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Pilot error: in an exclusive interview, exiled American Airlines CEO Don Carty reveals how he lost his job--and where the most important employer in the Metroplex is headed now.

Article Excerpt
LAST SPRING, WHEN DON CARTY WAS being widely hailed as the man who had saved American Airlines from bankruptcy, I never imagined that I would be standing on the deck of his well-appointed timber lodge in Whistler, British Columbia, talking to him about what had gone so disastrously wrong. As recently as April, the 57-year-old executive held the most important job in the airline industry--CEO of American, the largest airline in the world. He had pulled off a stunning piece of brinkmanship, the largest consensual (not court-ordered) corporate reorganization in the nation's history, and he had done it by leading by example and treating the unionized pilots, flight attendants, and transport workers as partners instead of mortal enemies. He took the unions in, opened his books, and told them more about the company's business than any American manager ever had. Unlike his snarling, combative predecessor, Robert Crandall, in his five-year term as CEO Carty had tried to remake the unforgiving, top-down, hyperagressive culture of American and its parent company, AMR Corporation, into something friendlier and more humane. He was a nice guy. He had tried to do the right thing.

And then, unaccountably, he made one large, irrevocable mistake. In the wake of an emotionally charged labor negotiation over huge wage cuts for American's roughly 100,000 workers, news broke that he had concealed about $40 million in executive perks from the unions, who went nuclear when they found out about it. Critics called Carty's move "shameful" and "appalling." Carty resigned, some reports said, "in disgrace." As a BusinessWeek headline put it, "What was Don Carty thinking?"

I had gone to British Columbia, having been granted the first full interview Carty has given since his resignation, to get some answers to that question--and another one: What is the future of American, to...

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