Taking A Moral Stand, American Airlines CEO Retires With No Severance Package As Company Goes Bankrupt
"Taking A Moral Stand, American Airlines CEO Retires With No Severance Package As Company Goes Bankrupt"
This week, American Airlines, the world’s fourth largest airline, filed for Chapter 11 bankruptcy. This is a step that former CEO Gerard Arpey, who just resigned, did not want to take.
For years, major airlines have “slashed wages and pensions after similarly declaring bankruptcy,” using the financial process to avoid obligations to their workers. For example, when United Airlines declared bankruptcy, its employees faced the “single largest pension default in U.S. history.” Some pilots at Aloha Airlines lost 90 percent of their retirement benefits after that business declared bankruptcy.
So instead of leading the company through bankruptcy, Arpey decided to retire after 30 years with the company, denying him any severance pay.
D. Michael Lindsay, the president of Gordon College, interviewed Arpey for a New York Times op-ed about his choice. Arpey told Lindsay that he wanted his company to honor its commitments to its workers:
When we discussed the prospect of bankruptcy at American he spoke with an almost defiant tone of the company’s commitment to its employees and holders of its stock and debt. “I believe it’s important to the character of the company and its ultimate long-term success to do your very best to honor those commitments,” he said. “It is not good thinking — either at the corporate level or at the personal level — to believe you can simply walk away from your circumstances.”
“This country would be so much better off if we had more people who had Gerard Arpey’s sense of responsibility and character as well as ability,” said David Boren, the president of the University of Oklahoma and a former governor and U.S. senator.
Arpey distinguishes himself from his predecessor, Donald Carty. Carty resigned “after it was disclosed that…executives’ pensions were protected in a separate trust, at a time when union members were being asked to approve deep concessions for their members.”