American Airlines' new CEO described as financial expert

By David Koenig ~ The Associated Press

FORT WORTH, Texas -- The new chief executive of troubled American Airlines came into the company as a finance specialist and studiously learned other facets of the business, even earning a pilot's license, as he climbed through the management ranks, colleagues say.

Gerard Arpey had long been seen as a future leader of the world's biggest airline, but his ascent to the top came sooner than expected.

Under fire from union workers, former CEO Donald Carty resigned Thursday, and Arpey, 44, already president of American, took over as CEO.

He saw through a final union concession agreement Friday to keep the airline out of immediate bankruptcy, but he now faces some of the same problems that Carty inherited five years ago from his predecessor.

Relations with American's labor unions remain delicate, and there are more troubles, including economic woes and fallout from the Sept. 11 terrorist attacks, as well as tougher competition from low-cost carriers. Parent company AMR Corp. just reported a $1 billion loss for its first quarter and came perilously close to bankruptcy three times in the past month.

"He's got a big job, but we feel we've got a superstar here," said board member Roger Staubach, the former Dallas Cowboys quarterback who now runs a real-estate company. "He understands the industry very well, and he's got great people skills -- people trust him."

Arpey will need those skills to repair relations with American's 99,000 employees, which have been badly strained by the long fight over worker wage and benefit concessions the airline said were necessary.

Carty resigned Thursday after an uproar that threatened the concessions deal over his failure to tell workers about bonuses and bankruptcy-proof pensions granted to executives while the rank-and-file were being asked to accept the huge pay cuts.

Union leaders later gave the outgoing CEO much of the credit for sealing the concessions deals. But Arpey played a vital role at the final hour, calling leaders of the flight attendants' union to his office late Thursday and approving crew-scheduling changes on top of deal sweeteners offered to all three labor groups.

On Friday, with company officials and lawyers poised for a possible Chapter 11 filing, the flight attendants agreed to $340 million in annual cost cuts. Unions representing pilots and ground workers had approved the concessions Thursday.

"It will come as no surprise to anyone that there is a definite need to rebuild trust within our company -- not just between unions and management, but between every member of the AMR family," Arpey said. "And that starts at the top."

Arpey was one of seven executives who were to receive lavish bonuses until the disclosure and union protests prompted the company to rescind the package. He also is one of 45 executives for whom AMR made a bankruptcy-protected payment into a pension trust, which is still in effect.

Arpey joined American in 1982 as a financial analyst, and rose through the ranks to senior vice president for planning by 1992. Three years later, he was named chief financial officer.

In 2000, he became executive vice president for operations, which gave him supervision of the company's worldwide flight operations. He was named president and chief operating officer last year.

Edward Brennan, a retired Sears CEO and current AMR board member who was named American's executive chairman on Thursday, called Arpey a man of integrity who has "guided the company's operations out of the depths of the Sept. 11th tragedy" and improved the carrier's on-time performance.

Staubach conceded that Arpey was relatively young for an airline CEO but said his breadth of experience compensated for lack of years. He said Brennan's appointment as executive chairman would let Arpey focus on running the airline -- and that Arpey might be named chairman in a few months when Brennan steps aside.

The president of the pilots' union, John Darrah, said he has shouted across the bargaining table at Arpey more than a few times, but he praised Arpey on Friday.

"There is not a person that I have more respect of trust in, not only in this company, but on this planet, than Mr. Arpey," Darrah said. "He has never shown me anything other than respect and self-confidence, and I feel we can work together."

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