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American Morning
Minding Your Business: AA: Are Don Carty's Days Numbered?
Aired April 24, 2003 - 07:43 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: We've been watching the headlines from the business world. American Airlines, could this today be judgment day for its CEO, Don Carty? There are a lot of people at American not happy to find out the news after they took concessions in their own wages, found out the executives were actually taking increases.
Andy Serwer has been looking into it...
ANDY SERWER, "FORTUNE" MAGAZINE: Yes, good morning to you.
HEMMER: ... and joining us now. Good morning.
SERWER: This really is the business story of the day, isn't it, of the week? What's going on right now, the board of American Airlines will be meeting today, and certainly the future of CEO Don Carty will be discussed. Apparently, the board is deeply divided over whether or not he should stay. He really has a credibility problem after disclosing, as you mentioned, those pensions for the senior executives, at the same time asking the members of the unions to take $1.8 billion in wage concessions.
And speaking of that point, Bill, that is still at square one now. And if those unions don't sign off on those wage concessions, the company probably will go bankrupt...
HEMMER: And if...
SERWER: ... the world's largest airline.
HEMMER: And if they thought this was an emotional vote last time, it looks like right now it could be even more emotional the next time they go back it.
SERWER: I mean, this is really unchartered waters. I can't remember this ever happening with a company, back and forth, the CEO in play like that.
HEMMER: What about pension funds right now? There's a story out there indicating that sometimes things are going up at the same time its not balancing out.
SERWER: Yes, an interesting story in "The Wall Street Journal" this morning, Bill, showing that some companies are doing very much the same thing that American Airlines is doing, which is taking care of the senior executives, while at the same time not looking after their employees. Here we go, Motorola, the telecom giant here, you can see here that an underfunded pension by $1.4 billion, but executives got $38 million for their plan. So -- and there's a bunch of others in this "Journal" story as well.
So it's not illegal, but it just kind of stinks.
HEMMER: Yes, we're talking about American right now, but there is another airline, Northwest, right now that apparently the CEO has gotten pretty wise.
SERWER: Yes.
HEMMER: He's not following the lead at American anyway at this point.
SERWER: Yes, it looks like that Northwest gets it. They're handing out wage cuts to 3,000 of their top managers. I mean, this is what you've got to do. You've got to have a level playing field.
HEMMER: Yes, what if the CEO at American came out and said, you know what? We'll give it all back. Let's do a do-over right now and wipe the slate clean. Impact is what then?
SERWER: I think it's too late. I mean, they already tried to apologize and it didn't wash. So I think that the credibility problem is there to stay.
HEMMER: All right, thank you, Andy. Talk to you a bit later about the markets today.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired April 24, 2003 - 07:43 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: We've been watching the headlines from the business world. American Airlines, could this today be judgment day for its CEO, Don Carty? There are a lot of people at American not happy to find out the news after they took concessions in their own wages, found out the executives were actually taking increases.
Andy Serwer has been looking into it...
ANDY SERWER, "FORTUNE" MAGAZINE: Yes, good morning to you.
HEMMER: ... and joining us now. Good morning.
SERWER: This really is the business story of the day, isn't it, of the week? What's going on right now, the board of American Airlines will be meeting today, and certainly the future of CEO Don Carty will be discussed. Apparently, the board is deeply divided over whether or not he should stay. He really has a credibility problem after disclosing, as you mentioned, those pensions for the senior executives, at the same time asking the members of the unions to take $1.8 billion in wage concessions.
And speaking of that point, Bill, that is still at square one now. And if those unions don't sign off on those wage concessions, the company probably will go bankrupt...
HEMMER: And if...
SERWER: ... the world's largest airline.
HEMMER: And if they thought this was an emotional vote last time, it looks like right now it could be even more emotional the next time they go back it.
SERWER: I mean, this is really unchartered waters. I can't remember this ever happening with a company, back and forth, the CEO in play like that.
HEMMER: What about pension funds right now? There's a story out there indicating that sometimes things are going up at the same time its not balancing out.
SERWER: Yes, an interesting story in "The Wall Street Journal" this morning, Bill, showing that some companies are doing very much the same thing that American Airlines is doing, which is taking care of the senior executives, while at the same time not looking after their employees. Here we go, Motorola, the telecom giant here, you can see here that an underfunded pension by $1.4 billion, but executives got $38 million for their plan. So -- and there's a bunch of others in this "Journal" story as well.
So it's not illegal, but it just kind of stinks.
HEMMER: Yes, we're talking about American right now, but there is another airline, Northwest, right now that apparently the CEO has gotten pretty wise.
SERWER: Yes.
HEMMER: He's not following the lead at American anyway at this point.
SERWER: Yes, it looks like that Northwest gets it. They're handing out wage cuts to 3,000 of their top managers. I mean, this is what you've got to do. You've got to have a level playing field.
HEMMER: Yes, what if the CEO at American came out and said, you know what? We'll give it all back. Let's do a do-over right now and wipe the slate clean. Impact is what then?
SERWER: I think it's too late. I mean, they already tried to apologize and it didn't wash. So I think that the credibility problem is there to stay.
HEMMER: All right, thank you, Andy. Talk to you a bit later about the markets today.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
