New CEO Helped Tiger International Navigate Troubles
A single-engine plane crashed in James A. Cronin III’s front yard in Torrance last spring, causing only minor injuries to the three people in the plane. But in the past eight years, Cronin has been a lot closer to a potential aviation disaster of another sort.
Barely out of graduate school, he went to work at Tiger International just as the parent of the nation’s leading air freight carrier was skidding toward financial calamity. Things got a lot worse before Tiger International returned to profitability last year, but Cronin, who a year ago was the new president of the Flying Tiger subsidiary, came through just fine. At age 34, he has just been named chief executive of the $1.2-billion parent and of its major unit.
The period was certainly traumatic, Cronin said in a telephone interview, but Tiger’s problems “created personal opportunities and experiences for me that I would not (ordinarily) have gotten in 20 or 30 years.” Tiger International’s board named Cronin chief executive Monday, although it indicated in December that it would go outside the company for a successor to Stephen Wolf, the former chief executive who left to head United Airlines.
A panel of three outside directors was named at that time to conduct the search. Although Cronin was not given the chairman’s post, which Wolf also held, the board Monday also called off its search for a new chairman. That move is being interpreted as a signal that the board sees Cronin as the embodiment of the new and improved Tiger International.
Sign of Caution
“His stature has grown internally during the past year,” said Andrew B. S. Kim, an industry analyst with Eberstadt Fleming in New York. “Maybe they see him as the natural heir. All the indications seem to be that he is the man they want to build the company around for the future.”
Cronin is “a very capable fellow,” said Frank Maguire, a 17-year Flying Tiger pilot. “The only surprise is that it took the board nearly a year to realize that the best man for the job is here,” added Maguire, chairman of the Flying Tiger local of the Air Line Pilots Assn. The fact that Cronin was not named chairman is an indication of the cautiousness of Tiger International director Saul P. Steinberg, whose Reliance Capital Corp. is Tiger’s largest single shareholder with a 17% stake, Maguire said.
A Reliance spokesman would only say that Steinberg feels “comfortable with the current situation.” Instead of a chairman, the company has had a structure it calls the “office of the chairman,” which includes Steinberg, directors Kelly H. Burke, a Virginia aerospace consultant, and Beverly Hills investor William E. McKenna, the spokesman said.
Cronin, also a director, said he, too, is comfortable with the current status. “I’m not sure we necessarily will have the position of chairman. Many companies do not have a chair. The board felt that maybe it is not a title that we need.”
Issue of Pay Cuts
Maguire said he thinks that company employees, many of whom think Cronin should be given at least as much credit as Wolf for the company’s turnaround, are “favorably disposed toward Cronin,” though they do not know precisely how he will handle labor relations. “I am . . . optimistic with Cronin in charge,” he said.
Cronin is especially good at marketing and other things that translate into profits, he said. However, he added, there is a question about how he will handle the “terribly sour taste” left with employees who accepted massive pay cuts in January, 1987, in order to help the company survive.
Although the company is now making fat profits (some analysts think 1988 profit will grow about 40% from last year’s $58.7 million), workers will have to live with the agreement for another two years, creating resentment at being far below the industrywide pay scale, Maguire said. That has resulted in significant turnover of pilots and experienced mechanics who are leaving to join rivals such as United Parcel Service, he said. When the agreement comes to an end, he said, there is likely to be a dispute about whether pay scales will automatically return to their previous levels.
Cronin is described by another employee as “very smart” and devoted to work. He lists work as his personal hobby, but he devotes leisure time to soccer and fishing, which is what his two children--5 and 8 years old--like to do. He is also said to be “business-like” but approachable by employees.
In the interview, Cronin noted that employees share in the company’s profits under the $60-million-a-year labor-cost savings agreement. He said he believes that personnel turnover is not excessive and is certainly below the rate experienced when the company was deep in red ink.
Joined Firm in 1980
Changes in compensation will be addressed in the “normal course of business,” he said. Meanwhile, he said, he realizes that he needs to spend more time on employee concerns and to “fully integrate employees into” the company’s efforts to continue to move forward.
A native of New Haven, Conn., Cronin did undergraduate work at UCLA before earning an MBA at UC Berkeley. He said he was approached by Tiger International in graduate school but decided to go to work for First Interstate Bank as a corporate banking officer. Tiger International remained interested in him, he said, and he joined the air cargo firm in 1980 as a senior planning analyst.
He held several jobs before obtaining the presidency of Flying Tiger last September. When Wolf left, Cronin became president and chief operating officer of the parent company.
Cronin said he joined Tiger because he was intrigued by the growth potential and challenges presented by transportation deregulation. The challenge now, he said, is to continue to develop “new markets and new products” and to manage a growing company in an atmosphere that is “no longer one of crisis.” Tiger International employees, he said, deserve a lot of credit for operating under the pressure of having to “hit a home run each time at bat.”