American Brat Pack: Where Airline CEOs Came Of Age

NEW YORK (AP) – From an office at the end of a Dallas runway in the 1980s, the modern airline business was born.

There in cubicles with thin, gray carpet and shared computers, young graduates of the top business schools were tasked with making sense of deregulation — a new era when the government no longer dictated routes or prices.

Under American Airlines’ then CEO Robert L. Crandall, they issued the first frequent flier miles, developed the hub system and found a way to fill empty seats with deeply discounted fares. Standards were high. Perfection was demanded. Those who excelled were quickly promoted, regardless of how young or new to the company they were. At the time, being a financial analyst on the second floor of American’s headquarters was unlike any other job in the industry.

Today, four of them are running airlines — including American — themselves.

“It was a magical time,” says Virgin America CEO David Cush, 51. “You didn’t know where these guys were going to end up, but you knew you were hanging around with a bunch of smart guys.”

US Airways CEO Doug Parker, 50, and Spirit Airlines CEO Ben Baldanza, 50, got their start alongside Cush.

Tom Horton, the other member of this airline Brat Pack, arguably hit it even bigger — taking over as CEO of the airline where they all started. But the job that he inherited is a long way from American’s glory days under Crandall.

The 1980s “was sort of a golden moment for American,” says Michael Useem, director of the Center for Leadership and Change Management at The University of Pennsylvania’s Wharton School.

Today, American is struggling with old jets and high labor costs. Once the largest airline in the world, American is now in third place behind Delta Air Lines Inc. and United-Continental Holdings Inc., which became bigger and more efficient through mergers. But the most-painful jab for the carrier came last month when American’s parent, AMR Corp., sought Chapter 11 bankruptcy protection — the same day it promoted Horton, 50.

Horton and Parker declined requests for interviews.

American’s success at molding future leaders echoes the success of big companies such as General Electric and Procter & Gamble. Those companies were known for weeding out underperforming executives and giving those who showed promise responsibilities well beyond their rank.

“These companies made developing great leaders a defining element of their DNA,” Useem says.

American didn’t just create CEOs. Dozens of its young financial analysts from the 1980s went on to become top executives at most of the major airlines. Others held senior roles at travel companies including Orbitz and Royal Caribbean.

They all came to American because it was the center of innovation in an industry on the verge of a revolution. There were challenges found nowhere else. For instance: how do you create the first curbside check-in system? These young analysts were driven by their bosses and each other. And nobody pushed harder than Crandall.

“The most competent got promoted very rapidly,” says Crandall, who retired in 1998. “That made American a very good place to work. And the consequence of that is we attracted a lot of very, very bright people.”

Crandall required major initiatives in other departments — from marketing to flight planning — to be vetted by the finance department, exposing the analysts to all aspects of the industry. He wanted to know the exact cost and potential benefit of any change.

Three decades later, most still recall the CEO’s persistence.

The worst thing you could do was say you didn’t want to waste his time with the details. Crandall thrived on those details and demanded them of his staff. He was known to quiz station managers on how much they spent on rags. If they didn’t know, they were told they didn’t really understand their operation.

“They didn’t care if you were too young or didn’t have enough years of experience. All they cared about was if you were competent and able to do a good job,” says Bernie Han, who worked at American from 1988 until 1991. He later became the chief financial officer at America West and then held that title at Northwest. He is now chief operating officer of Dish Network.

American’s headquarters was an energetic place. Competition was fierce but friendly. The analysts often bounced ideas off each other while playing Nerf basketball in a cubicle.

“If somebody did good work, the other guy wanted to do better work,” says Jeff Katz, an American alumnus who went on to become CEO of Swissair, then led the online travel company Orbitz before landing the top job at Nextag, an online shopping website.

Despite being at competing airlines today, many of the former American analysts still keep in touch. From the start, they were a social group.

After work, beers were had at the Euless Yacht Club — a land-locked dive bar that was the closest place to headquarters. Other nights, it was margaritas at Esparza’s, a nearby Mexican restaurant.

There were Texas Rangers games, a basketball league that Parker played in and the occasional lunchtime trip to Sonny Bryan’s Smokehouse.

“We were all single and many people met their spouses there,” says Teri L. Brooks, who rose to head human resources at American before leaving in 1996. She started the same year as David Brooks. Five and a half years later, they were married. He now runs American’s cargo division.

Parker met his wife Gwen — then an American flight attendant — thanks to Cush, who knew her through a college friend.

Working at an airline meant free flights. Thursday night or Friday morning a weekend destination was selected — New York, London, the Caribbean or skiing in Utah.

“We’d all pile into hotel rooms, sleep on the floor,” Brooks says.

Sometimes a random gate was picked. The plane might be heading to Cancun or Kansas City. Fate would decide.

“I was never a fan of that game,” says Virgin America’s Cush. “It never worked out very well.”

For the most part, the young analysts were respected by those outside the finance department. Occasionally, a veteran manager would ask how long they’d been at American, suggesting they weren’t qualified to be asking questions. That was the exception.

Crandall wanted the facts and would take them from whoever knew the business best. Those working around him learned how to gather information about a complex issue and then make a decision.

