Horton: ‘Merger will make us stronger’

Posted Friday, Oct. 18, 2013  comments  Print Reprints

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Almost two years into bankruptcy, AMR Chief Executive Tom Horton is smiling.

The parent of American Airlines posted its second straight quarterly profit Thursday, has accumulated over $7 billion in cash and investments, and is set to make its first profit-sharing payment to employees in over a decade. It’s all quite a reversal from the American Airlines of 2011, which posted a loss of nearly $2 billion.

“There was a reason why some of our big competitors were outperforming us,” Horton said. “Now it’s our time.”

In an interview with the Star-Telegram on Thursday, Horton discussed the carrier’s strong financial performance and whether the merger with US Airways is still in the cards for the Fort Worth-based airline.

On whether American’s financial success diminishes the need for the merger: As we said from the outset, of course American is going to be very successful after having been restructured. I think the results speak for themselves there. But the merger will make us stronger because it will give us a bigger, broader network and allow us to be even more globally competitive. So we’ll be successful, but we’ll be even more successful with the merger.

On whether having a profitable American and a profitable US Airways hurts the airlines’ case in the antitrust trial: Strong companies merge all the time and we think a strong company means a strong merger, and the standard for the DOJ is to prove that the merger is anti-competitive, not whether or not American or US Airways is making a profit.

On the carrier’s fleet renewal plan: Today we’ve taken 43 new airplanes, and for the full year we’ll take 60. For the next year, we’ll take 63. It’s an unprecedented renewal of the fleet. And as you know, that has huge leverage on fuel costs, maintenance costs and operating costs in general. But maybe more importantly, it has a huge benefit for our customers. They’re seeing state-of-the-art product and we hear a lot of buzz about that from our customers now, which is exciting.

On the recent public campaign to pressure the Justice Department to settle: I do think it is important and relevant that there is near universal support for this merger. I think it is important that is made evident. We obviously believe in the merger. We think it’s good for all of American’s constituents. It’s good for all of US Airways’ constituents. We’re going to do our best to tell that story everywhere that it’s appropriate. We’re now in the zone where this will be a question for the Justice Department and the courts, and we’re respectful of that.

On the effects of uncertainty on the workforce: I think it’s a great credit to the entire team at American that everybody is standing tall, doing their jobs every day and doing a great job for our customers and the results are showing it. I think it’s great that in the meantime, those results are being translated into profit sharing for recognition of what our folks are doing. I think it’s also great that we’re now back in hiring mode. We’re hiring 1,500 pilots over the next five years. We’re hiring 1,500 flight attendants this year alone, and we’ve hired some agents and reps as well — I think 1,200 over this year. All of that begins to create more movement and opportunity and excitement at the company, and I think you see that on board our airplanes.

On being in bankruptcy for almost two years: Obviously, when we entered the process, we weren’t contemplating a merger before emergence. We were contemplating emerging independently and then pursuing the strategic options on the other side. As we got our restructuring well in hand and held off merger talks long enough to get the independent company looking strong and durable, then we were able to negotiate from a position of strength and create a really good outcome for all constituents.

So I am pleased with that and the way it worked out, obviously. I am not pleased the company remains in restructuring because it’s costly and it’s disruptive. So we’re very keen to bring this to a close — either win our case or settle it and move forward with the world’s leading airline.

Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk

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