* AMR showdown with labor unions heats up this month
* April 23 hearing on AMR request to void labor contracts
* AMR CEO Horton prepared to be tough
* Supporters call Horton smart and analytical
* Critics say AMR's demands are ruthless
By Kyle Peterson
April 16 AMR Corp Chief Executive Tom
Horton may have a soft-spoken demeanor, but people who know him
say he has a backbone of steel and will not flinch if he has to
cut thousands of jobs to save the bankrupt American Airlines.
AMR last month asked the U.S. Bankruptcy Court in Manhattan
for permission to void labor contracts with unions that do not
agree to the concessions that the world's third-largest airline
is demanding. A hearing on the issue is scheduled to begin on
The right to end labor contracts is perhaps the sharpest
knife a company can wield in bankruptcy, and people who have
worked with Horton say he is prepared to use it.
"If people want to test his resolve, they'll find that he's
got a steel backbone," said former AT&T CEO David Dorman, who
recruited Horton to be chief financial officer of the telecom
company in 2002.
In 2004, AT&T announced plans to trim its work force by 20
percent, or about 12,300 jobs. Dorman recalled that Horton did
not hesitate when AT&T's restructuring plan called for a 25
percent cut in management staff, a move that met pushback from
managers close to Horton.
"Look, this is not my first rodeo," Horton said in a March
16 interview at his sixth-floor corner office at AMR's
headquarters in Fort Worth, Texas.
"I've done a fair bit of M&A (mergers and acquisitions) in a
pretty public way in the telecom industry and here at this
company in the past. I have done some restructuring work."
The 50-year-old Horton became CEO of AMR as it filed for
bankruptcy in November 2011, citing the need to cut labor costs
to match those of rival airlines. H o rton replaced his friend
Gerard Arpey who had resisted a Chapter 11 filing, preferring
negotiated labor deals to court-imposed contracts.
Arpey had won steep voluntary concessions from the unions in
2003 but the cuts were not enough. A MR lost $10 billion over the
past decade and has posted net losses for the last four years.
The carrier now aims to shed 13,000 jobs from its 74,000
work force to trim labor costs by $1.25 billion. T he cost cuts,
opposed by the unions, also could mean changes to work rules as
well as pay and benefit reductions.
Born in Virginia but raised in Texas where his father worked
for NASA, Horton holds a degree in accounting from Baylor
University in Waco, Texas, and a master of business
administration degree from Southern Methodist University in
He began his career with AMR in 1985 and held various
financial positions. He was appointed chief financial officer in
2000, but left two years later to join AT&T as CFO. H o rton later
helped lead the 2005 sale of AT&T Inc to SBC
Communications, which led to more layoffs.
Horton returned to AMR in 2006 as CFO with expanded
responsibilities for network, fleet and alliances. He became
AMR's president in 2010.
Horton told Reuters that he is focused on stabilizing AMR.
He said abrogating deals is a last resort and that he prefers
negotiated labor contracts.
His office, with a view of a nearby building that houses
labor talks, is a modest room, decorated with aviation
memorabilia, including an autographed photograph of astronaut
John Glenn that Horton received when he was 5 years old. Glenn
wrote: "Best regards to my friend Tommy Horton."
Bob Crandall, AMR's former CEO, said Horton's skills in
finance and restructuring will serve him well as he navigates
the maze ahead. In many ways, running an airline and
restructuring one are a matter of arithmetic, he said.
"I was a former finance guy. That's where I started,"
Crandall said. "In the end, the airline business is about lots
and lots of numbers."
A NEW CHALLENGE
When Horton returned to AMR at the request of Arpey, he
shared the prevailing view at the company that bankruptcy was an
"un-American" solution to its woes.
But after years of fruitless talks with unions on
concessions, American lagged profitable rivals like United
Airlines and Delta Air Lines Inc. Those carriers
restructured in Chapter 11 and later took merger partners. They
overtook American in size, knocking it from No. 1 to No. 3.
By late November, the writing was on the wall. AMR's board
of directors decided on Chapter 11. The company was able to show
sufficient hardship to declare bankruptcy despite having $4
billion in cash - enough to operate without outside financing.
"Circumstances change," Horton said. "I think it's fair to
say that our company fought that battle as long as it possibly
could, did everything possible to avoid going down this path."
Horton shrugged off merger interest from US Airways Group
Inc, saying AMR plans to exit Chapter 11 as a
stand-alone company. He dismissed talk of meetings between US
Airways and members of AMR's creditors committee, saying
objections to a business plan are normal. "There's a lot of due
diligence that is done on the plan," he said.
Gordon Bethune, the former Continental CEO credited with
turning around the troubled airline in the 1990s, said Horton
has a big challenge to preserve the airline's independence.
"He has a 50/50 chance," Bethune said.
Horton's supporters like Larry Kellner, a former CEO of
Continental Airlines, regard him as smart and analytical. "He's
a very strong leader," Kellner said.
His critics frame him as a detached executive who keeps his
customers and employees at arm's length.
"He doesn't care about his customers and he doesn't listen
to his employees," Laura Glading, president of the Association
of Professional Flight Attendants, said in an emailed statement.
The union has called AMR's demands "ruthless."
The union representing American Airlines' pilots declined to
comment on Horton. A spokesman for the Transport Workers Union,
which represents seven work groups at the airline, also declined
to comment, saying union leaders do not know the former finance
executive well enough to assess his leadership.
Robert Mann, an airline consultant and former AMR executive,
ended his career at AMR in 1985, briefly crossing paths with
Horton, who was just starting out. He said that while Arpey
showed strong resistance to bankruptcy and the toll it takes on
workers, Horton embraced the challenge.
"It almost appears that when Arpey refused to carry the
pointed stick and poke people in the eye with it, Horton was
more than willing to," Mann said.