American Airlines will need more liquidity as well as increased revenue this year, even though the company had $2 billion in cash on hand, president and chief executive Gerard Arpey told a Merrill Lynch conference in early June. The liquidity needs will be met through a combination of financings and asset sales, the carrier said in a Securities and Exchange Commission filing. Arpey said that American still needs to increase revenues despite the fact that unit revenue improved by about 4% in May on an annual basis.
Since taking over in late April, Arpey has made his mark, reversing the much touted "more legroom in coach" policy introduced three years ago. Seats will go back in all its 140 Boeing 757s and 34 Airbus A300-600s, 23% of the fleet.
Lehman Brothers analyst Gary Chase says that modifying only some of the fleet will let Arpey observe the pace of the recovery before deciding if he will make the changes in the rest of American's fleet. Arpey, who became chief executive after predecessor Don Carty was forced out, says that "customers tell us price - and seat availability at low prices - is predominantly how they choose a carrier".
Arpey told stockholders at their annual general meeting that he refused a pay rise when he was promoted from president and chief operating officer to chief executive and will not be receiving stock options. Carty, who was ousted after failing to disclose that American had funded his supplemental pension plan while he sought steep concessions from the unions, will not be receiving a severance package. He will be given $8.2 million after taxes from a supplemental pension plan and an annual pension payment of $79,000, as well as medical benefits.
Source: Airline Business
