FORT WORTH, Texas — It took Thomas Horton 26 years to reach the corner office, but the promotion came with a catch: His company was going into bankruptcy protection.
Horton was elevated from president to chief executive of American Airlines parent AMR on a late-night phone call in November. On the same call, the company’s board finalized the decision to file for Chapter 11 the next morning.
The 50-year-old Horton sat down recently for an interview with The Associated Press. Here is an excerpt:
Q: What happened the day you were picked to replace Gerard Arpey as CEO?
A: We had a board meeting in New York. I flew back here that night, and we had a board telephone call late that evening to make final what had been tentatively decided earlier in the day. I was made chairman and CEO on that phone call, and the next morning we filed. That was a night that I didn’t get a lot of sleep.
Q: What’s it like to lead a company during this kind of turmoil?
A: I’ll get back to you in about a year.
Q: Your reorganization plan envisions $2 billion in cost saving and $1 billion in extra revenue every year. Some analysts are skeptical about the $1 billion in new revenue. Is it real?
A: I think it’s very real. It’s really about being able to tailor what airplanes we’re flying to what markets, and there’s a lot of revenue there. We are also going to fully capitalize on the joint business agreements that we’ve put in place over the last couple of years (with British Airways and Japan Airlines and a pending deal with Qantas). And then of course we would foresee more flexibility to code-share (work together and share revenue with other U.S. airlines). All those things taken together add up to a lot of revenue.
Q: How long will the bankruptcy process last?
A: I want to go as quickly as we can. We must do this right. We must do it only once, and we must be sure that the company is profitable, successful and growing coming out the other side. I’ve given our team a target to have that done by the end of the year. I will admit that is an aggressive target by prior standards. There’s no reason why we can’t do it.
Q: Recently, you’ve opened the door to a possible merger but not while you’re still in bankruptcy protection. Is that a new position?
A: No, nothing new at all. For years I’ve said that I think consolidation has been — can be healthy and constructive for the U.S. airline industry. But right now we are in the midst of a very complex restructuring and so our focus is singularly on returning the company to profitability and growth. The idea of doing the two together strikes me as a bridge too far.
Q: What’s the outlook for the airline industry this year? With high fuel prices and questions about the European debt crisis, is this going to be a tough year for airlines?
A: Yeah, it’s challenging. Oil prices are up, there is uncertainty. The revenue environment (travel demand) has been pretty decent thus far this year, but it has to be to offset the very significant increase in fuel prices.
Q: What’s your forecast on oil prices?
A: It’s a good question, and I have no idea. The only thing I can say is, expect volatility because there is obviously great uncertainty in the Middle East right now, and that has not been helping.
Q: We’ve had many ticket price increases in the past year. Are consumers and business travelers maxed out?
A: I don’t know. Load factors (percentage of seats sold) have been quite strong in the industry by historical standards.
Q&A Thomas W. Horton, chief executive of American Airlines parent AMR
