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American Airlines Parent Announces New President, Layoffs

March 15, 1995

DALLAS (AP) _ AMR Corp., the parent of American Airlines, on Wednesday announced 900 layoffs in order to cut costs and the naming of a new president for the nation’s second-largest air carrier.

The moves, which are expected to save the company $93 million a year, come as the airline struggles with years of losses. It already has slashed routes and operations, furloughed 610 pilots, slashed capital spending and cut its fleet.

Donald J. Carty, 48, was named president of American Airlines, replacing Robert L. Crandall, who will continue as chairman, president and chief executive officer of AMR and chairman and CEO of American.

Crandall said he had no immediate plans to retire, but Carty was the logical choice to follow him as head of AMR. ``In most companies, the man or woman who becomes president of the company’s largest unit would be considered to be the prime candidate,″ he said.

Carty will take responsibility for operations, marketing, labor negotiations, safety and capacity planning for American, AMR’s four American Eagle commuter carriers and the company’s cargo division.

Candace Browning, an airline analyst with Merrill Lynch, said ``altogether, it was a very sensible reorganization.″

``It clearly identifies ... Mr. Crandall’s successor at the airline,″ she said.

While some industry analysts said the management changes were meant to show unions that the company is serious about controlling costs, Browning said it could also be intended to smooth heated ongoing talks with the pilots’ union.

``I think maybe that is an olive branch,″ Browning said. ``With the pilots, Crandall has become a lightning rod.″

The company has sought $750 million in pay cuts and work rule changes, but has met with resistance from its three labor unions. At the same time, however, AMR has beefed up its profitable technology and service subsidiaries.

Gregg Overman, spokesman for the Allied Pilots Association, said the change might help negotiations.

``The proof is in the pudding,″ he said. ``If Mr. Carty has a measure of autonomy to go with the increased responsibility he has, it could be for the better. We’ll have to wait and see.″

In a second appointment announced Wednesday, Michael J. Durham was named president of AMR’s SABRE Group, which, among other things, sells computerized flight schedules and booking information to travel agents.

As part of the cost-cutting, AMR will trim nearly 20 percent from its headquarters staff of 5,000 in Fort Worth.

The changes follow rough times for AMR in 1993 and 1994, which saw a strike by flight attendants, two plane crashes and the partial grounding of American Eagle’s fleet.

American lost an estimated $190 million from the five-day flight attendants’ strike just before the 1993 Thanksgiving holiday.

AMR’s problems continued with the Oct. 31, 1994, crash of an ATR-72 plane in Roselawn, Ind., that killed all 68 people aboard. The crash was blamed on an icing problem on the plane’s wings.

When the federal government grounded the planes after the crash, American Eagle had to temporarily shut down commuter operations at Chicago’s O’Hare International Airport.

Despite a $123 million loss in the fourth quarter last year, AMR Corp. reported a $228 million profit for the year _ its first annual profit since 1989.

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