Saturday, October 16, 2010

The sign indicating the headquarters of AMR Co... New American Airlines president aims high, relishes challenge ahead
10:27 PM CDT on Saturday, October 16, 2010

By TERRY MAXON / The Dallas Morning News

Tom Horton grew up in a neighborhood where people aimed high in their careers. Now he's trying to match them.

Of course, the new president of American Airlines Inc. and parent AMR Corp. isn't literally emulating the fathers of some of his neighborhood buddies. He has no plans to go into outer space.

Tom Horton
Horton grew up in the Houston suburb of Taylor Lake Village, where four of the original seven astronauts lived not far from the
Johnson Space Center.

Even today, he speaks with great admiration about the fathers he saw hanging around the neighborhood.

"They were regular superheroes," Horton said in a recent interview. "They were the most amazing people you could imagine, physically and intellectually, and just had capabilities that were extraordinary."

Now Horton simply has to duplicate their performance as he works with Gerard Arpey, chairman and chief executive at American and AMR, to right the ship at the Fort Worth-based airline.

AMR picked Horton to take over the president's job from Arpey, who had held all three top jobs at both AMR and American since 2004.

Some would say that it will require a superhero to fix American – a money-loser for seven of the last nine years (cumulative loss since 2001: $11 billion) and expected by analysts to lose more than $400 million this year.

It has restive employees who took big pay cuts and other concessions in 2003 and carry a big chip on their shoulders over executive pay and incentives. At the same time, Arpey and Horton estimate that American has a labor-cost disadvantage of $600 million compared with other U.S. carriers.

Among major U.S. airlines, American's fleet is older than all except that of Delta Air Lines Inc. It consistently ranks in the lower half of U.S. carriers on service indexes such as on-time arrival and consumer complaints.

Over the last two years, four of its largest competitors have merged. The two marriages have pushed American from the top spot in size to No. 3, behind United Continental Holdings Inc. and Delta, which has absorbed Northwest Airlines Inc.

Horton's July 21 promotion from executive vice president and chief financial officer was part of a general shake-up in American's top management ranks. Another executive vice president, Dan Garton, moved to take over American Eagle, and Horton assumed many of Garton's duties.
Horton indicated that he will spend a lot of time trying to improve American's face to customers.
"You know, I have a real sense of responsibility to our customer, because I've got a lot of the customer service functions and marketing functions and in-flight functions, technology, those types of things," he said.

American "has a long history of being, I think, one of the biggest and best airlines in this country," the 49-year-old executive said. "I want to do everything I can to make it the best it can be. So that's what we're going to do. That's what we're going to focus on."
Early career

Horton graduated from Baylor University in 1983 and went to work for a public accounting firm. He soon decided that he didn't want to spend his career in that field, so he earned a master's degree in business administration from Southern Methodist University in 1985.

To that point, he never considered a career in aviation, even though his father spent his career at NASA and his brother still works there. Even at SMU, he thought it most likely that he'd land a job at a bank or some other financial institution.

"On a whim, I saw that American was on the recruiting calendar over there, and thought, 'Well, that's interesting.' From my first interview, I was hooked," Horton remembered.

He started out as an analyst in American's financial planning group, with his first task to take a look at the maintenance and engineering operation. After several promotions, he was named vice president and controller in 1994 and vice president for Europe in 1998.

Donald J. Carty, who was running AMR and American at the time, named the 39-year-old Horton as CFO in 2000.

"Tom was and is a very bright, very analytical, self-confident, articulate guy, and he just did great work from the outset," Carty said. "In a group of a bunch of young people who were doing very good work, he was doing great work."

Flying high
It was a good time for AMR, American and the industry. That year, 2000, marked the end of AMR's most profitable period ever. From 1994 through 2000, the company earned $5.5 billion.
In April 2001, AMR bought Trans World Airlines Inc.'s assets. Five months later, on Sept. 11, terrorists hijacked and crashed two American and two
United Airlines jets, helping send the industry and the economy into a sharp decline.

Before 9/11, a headhunter for AT&T Corp. had contacted Horton about the CFO job at the ailing telecommunications giant. He said no. Another feeler in the months after Sept. 11 also received a rejection from Horton.

