A ‘Mellower’ AMR Chief? Scratch That
Just when it seemed American Airlines Chairman Robert Crandall had softened his renowned tough edges, he’s proving he still plays hardball when it comes to labor costs.
Despite a pilots strike threatened for tonight that would force American’s grounding, throw the U.S. travel system into turmoil and cost American $50 million a day, Crandall and the airline are standing firm in contract negotiations with the Allied Pilots Assn., the union for American’s 9,300 pilots.
That Crandall is prepared to accept a strike--it would be the second major work stoppage against the carrier in 3 1/2 years--instead of accepting the union’s demands illustrates his long-held conviction that labor costs are the biggest threat facing the airline.
“This [dispute] isn’t about principle, it’s about money,” he said in a speech earlier this week.
Ironically, Crandall’s steely posture toward the pilots came just as some press reports were portraying him as having mellowed a bit in his management of American and its Dallas-based parent, AMR Corp., where he is also chairman.
Crandall, 61, is known as much for his combative, temperamental, forthright and impatient manner--he once called the airline business “bitterly, savagely competitive”--as he is for being one of the longest-running airline chief executives (16 years) and perhaps the industry’s most innovative strategist ever.
Besides steering American through a host of fare wars, recessions and severe competition during his reign, he pioneered the frequent-flier miles program, super-saver fares and the use of complex computer-reservation systems that enhanced American’s ability to balance its revenue against its costs.
Occasionally frustrated, often profane and never one to suffer fools gladly, Crandall also promoted the “hub-and-spoke” route networks that were copied by many rivals, and in 1983 he invented the “B-scale” wage system that paid new hires considerably less than existing workers in order to limit American’s payroll costs.
But the B-scales left lingering unhappiness among many of American’s 90,000 employees, and are just one reason why Crandall’s relationship with labor has often been rocky.
Their last big clash came in 1993, when American’s flight attendants struck the airline for five days during the Thanksgiving Day weekend. The attendants union leaders later said the strike stemmed in good part from Crandall’s unwillingness to bend in negotiations.
AMR earned a record $1 billion last year, but Crandall is convinced that if the pilots’ wages climb too high, American will lose a competitive edge. But the pilots, who earned an average $120,000 in 1996 and want an 11% pay hike over the next four years, have proven to be just as tough as Crandall.
A lean man who both smokes and exercises daily, Robert Lloyd Crandall was born in Westerly, R.I. He holds a bachelor’s degree from the University of Rhode Island and an MBA from the University of Pennsylvania’s Wharton School of Business.
After holding jobs at Eastman Kodak, Hallmark Cards, Trans World Airlines and Bloomingdale’s, he became American’s chief financial officer in 1973. He was named the carrier’s president in 1980 and chief executive in 1985.
* BRACING FOR CHAOS
American and its pilots union failed to agree on a strike-averting contract. A1
