If the instincts of senior Air Canada executives had been correct eight years ago, Don Carty would now be leading them into battle instead of advising their biggest enemy. In 1991, airline officials thought retiring CEO Claude Taylor was so close to hiring Carty as his replacement that they drafted a news release to that effect. Instead, Carty, then a senior executive at Fort Worth, Tex.-based American Airlines, walked away from negotiations after discussing his situation with Americans chairman, Robert Crandall. Last year, he became Crandalls successor as chairman and CEO of the parent AMR Corp., and now oversees an operation that has 120,000 employees. In his first year as CEO, the company made a record profit of $ 1.9 billion. “Taking the Air Canada job would have meant a huge financial hit, and I realized I have this inordinate attachment to American Airlines,” recalled Carty last week. But, he added, “it was tempting, because I’ve always liked the idea of coming home.” Home, in this case, means literally that: on a two-day business trip to Montreal, the 53-year-old Carty stayed with his 78-year-old mother in the family house in suburban Town of Mount Royal, near his old high school. The next morning, he strolled along Sherbrooke Street West, past the apartment where he lived after taking his first airline job with Air Canada, and stopped at a restaurant for coffee and toast. The Gazette that day reported Premier Lucien Bouchards insistence that any merger between Canadian Airlines—in which American Airlines holds a 2 5-per-cent stake—and Air Canada must be vetted and approved by the Quebec government. Carty, pressed for a reaction, chuckled. “You must be forgetting my Quebec roots,” he said. “Ed be surprised if that government wasn’t demanding something.”
Carty is in Canada often at the moment because of American Airlines’ role in backing Onex Corp.’s efforts to roll Air Canada and Canadian into one airline. (AMR held a board meeting in Toronto two weeks ago, and while Carty was in the city, he and Onex CEO Gerry Schwartz—whom Carty calls “a good, good friend of many years”—met frequendy to talk strategy.) A near-double of the actor Jimmy Stewart in appearance and his low-key, laconic manner, Carty is now a near-perfect hybrid of two countries: he still retains some of his hard-learned French, is a passionate skier, and his fluency in talking hockey would win acceptance in any Canadian sports bar. But he does so with more than a trace of an American twang, and he sports a permanent Texas tan.
Until five years ago, Carty commuted on a near-weekly basis from Dallas to a small island he owns on a lake in the Ottawa Valley, whiling away the six-hour trip by bringing files
from the office. Now, recendy remarried with a five-year-old stepson and a four-month-old son, he makes the trip less often—but it remains a regular meeting place for members of the Carty clan, including three grown-up children from his first marriage. Although he holds joint Canadian-American citizenship, he says: “In my mind, Em Canadian; no amount of time away will change that.” He is also one of the most high-profile executives in the American airline industry, and in the eyes of many peers, perhaps the smartest. He has been repeatedly wooed by other American carriers and won’t comment on reports he once declined the top job at United Airlines. A graduate of Queen’s University and the Harvard Business School, Carty is renowned fo| finding innovative technological solutions to nagging problems: that ability has led to offers from companies in a variety of fields. But none, he says, offer the satisfaction of his present job: “I like it because it’s so complex. The airline business has jumped up and bitten a lot of people hard over the years, but it tests your skills like nowhere else.”
One of those skills is Carty’s great charm. Since joining American Airlines in 1978, he worked closely for much of the past two decades with Crandall, a legend for his clear-eyed sense of direction and imperious style. Crandall led the company through airline deregulation in the 1980s, and gave American the first customer-friendly computer-reservations system and a streamlined frequent-flyer program. But he was often resented as much as respected. Now, Carty says, carefrilly: “We want our people to feel more fond of the company.” Despite his easy manner, Carty is blunt about his business. He acknowledges that the airline industry, beset by consumer complaints over everything from uncomfortable flight conditions to safety concerns to late flights, has recendy faced “a public relations crisis largely of our making.” Of efforts to forge a cohesive unit of the Oneworld alliance with airlines that include Canadian Airlines and British Airways, Carty says: “Overall, I give us a B-minus. We still could do better.” And, Carty says flady, “the industry has to change the pricing structure” of tickets. In an experiment in the early 1990s, American Airlines dropped the price of regular tickets by about 40 per cent, but announced there would be no more seat sales or discounts for advance purchases. Other airlines didn’t follow suit, and American had to change back. But, says Carty, “the system must change. Consumers don’t like it, and we must listen.” That’s an issue he hopes to revisit, backed by American Airlines’ powerful status. If he ever succeeds, he’ll give consumers a gift he could never have managed working on this side of the border.
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