“If you were aggressive, intelligent and were willing to work hard,” Baldanza says, “there was no limit on the types of things you could be involved in.”

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • susan

    bob crandall was smart and, business savvy and he had the respect of those who worked for him..the problem with american airlines through the years was thinking the “bean counters” (as we called them) at headquarters, were the be all and end all of knowledge about what should be done..american was notorious for hiring ivy league mba’s to run the company..what they should have done was to ask the people actually doing the job of keeping aa going what their opinions were..buying the bankrupt twa and getting its old aircrafft and senior employees for example was a huge mistake..most of their people were laid off,the aircraft sold or parked and american didnt even get any good routes out of it!..i hopr horton is a better leader than arpey was for the sake of the current employees and the retireesd who are still waiting to hear whats happeining!!!

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  • JosephP

    Crandall knew how to grow a business but times changed and growth was not the means to profits. It was and is now a matter of sustaining, looking forward, seeing how things are changing and be able to change quickly. Crandall only dealt well with A personalizes but never did well with everyone else. He dictated rather than develop as he did his leadership personnel. His actions towards the rank and file ultimately creating a workforce that hated him and AA’s management. They no longer believed or could trust them. The immediate successor of Crandall only made it worst with their under handed schemes. Arpey tried to pull the employees together and did as indicated by American not filing before now. But the pressure of higher fuel costs, stripped down competition, and Wall Street demanding profits brought Arpey’s efforts crashing down.

    (Note: Millions were being paid to pensions and wages. Why is that not considered a profit, but now, with bankrupts those millions will be funnels to Wall Street and those who are trying to make a quick buck.)

    I hope the courts, Horton, and creditors committee will provide AA employees with a fair wage and benefit outcome be a bit above the competition, and that will show the rank and file that the company can be trust to do the ‘RIGHT’ thing and in turn will work to make American the best Airline in the industry again. The people are the company, not the bean counters, or the CEO. Let’s hope the workers win this battle.

  • Christoforo

    Well, this is a bit of a fantasy piece. At best, it is a nostalgic look back at an era that was a gross mistake. Deregulation brought about reduced service, outsourced maintenance, labor strife and many other factors. Smaller towns were tossed aside in favor of profit-only hubs and high value destinations.

    Crandall’s exposing everything to the Finance dept was, perhaps, a unique move, but it also showed little regard for customer satisfaction which has long been lacking at American.

    All in all, this article paints a rosy picture of a place that didn’t really exist quite as portrayed and certainly has not existed in that way for two decades or more. American is top-heavy with useless management paid high salaries and bonuses and neglects customer-facing personnel in nearly every way.

    Yes, it is an MBA/Financial guy’s dream. And therefore a failure of a company.

  • AA89

    The last 2 comments are so accurate. Bean counters will continue to destroy this airline and as much as people want to be positive about the Crandall years we must also give him some blame for where we are now. Massive growth in a short period has today brought us an aging workforce of topped out employees. The labor costs without lower paid new employees is unsustainable. I owe my job to that growth spurt but anyone can see that a top heavy labor force is the cause of this.
    I predict very deep cuts and a much smaller work force. AA will be profitable in 2013 if not sooner, the bankruptcy lawyers and executives will be enriched and unsecured creditors and thousands of employees will be sacrificed so that this RATPACK can continue their party.
    Ain’t capitalism great?

    • susan

      aa89..did you start in 89 or leave aa then??did you work many years with crandall? the “growth plan” was pushed in the 80’s and that is also when aa acquired feeders and called them eagle and started into many smaller markets..and then came miami because of eastern and expansion into nasville which bottomed out..those were 90’s decisions as well as twa, another bad decision by the beancounters..maybe they should have asked the “aging workforce” what we thought….and what do you consider an “aging” workforce”?? people over 40? i will say the union employees demanded a lot and they were given it over the years until after 9/11 when we all had to take cutbacks..what area of the company were you in and were you a union person? if you had a good job with benefits and decent pay, would you quit..i doubt would stay on until retirement..that my friend is the “aging workforce” as you call it,,both union and non union at aa….many people looked at aa as a career choice, and in choosing a career, you try to stay where you can make a decent living..i am no fan of aa management, and a lot of the “ratpack” have changed throughout the years (that “fierce and friendly management stuff iquoted about aa is a fairty tale and many of those people have gone elsewhere because of it) but dont knock the “aging workforce”..experience in a job counts for somethiing and a big part of the financial difficuilties were caused by union representation and the demands they put upon aa…a smaller workfoce is inevitable becuse routes will be deleted, but you are talking out of two sides of your mouth about thousands of employees being sacrificed, yet blaming the “aging workforce”!!!!!..

  • AA89

    Susan I am 50 years old. I started in Aircraft Maintenance in 1989 and am still employed at AA in Aircraft Maintenance. My blame was not on the aging workforce but on Crandall and the subjects of this article who grew the airline rapidly and now we have the fruits of their efforts. An aging fleet and yes, an aging workforce. In no way am I blaming older workers of which I am one..
    I do realize there are many reasons we are in this situation. I was simply responding to the focus of the article.
    I hope this clarifies and good luck through this year.

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