|American Airlines CEO Gerard Arpey|
DALLAS ( TheStreet) -- The airline industry, once exciting, has deteriorated to tedious. The mergers are largely done and most carriers emerged from bankruptcy to reduce capacity, charge fees for services, and make money even at $100-a-barrel fuel. This was certainly the story in a second quarter with only a single pocket of drama: the morality play that is going on in Dallas.
It is hard not to think of American ( AMR) as more principled -- not to mention edgier, bolder and more interesting -- than its peers. More principled because its CEO was unwilling to file bankruptcy,
largely due to moral objections. Edgier because it still leads the industry in many ways, particularly its willingness to challenge the tyrannical global distribution systems that sell airline tickets, while most other carriers are content to watch from the sidelines. Bolder because it sticks to its course, despite widespread disapproval on Wall Street, and also because it just placed the largest aircraft order in history, for 460 aircraft. And more interesting because despite all of these commendable qualities, American will be the only airline to lose money in the second quarter and -- analysts expect -- for the full year. The drama that hit Wednesday, AMR's earnings day, was typical American and provided a clear picture of the dichotomy surrounding the company. In Dallas, many American employees were exuberant about the huge aircraft order. The world's two big jet manufacturers, despite being flush with orders, both felt compelled to deal with American. Each provided billions of dollars in financing, and Boeing ( BA - Get Report) even offered to speed up its decision-making regarding a major alteration in the most successful aircraft program in its history. Obviously, this was an affirmation of American's strength.
Afterwards, morality's triumph over adversity was underscored by CEO Gerard Arpey, who said on the carrier's earnings call that the giant deal was enabled partially by American's avoidance of bankruptcy. "Our track record certainly had an influence on Boeing and Airbus, the fact that over past 10 years, we honored all our commitments," he said. "My own sense is that it did matter to them." One more point here is that Arpey placed the order instead of doing something common in the industry, which is to use a potential order as a bargaining chip in contract negotiations. This gesture was noticed by Dave Bates, president of the Allied Pilots Association, who wrote in a letter to pilots that "I view this as another indication that management sincerely seeks an improved relationship with our pilots."