airline industry. That deal has enormous flexibility for growth in it. We have 460 firm airplanes, but we also have another 465 options on top of that.
Q: Are you going to ask the bankruptcy court to restructure or jettison your company's pension obligations to the Pension Benefit Guaranty Corp.?
A: Obviously, pensions are part of our cost disadvantage. We're not prepared to comment on how all of that will go or whether we will necessarily seek to have the pension plans taken over or terminated. But the pension plans and the retiree medical plans are very expensive, and our company spends a lot more on them than our competitors spend on their retirement plans. I do think it is worth pointing out that once in Chapter 11, there are a variety of factors that come into play, including, notably, the creditors' interest and the creditors' committee.
Q: What about the American Eagle divestiture?
A: Obviously, that is on hold right now as we get on to restructuring American Airlines and the AMR Corp. (American Eagle CEO) Dan (Garton) and his team will be very much focused on being part of the reorganization of the broader company.
Q: Are you planning on parking any aircraft?
A: We're looking at all of that. What you have to do is look at the fleet tail by tail and look at the cost of operating the airplane, not just the ownership cost. (We'll look at) the maintenance-cost profile and the operating-cost profile, and by doing that we'll decide which airplanes we want to keep and which might be candidates for leaving behind in the process.
Q: Does this make AMR a possible target for a takeover or merger with another carrier?
A: I'm not going to comment on that. We are laser-focused on completing a successful restructuring of this company. When you look at the assets this company has, I have no doubt, nor do many observers in the industry, we will be very successful. We have hubs in the right places in North America. We have hubs in the best markets around the world, and we have an enviable aircraft order book.
Q: What are you telling employees at this time?
A: We're saying it's time to turn the page and move forward, and a successful American Airlines is in everybody's interest, and that's what we have to go to. We have to put the past behind us and get focused on the future.
Q: What does this mean to you to be named CEO of AMR at a time when the company is entering bankruptcy?
A: It's bittersweet, of course. We have worked so hard to find a different path, and, as you know, (former CEO) Gerard (Arpey) was fully committed to that. He poured his life into that, and I was right there alongside him, so in that regard it is bittersweet. Of course, I'm saddened to see Gerard leave the company. Nobody cares about the company more than Gerard Arpey, and that saddens me.
On the flip side, it is a huge honor and privilege. It is a company that has only had a handful of CEOs. I feel a great sense of honor and history and a great sense of obligation to make it a success.
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