Carty Set To Step Into Bob Crandall's Shoes

<B> Carty Set To Step Into Bob Crandall's Shoes</B>

By Jay Campbell

A Canadian will be running American on May 20 as AA president Don Carty, 51, takes over the titles of chairman, president and CEO of AMR Corp., chairman and CEO of American Airlines and chairman of Sabre.

He's filling huge shoes. If there is such a thing as leader of the travel industry, Robert Crandall is it. Since taking over as senior vice president of marketing in 1973, president in 1980 and chairman and CEO in 1995, Crandall has been the nation's most influential airline executive, the only arguable exception being Southwest's Herb Kelleher. Now, in his 25th year with AA, Crandall is retiring to pursue hobbies such as sailing.

A vicious competitor and creative marketer, Crandall is credited with turning American into the undisputed innovator of the industry by developing Sabre, yield management and the AAdvantage program.

But Crandall also has had dark days. He was caught on tape attempting to fix prices with Braniff Airlines in 1982 and sued by the Justice Department. His value pricing plan in 1992 failed under pressure from other carriers and corporate buyers, and those same buyers remember him telling the crowd at NBTA that corporate discounting doesn't make sense even as his own sales people were signing deals. Crandall also is well known for being difficult and unpopular with unions for the invention of B-scale pay rates.

On the latter point, Carty has taken the lead (<I>BTN</I>, Jan. 12) and observers see him as more affable on issues such as government relations and AA's proposed alliance with British Airways.

Of course, there is no reason to believe Carty is any less astute or ambitious than Crandall. Carty quite likely has adopted many of Crandall's ways. "Most of the company's strategic initiatives have been a collaborative effort between us for the last 5 or 6 years," he said last week. "It's been much more collaborative than an outside observer may have noticed. What you're going to see is differences is in style, not strategy."

In terms of staffing, Carty said, "inevitably" there would be some management changes. Some of the senior people who were reporting to Carty will take on broader duties. A number of others, he said, are getting close to retiring. One of the interesting things about this succession, he pointed out, is that it's a natural one. "I can't think of a single succession prior to this one and since deregulation in which there wasn't the turmoil of buyouts and things like that," Carty added. "This has been planned for 6 or 7 years."

Carty said this was an appropriate time for Crandall to exit because the company is on an upswing financially and because the labor situation has stabilized. "Bob's not a lame duck style guy," he said. "He wanted to see the company on the upswing and didn't want to leave the shareholders and board in the lurch."

Crandall had been "filling in on the day-to-day stuff," while Carty over the last couple years often played the role of vice president of labor relations in negotiations with pilots rather than president. Carty still faces negotiations later this year with flight attendants, who struck in 1993 for five days.

Carty had served American as senior vice president and controller until 1985 when he became president and CEO of Canadian Pacific Air. When that carrier merged with Eastern Provincial Airways, Nordair and Pacific Western Airlines in 1987 to form Canadian Airlines International, Carty came back to AA as senior vice president of airline planning. He was promoted to executive vice president of finance and planning in 1989.

When comparing leadership styles, Carty said the main difference is that "I'm an optimist. You used to have to take everything Bob said and inflate it because he was a pessimist. The optimists around the place used to have to keep Bob in check. Now the pessimists will have to keep me in check.