This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

AMR's Horton Aims to Stay Grounded

Horton acknowledged that many of the achievable nonlabor-cost reductions have been made, but despite repeated questions he wouldn't comment on whether the company will seek further cuts in labor expenses.

"We are three years into the turnaround plan, and each year we've found ways to drive costs down further," he said. "We have to keep working at it. I don't have all the answers. It does get harder."

He said management must make the strategy of engaging labor be fruitful and that reducing costs through Chapter 11 isn't the answer. "If you put your company through bankruptcy, at the end of the day, I don't think you are going to create an environment where your people are going to feel really motivated to do a good job," he said.

There are similarities between the airline industry and the telecommunications industry, Horton said. Both have "a checkered history of regulation and re-regulation." Both had overcapacity and, a few years ago, both faced financial distress. Horton said the solution at AT&T included focusing on the business market, paying down debt to reduce interest costs, improving technology and eventually, merging with SBC, which retained the AT&T name.

That's not to say Horton is considering another merger for American, which became the largest airline in the world because of the 2000 acquisition of TWA.

"In retrospect, we can all say we shouldn't have done the TWA merger," he said. At the time, UAL (UAUA) unit United Airlines had announced plans to merge with US Airways. Horton didn't think the deal would be approved by the Justice Department, "but had they succeeded, they would have taken a lot of revenue out of our hide, (so) we were in the scramble mode."

American considered merging with Northwest Airlines (NWACQ), and also approached United about splitting up US Airways, but neither plan went very far.

Now, airline consolidation is again widely discussed.

"Never say never," Horton said. "Airline mergers are inherently complex, inherently rife with labor issues. But it is an industry that probably has too much capacity. If you look at it as a man from Mars, you could conclude that the industry ought to consolidate more."

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
T $34.00 0.00%
AAPL $128.54 0.00%
FB $80.90 0.00%
GOOG $573.37 0.00%
TSLA $202.44 0.00%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs