Ex-American Airlines CEO balked at bankruptcy
COMMENTARY American Airlines' parent company, AMR, decided to file for chapter 11 bankruptcy even though it has $4 billion in cash. It has done this over the objections of Gerard Arpey, the now retired CEO, who thought of bankruptcy under these circumstances as a betrayal of the interests of employees, stock holders and business partners.
AMR said today's bankruptcy filing was an effort to shed its crippling debt burden and reduce its costs. American wants to unload the massive debt it says were caused by years of accelerating jet fuel prices and labor struggles. It was the only major U.S. airline not to declare bankruptcy in the wake of the 2001 terrorist attacks. While other airlines were returning to profitability, AMR posted annual losses three years in a row, including a $471 million loss last year. Through the first nine months of this year it has lost $982 million. As of Sept. 30, AMR reported $24.7 billion in assets and $29.6 billion in debt, as well as $4.1 billion in cash and short-term investments.
Why would anyone buy an airline stock?
Gerard Arpey was an American Airlines man through and through. It's the only company he's worked for since he graduated college in 1982. He's also long had a reputation as a moral person -- not because that boasted of his morality but because he lived it.
In September of 2010, Arpey told TheStreet.com:
This company stands for something, more than just any old company. Gradually, it will emerge as a successful company that honored its commitments and its pension obligations and that was guided by principles of doing what's right. The path we have taken has created cost challenges for us. But I believe there is something misguided about how we measure success, if success is bankruptcy, giving pension obligations to taxpayers and not paying back creditors. By that measure, we have failed.
Someone who doesn't want to pawn his problems off on taxpayers. Wow. Someone nominate this man for president. I can't remember the last time I heard a CEO use the words betrayal, moral and failure without trying to pin blame on someone else.
Unfortunately honor and decency lost out to the bottom line, as always it seems. Take care Mr. Arpey, we may not see your like again.
