Donald Carty, Chairman & CEO of AMR

This is a partial transcript from Your World with Neil Cavuto, January 17, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews. 

NEIL CAVUTO, HOST: But today, AMR, the parent company of American Airlines reporting the biggest quarterly loss in the company's history. But still not as deep as Wall Street had feared. American losing $734 million or $4.75 a share during what the company calls an incredibly difficult quarter.

Earlier, I spoke to the man who runs American Airlines, Don Carty, and I asked him if this is as bad as it gets.

(BEGIN VIDEOTAPE)

DONALD CARTY, CHAIRMAN & CEO, AMR: I think it is. We can't imagine anything like we experienced in the fourth quarter. This quarterly loss obviously exceeds any annual loss the company has ever had in its history. So this is pretty ugly.

And in the context of whether it gets any worse, I think there we've got a little bit of optimism beginning to show up. The traffic that we saw at Thanksgiving, the traffic we saw at Christmas, and now as we enter into the new year, actually is beginning to show a little bit of signs of returning to earlier levels. So we're seeing a build of demand not anywhere near where we need to be, but better than what we saw during most of the fourth quarter.

CAVUTO: Well, let me ask you about the government monies that were secured for the airlines, yours included. Does this include monies that were given to you by the government?

CARTY: Well, most of the grant, Neil, that we received from the government showed up as a one-time favorable adjustment in the third quarter rather than the fourth quarter. There was a tiny amount of residual money in the fourth quarter, but largely that was booked in the third quarter.

CAVUTO: This was like a lump sum. It's a third quarter issue, not a fourth quarter issue. Yet despite all of that, I know this is maybe just accounting here, it doesn't seem adequately reflected. In other words, things would even be a lot worse without it.

CARTY: Well, I think there is no question that the government to the industry which was a total of $5 billion for the whole industry, and our piece of it was between $800 and $900 million, didn't, in any way, fully compensate the airlines for the magnitude of the loss that resulted from September 11. That was notwithstanding, of course, we're tremendously grateful for the action the government took. But on the other hand, it's a long way from solving all our problems.

CAVUTO: Let me get your take then on where we stand now. As you know, Mr. Carty, for people who fly, it is still not only a security worry, even though that has eased quite a bit, it's just a nightmare with waiting in lines, now people taking off their shoes and having them checked, again, maybe for good reason. But it's a nightmare. How can you, or can you, assure people that that's at least easing?

CARTY: Well, I think it is easing. I think if you go to the airports today, you'll find, for the most part, those security lines are moving along a lot better than they were in the early days and better than they moved along perhaps at the Christmas peak.

We're getting better and better at this. The government is going to take responsibility for this security lines. And I think together we and the government are going to have to find ways of expediting it.

Now I think in the long run, the answer to an awful lot of this is technology. We need to have technology in place that will allow known passengers to get through the airport much more smoothly. And we and the government are working on that. In the meantime, we're working very hard to smooth these lines. I know most of our business travelers today can go to the airport without the kind of long advanced times that they had in the late fall and get to their gate and get on their airplane relatively quickly.

CAVUTO: Again, the September 11 attacks were unique, and certainly not unique just to your carrier. But two of your planes were involved. And then this November Airbus A300 plane crashed again, an American flight. Are you concerned that people might be predisposed to say, not American. Does that worry you?

CARTY: No, it really doesn't, Neil. We have got such a strong brand in the market place. We are so well positioned as a company with respect to the market. With the acquisition and integration of TWA, we have the biggest network. We are capable of taking our customers more places more times that any of our competitors.

As I say, our reputation for service and product are better than most. We now have a product advantage versus all our competitors with more room in coach. So while it's terribly unfortunate that we've been at the focal point of a number of these incidents, our reputation and our position with the customer I think provides for as very well as we move into the new year.

CAVUTO: All right. I'd be remiss if I didn't try to get an update from you, sir, on this Arab-American Secret Service agent of the president's who was kicked off one of your flights on Christmas day when he reportedly became very loud and abusive. I'm not quite even sure what the company's response has been since you claim that your captain was well in his jurisdiction to bump this guy off the flight. But it's called a brouhaha involving not less than the president of the United States. Where does this thing stand?

CARTY: Well, where it stands is I believe the Secret Service is conducting an investigation. We've conducted investigation ourselves and we're satisfied that the captain did exactly the right thing under the circumstance.

And in defense of both individuals, I think we all have to remind ourselves that post-September 11, there's a lot of anxiety out there. There's a lot of tension out there. Obviously, it's very unfortunate that this situation developed. But our captain made a simple call that we had an armed individual with flawed paperwork who had lost his temper. Well, we don't want anybody with a weapon on our airplanes whose mindset isn't in the right place. And so I think the captain made absolutely the right call.

(END VIDEOTAPE)

CAVUTO: All right. Don Carty of AMR.

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