Shame on American Airlines
Posted
Apr 10 2008, 04:10 PM
by
Robert Walberg
Rating:
In the words of Ricky Ricardo, the CEO of AMR Corp. has "some 'splainin' to do." Whether you believe the parent of American Airlines is merely the victim of a reactionary FAA or not, the fact of the matter is that management had 18 months to comply with the FAA's request regarding the wiring on the MD-80s and failed to act.
Yes, the planes have been flying safely for years, and yes, the FAA is likely overreacting to criticism from Congress after it was made to look inept in the Southwest Airlines debacle a few weeks back. Nevertheless, the single most important task of any airline CEO is public safety. Failing to address a potential safety risk merely because you didn't think you would get caught is a miserable excuse.
Maybe AMR's management simply thought the cost of fixing the problem would be too high -- especially since the FAA really hadn't checked that carefully in the past. With jet fuel costs skyrocketing and the economy slumping, spending more money on maintenance that didn't seem necessary had to be a tough pill to swallow. So AMR chose not to take its medicine in small manageable doses over the past 18 months in hopes that the problem would just go unnoticed.
Talk about bad decisions. As a result of the CEO's leadership, or lack thereof, AMR has canceled thousands of flights and will be canceling more. The immediate dollar cost of those cancelations is estimated in the tens of millions. But my guess is those estimates will be too low because it's very difficult to measure the loss in customer loyalty -- a cost likely to continue to hurt AMR for years to come.
If it were me stuck at an airport for days because the airline I chose didn't take the steps necessary to secure my safety, I would think long and hard about using that carrier again. At the very least, I would demand more than a public apology. I would expect a full rebate on my canceled flight, maybe a certificate for a free round-trip within the next 12 months and an assurance that all safety measures had been addressed. Finally, I would want to see the CEO fired.
Bottom line: This was an inexcusable mistake and one that should cost CEO Gerard Arpey his job. Until this step is taken, I wouldn't just avoid the stock, I would also avoid the airline. I doubt I'm alone.