But when chairman Dave Dorman called again in mid-2002, Horton listened to his persuasive pitch. He joined AT&T as senior executive vice president and CFO, eventually becoming vice chairman.

"It was the right thing for the family," Horton said. "It was a good time to go out and learn something new – try a different business, different location. The kids were young enough that we could move them and it wouldn't disrupt the family too much."

The move to New Jersey also meant a return to where Horton had met his wife, Janet. The summer before graduating, he had had an internship in Morristown, N.J., and stayed on the Fairleigh Dickinson University campus, where she was attending a weeklong summer class. They married the following year.

Time at AT&T
Dorman says AT&T needed someone who was cool under pressure and had experience dealing with difficult situations.

"Tom stuck out for a variety of reasons. First of all, he was a guy who seemed to me absolutely unflappable," Dorman said. AT&T also needed someone who knew more than numbers, he said.
"The training that American had provided Tom operationally, having run the international business, really appealed to me," Dorman said. "I would have a business partner in the CFO job, not just an accountant."

Horton "was parachuted into a very difficult position," said Paul J. Taubman, a Morgan Stanley executive who worked with AT&T and Horton.

AT&T's business was under attack, the stock was under pressure and big telephone companies such as SBC Communications Inc. and Verizon Communications Inc. were competing directly with AT&T.

Horton was quick to understand that AT&T needed to investigate its alternatives. After Horton and Dorman realized that AT&T could not remain independent, Horton helped bring AT&T to the merger with SBC, Taubman said.

"He inherited a very, very difficult strategic hand to play," said Taubman, co-president of institutional securities at Morgan Stanley. "A lot of the crown jewels had already been spun off or sold, including the cable and wireless business. In light of that difficult environment, he did a very admirable job in a very trying period."

Under all that pressure, Horton never blew up, even when he got angry, Dorman said.
"Tom did a controlled burn. He would get quiet. He wouldn't get loud. Generally, he would reserve himself. I don't think Tom ever got really angry with me. I watched him get angry with other people in situations," Dorman said.

"It has a lot to do with his faith, but he could be almost Buddhist-like in terms of his ability to deal with adversity. It was like 'Hey, this is not going to get the best of me,' " Dorman said.
In the end, AT&T could not be saved as an independent company. But the name lives on; SBC bought AT&T in late 2005 and renamed itself as AT&T. Horton said he was glad that they were able to save the brand and protect shareholders and employees as best they could.

"It turned out to be a great experience," Horton said. "I learned a lot. It was rewarding in every way, professionally."

Coming back
At the beginning of 2006, Horton was ready to look for another job, possibly a corporate job or with an equity company. He and his wife were in the
Bahamas on a fishing trip in February 2006 when the bait was thrown to him.

"I checked my e-mail down there, and Gerard said, 'Give me a call.' So I did," Horton said.
Arpey had an opening because CFO James Beer had announced he was quitting to take the CFO job at
Symantec Corp.

Arpey "made the pitch," Horton said. "That night, my wife and I had dinner, and the rest is history. She wanted to come back, and it felt right to me, too."

On March 29, 2006, AMR announced Horton's return.
"Tom is obviously a talented executive and great leader, evidenced by his success in his first stint with American and great accomplishments at AT&T," Arpey said last week. "But more importantly, to me he is simply a fine person – impeccable integrity, outstanding character and someone you can always count on."

"Tom cares deeply about American and its people," Arpey said, "which is why I think we were able to recruit him back – he certainly had no shortage of other opportunities."

Horton understands that many people probably wondered why he would return to such a tough job in a tough industry. But he tells them he liked the business, he likes the people and he's "never regretted it for a minute."

"Yes, there's madness all over this business," Horton said. "Of course, we have challenges, but I like challenges. Without the challenges, it's not interesting."

Thomas W. Horton
AMR and American Airlines president

Baylor University, bachelor's degree, 1983; Southern Methodist University, MBA, 1985

Wife, Janet, married in 1983; two children in high school, including a son who was named a National Merit Scholarship semifinalist last week

•American Airlines, 1985-2002, 2006-present. Joined as a financial analyst; held a variety of jobs, including vice president of Europe, executive vice president of finance and planning and chief financial officer.

•AT&T, 2002-06. Joined as senior executive vice president and CFO; added vice chairman's job in 2005.
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