AMR Unions Want Horton Out if Merger With US Airways Occurs

CHARLOTTE, N.C. ( TheStreet) -- AMR's ( AAMRQ.PK) unions weren't happy to hear that CEO Tom Horton could remain with the airline following an expected merger with US Airways ( LCC)

"If he isn't out, you're going to see an employee riot," said Jason Goldberg, a principal in The Leading Edge consulting firm and an American pilot. "It's not just a matter of bad will, which certainly exists. Employees believe that American has been completely operationally adrift during Horton's tenure."

The Wall Street Journal reported Tuesday that Horton is in talks about being board chairman in a merger. It was unclear whether he would be executive chairman, with authority over the CEO, or non-executive chairman, lacking such authority. It is assumed that the merged airline would be run by US Airways CEO Doug Parker and his current management team, which assembled at America West and took over US Airways following a 2005 merger.

American's unions were early to support a merger, signing tentative contract agreements with Parker in April. They have been steadfast in the opposition to Horton, who was a key partner in shaping American's strategy since rejoining the company as chief financial officer in 2006 following a stint in the telecommunications business, and who has overseen cost reduction efforts during AMR's bankruptcy.

"We firmly believe that the only way for American Airlines to grow and compete and perhaps even to survive is through a merger that puts Doug Parker and his team in charge, " Laura Glading, president of the Association of Professional Flight Attendants, said in August, in a prepared statement.

In May, nearly 7,500 American pilots signed a petition, which expressed "a vote of no confidence in the management of our company," and declared "their inability to create a comprehensive business plan that will ensure the long-term viability of our airlines makes it evident that we need new leadership." Union spokesmen declined to comment Wednesday on the possibility of Horton's retention.

In a report issued Wednesday, Buckingham Research analyst Dan McKenzie wrote: "Who's in charge matters as different management teams will naturally manage the same assets differently. AMR management, in the past, reported plans to grow the airline 20% in five years which would be toxic for industry pricing and ruinous for shareholders, in our view. Put simply, our longer-term valuation outlook on the whole group is at risk with an AMR-led management team at the helm of a merged airline.

"AMR management has one of the worst records operationally in the industry," McKenzie said. "US Airways management has one of the best."

-- Written by Ted Reed in Charlotte, N.C.

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