In a merger, American Airlines’ Tom Horton could retain power
By TERRY MAXON
It’s one thing to be called chairman of a company. It’s another thing entirely to define what a chairman is.
If American Airlines Inc. and US Airways Inc. merge, American chairman and chief executive Tom Horton is rumored to become the non-executive chairman.
His counterpart at US Airways, Doug Parker, would have the CEO job, sources say.
But what does that mean for Horton, assuming the whispers come true next week, when the two carriers are expected to announce they’ll merge?
Dr. Albert A. Cannella Jr., management professor at Arizona State University, said someone called chairman can have considerable power, depending on the corporate structure.
If it’s not just an honorary title, “that actually makes Horton the chairman of the board of directors and gives him a significant role in that he can control the board meetings and the agenda,” Cannella said.
When the role of CEO and chairman are separated, the chairman oversees the people who actually operate the company, Cannella said.
“The chairman of the board is supposed to oversee the CEO. It’s not that the CEO reports to the chairman. They don’t. But because the chairman controls the agenda of board meetings and also has the capacity to have the outside directors meet on their own, that’s a pretty powerful role,” Cannella said.
The board of American’s parent, AMR Corp., has not yet signed off on a merger, even though managers at both airlines have been preparing for weeks for that likelihood. The AMR board is tentatively scheduled to vote on a merger early next week, with any announcement to follow later in the week.
Representatives of American and US Airways have declined to comment on reports of the management structure.
Other airlines have handled the issue of the top jobs after a merger in a variety of ways:
When Southwest Airlines Co. acquired AirTran Holdings Inc. in May 2011, Southwest’s Gary Kelly kept his positions of chairman and CEO. AirTran chairman and CEO Robert Fornaro became a consultant only.
When United Airlines Inc. and parent UAL Corp. merged with Continental Airlines Inc. in 2010, UAL chairman and CEO Glenn Tilton became non-executive chairman of the new company and Continental chairman and CEO Jeff Smisek became CEO.
As agreed in the merger deal, Tilton retired at the end of 2012, and Smisek added the title of executive chairman of United Continental Holdings to his other roles.
When US Airways merged with America West Airlines Inc. in 2005, Parker kept the chairman and CEO jobs he had held at America West. US Airways chairman David G. Bronner and CEO Bruce R. Lakefield were out.
Other airlines also have split the top two jobs, including Alaska Air Group Inc. and Hawaiian Holdings Inc. and its Hawaiian Airlines Inc.,
Delta Air Lines Inc. has a non-executive chairman, former Eastman Kodak head Daniel Carp, while CEO Richard Anderson and president Ed Bastian are the airline’s public faces.
At JetBlue Airways Corp., Joel Peterson is the independent chairman of the board and, like Carp, doesn’t come from the airline industry. Dave Barger is the CEO.