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Just Whose Neighborhood Is It Anyway?
by Daniel Sargis
26 January 2004American Airlines

Through a succession of CEO’s starting with Robert Crandall, American Airlines has demonstrated its grit to become a case study in mismanagement.


Always beware of a company that tells you they want to be, “a good neighbor!”  If I learned one thing in my M.B.A. program...a company is in business to serve the long-term best interests of its owners.  All of this “good neighbor” tripe is...well, just tripe.  And American Airlines (AA.) keeps making that point.

That “something special in the air” does “what they do best” by “fly(ing) naked” and it is not the “American Way.”  Trust me, even if “Rio Loves You”...American Airlines doesn’t.

American Airlines pilot Dale Robin Hersh was arrested at Sao Paulo Airport after making an obscene gesture while being photographed by Brazilian immigration officers.  It seems that Hersh flipped the bird to the airport gauchos to protest recently introduced Brazilian security measures requiring US citizens to be fingerprinted and photographed upon entering our southern neighbor.  “Brazil implemented the policy on January 1 in retaliation for a similar US program to fingerprint and photograph visitors who need visas for the United States.”  The boys from Brazil trumped the girls from Dallas.

In gutsy fashion, AA management immediately stood by their own, “The company apologizes to the Brazilian government, the airport authorities, the police, or anyone else who perceived anything they believed to have been disrespectful.”  I wonder if they sent bin Laden a holiday fruit cake?  Well, AA stays busy enough pleasing its own fruit cakes.

When it comes to the really serious stuff, AA is unparalleled.  Just recently, American Airlines was honored by the Gay & Lesbian Alliance Against Defamation (GLAAD) with the 2003 GLAAD Leadership Award.  According to Joan M. Garry, GLAAD Executive Director, "American was the first major airline to implement same-sex domestic partner benefits, first to implement both sexual orientation and gender identity in its workplace discrimination policies, and first to have a recognized GLBT (gay, lesbian, bisexual and transgender) employee group -- GLEAM.”  There’s something to raise your landing gears over.

If only AA management could pay so attention to its business...i.e., its shareholders.  Through a succession of CEO’s starting with Robert Crandall, AA has demonstrated its grit to become a case study in mismanagement. 

The shareholders were so pleased with Crandall’s performance that, within minutes of announcing his resignation, the stock climbed 6 5/8 on April 15, 1998.  His successor, Donald Carty, received an $8.2 million severance payment, $79,000 per year pension, medical benefits and travel benefits as a reward for taking AA to the verge of bankruptcy.  Oh...Carty also deceived his pilots, flight attendants and transport workers into granting $1.6 billion in wage concessions while trying to pocket millions in retention bonuses for himself.  Not my idea of a good neighbor.

Carty’s successor, Gerard Arpey, is in the process of accepting the lion’s share of a multi-billion dollar government bailout of the airline industry.  That’s right...this good neighbor is taking your tax dollars to float the company which paid him a paltry $513,700 in 2003 (he’s whined publicly about being underpaid). 

And why not?  The good neighbor policy at AA only cost its shareholders $3.5 billion in 2002.  In the first quarter of 2003 AA reported a $75 million loss that would have been a $357 million loss if not, in large part, for government aid.  Hey, if my neighbor had his hand in my pocket for GLAAD initiatives, or for billions of dollars, I wouldn’t be very happy.  But, AA can’t even make it feel good.

When pilot Hersh and his crew showed a bit of American spirit, AA management did the Democratic thing and immediately surrendered.  After taking billions of dollars from the American taxpayer and American worker, AA’s idea of being a good neighbor was to roll over for the Brazilians.  Not to forget that AA should have some clout with Brazil.  Their fleet of planes contains 141 Brazilian-made Embraer jets.  There’s another couple of billion dollars that did not go into U.S. pockets.

So what’s the playbook look like?  U.S. worker expendable, U.S. taxpayer expendable, U.S. shareholder expendable, U.S. patriotism expendable, but...AA still has an untarnished record of excellence in political correctness.

AA’s management might not be treating shareholders and the country so well, but they can boast about their African-American Employee Resource Group, Asian Cultural Association, Caribbean Employees Resource Group, Gay, Lesbian, Transgender and Bisexual Employees Resource Group, Indian Employees Resource Group, Latin Employee Resource Group, Native American Employee Resource Group and (Allah save us) Muslim Resource Group.  I thought we were talking about an airline...not an Est encounter session.

If AA really wants to be a good neighbor, it should start by becoming a good American.  And, if AA’s management wants to pick the taxpayers' pocket and keep themselves lavished in the six to seven figure income bracket, they should be required to be good Americans.

AA’s modus operandi for running a company reminds me of the washout husband with six unfed children who still manages to buy his tawdry mistress gold jewelry for the holidays.  Charity begins at home and the last I heard, AA was an American company.  The American Way of dealing with Brazil would have been a stuff-it love bite.  But maybe AA was afraid of losing its Brazilian routes and the opportunity to transport millions of illegals onto our continental shores.  Somebody has to clean their restrooms.

If this is the way to run a company, I’m moving to France.  That is, of course, unless you wish to run the company into the ground.

Daniel Sargis, a freelance writer, is a principal in a private investment development company.  His website is dansargis.org
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