The executive leadership award was presented to Gerard Arpey, American Airlines

It may be a sign of our dire times that a US carrier gains recognition simply by avoiding the bankruptcy club that has enrolled so many of its peers, but it is a major achievement. And for Gerard Arpey, chief executive, chairman, and president of American Airlines and its parent AMR, the achievement is all the more notable in the way he has kept the carrier out of bankruptcy court - a venue it was nearly forced into in the days and hours just before Arpey's appointment.

The youthful Arpey, who started at American in 1982 as a financial analyst, his first full-time job in the industry, took over the presidency and chief executive slots during an April 2003 crisis that saw the abrupt departure of a predecessor amid a controversy over executive compensation. That controversy derailed negotiations with labour over concessions and created a very credible threat that without them, the airline would join United Airlines and US Airways in court-supervised reorganisation.

But within weeks, Arpey had regained enough of a working relationship with the airline's unions to put in place a "Pull Together, Win Together" plan that involved sacrifice by both management and labour. That plan soon became a continuous improvement plan that drew upon employee thinking and participation to cut costs and bring in new revenue.

For instance, steps to save weight on aircraft and to streamline maintenance processes came from front-line workers - flight attendants, who had gone out on strike a decade earlier, and machinists, whose union was noted for its militancy. With the machinists, Arpey was able to craft plans to in-source maintenance at competitive prices at three major maintenance bases. Overall staff numbers are down, with a 7,000 headcount reduction achieved consensually and without the threat of court action.

The airline has also increased productivity per employee by roughly 8% at key hubs in Chicago and Miami, largely through depeaking schedules, making aircraft turn-around times more efficient and winning higher average fares with improved premium products in both first- and business-class. It has tailored a fare reformulation very carefully, with a targeted simplification at Miami that responds to the low-cost carrier competition there.

The airline's financial performance has improved enough to allow AMR to attract investors in a new public share offering late last year. "We have, unlike many of our competitors, continued to meet our various financial obligations," Arpey says.

AMR's share price has since risen and it has avoided the executive exodus that has emptied offices at other carriers. Arpey even managed to lure back the airline's chief financial officer, Tom Horton, who had left for phone giant AT&T. Horton's return produced a raft of headlines noting the irony of a highly regarded executive actually choosing to go to an airline.

Arpey will be the first to tell you that the airline has not yet made profits despite all the good work, and American officials acknowledge that executive compensation issues remain a symbolic sticking point. But for the airline that truly lived up the reputation as the angriest airline in the USA, the transformation is remarkable and Arpey has laid a solid platform for future progress.

Source: Airline Business