The World Of Bob Crandall: No Tea Party

After reading your story on American Airlines ("The airline mess," Cover Story, July 6), I immediately realized the reason for their success: Robert Crandall. Obviously the man realizes he is not at a tea party. He has taken the bull by the horns and is fulfilling his responsibility to do whatever it takes to keep his airline competitive.

I see Robert Crandall and Ross Perot cut from the same cloth--businessmen who live by the motto, "Lead, follow, or get the hell out of the way!" Instead of criticizing his management style, maybe Carl Icahn should get off his high horse and watch Crandall, a real airline man, go to work.

Christopher P. Johnson

Athens, Ga.

Crandall is the problem. Several years ago, he thought he was God. After two antitrust problems, he found out he was not. Now, however, he thinks God reports to him.

Carl L. Bryant

Worthington, Ohio

Your article sounds in part as if it were written by the American Airlines Public Relations Dept. in preparation for contract negotiations--in particular, your saying "the average pilot will receive a pay increase of 14% in each of the coming two years."

Our contract gives captains 4% annual increases, and their pay constitutes more than 70% of the pilot payroll. A pilot of a narrow-body who is able to upgrade to a widebody would receive an additional 10% pay increase, but that is hardly "average." The last contract, 1987 to 1989, gave captains 2% annual increases, which meant losing ground to inflation. Those who are co-pilots or flight engineers are getting larger percentage increases, but hardly enough to bring the average up to 14%. In the meantime, Bob Crandall makes close to three times what Delta's CEO takes home, while my Delta counterparts make 33% more.

The long-term cost-benefit balance of the two-tier wage structure is yet to be determined. A 10% across-the-board wage cut in 1983 would have provided equivalent savings from 1983 to 1990--with the added benefit of providing immediate cost benefits--instead of gradually increasing savings. Working side by side with someone doing the same job for half the salary tends to generate hostility. It is no coincidence that we had "especially bitter negotiations in 1990." As long as AMR management continues to play Divide and Conquer, both between and within employee groups, negotiations will be acrimonious.

David O. Aldrich


American Airlines Inc.

St. Charles, Ill.

As a frequent flier (67 flights last year alone), I want to add my comments. Bob Crandall is the problem. I was a devoted American Airlines customer--frequent-flier program, Citibank AAdvantage Visa card, and MCI Communications to get mileage on American, etc. If I flew, it was always on American. But over the past couple of years, Crandall has made it clear to me that I am not a wanted customer.

First, he pulled American out of the Los Angeles-San Francisco route, forcing me to Delta Air Lines. This year, he "lowered" prices through his new pricing schedule. Well, I've got news for you: The new prices are twice as high as I was paying before. I realize the airline business is highly competitive, but we know that all airlines charge the same prices. Crandall has continued to mess up the airline industry, yielding price changes as fruitless efforts. What he needs to do is remember his days at Wharton School--use product differentiation instead of pricing. Bob, do you remember that class?

Neil Ticktin


Xplain Corp.

Los Angeles

I found it most ironic that the shareholders of America West Airlines (many of whom are America West employees) were suing American Airlines for predatory pricing. Do America West shareholders have such a short-term memory that they have forgotten that just a little over a year ago it was America West that slashed its prices in half? You didn't see Southwest Airlines whining about predatory pricing.

Howard Ackerman

Long Beach, Calif.

As one who has traveled constantly over the past 25 years, I marvel at the way greed has been used to sacrifice the average traveler's right to fly. American, Delta, and United Airlines typify greed in all its forms. They have not learned the lesson of the past 10 to 15 years: Unbridled, avaricious desire to be the biggest (not necessarily the best) eventually comes full circle. And then, what happens to the American flying public, innocent bystanders in all this craze for growth?

The consequences of any of the present giant airlines' collapsing, as hypothesized in your article, is too traumatic to contemplate. It's time for control, regulation--call it what you will--to halt this headlong rush to possible disaster for the American public.

J. Brendan Swan

Deerfield Beach, Fla.

It should be obvious to everyone why Robert Crandall is playing "commissioner of fares" in today's marketplace. Crandall, along with Delta and United, must get rid of price cutters such as TWA, America West, and Continental Airlines before the two-tier wage structure expires and labor costs soar.

The public will pay dearly for Crandall's visions.

Barry Stompe

Calabasas, Calif.

Perhaps we should ask ourselves how AMR Corp. American's parent lost $280 million in 1990 and 1991 on revenues of $24.6 billion, while Cathay Pacific Airways, with only 21% the revenues of American, made a profit of $767 million. Both carriers were dealing with the same problems of high fuel costs, the Mideast war, and a worldwide recession. However, Mr. Crandall is entitled to his outrage at having to compete with carriers that are being kept alive in Chapter 11, using their protected status to lower costs unfairly.

Barbara Cameron Slaton

Menlo Park, Calif.

Before it's here, it's on the Bloomberg Terminal.