The following excerpt is being used with permission from Holly Hegeman’s Plane Business Banter publication.
AMR Bankruptcy Follies: Uniquely American Truthiness – June 12, 2012
by Holly Hegeman, Editor and Publisher, Plane Business Banter
Enough of our serious side regarding the AMR Bankruptcy. We can only take so much without some much-needed comic relief.
Recently, as I reported here, American started an internal newsletter that is available on the airline’s intranet called Uniquely American. This may be better described asÖ"When Did the Commercial Farm Move in Next Door?"
Yes, something Special is once again in the Air. If you’ve ever lived near a commercial farm, and the winds blew a certain way, you know what I’m talking about.
This was the first thought that came to mind when we read not only the Deep Thoughts by Tom Horton column, but even more so when we saw it followed by a new column called "Support from our Partners."
This particular partner, Citibank, apparently decided out of the blue it was time to let Tom and Friends know just how it feels about American. The author was none other than Vikram Pandit, CEO of Citigroup, and the letter was addressed directly to Tom Horton.
The letter is startling in that it exists at all. Does anybody think Mr Pandit was sitting around worrying about the financial crisis in Europe when he suddenly thought, "I should send Tom a letter telling him he can count on my support?"
Um. Probably not.
The more likely scenario is Tom called Vikram and asked him to please send a letter. A letter that the airline could then term "Uniquely American."
Where to start? The mind boggles.
American is now taking a page out of the old playbook that is so transparent it’s almost laughable. We call this the "you scratch my back, Iíll scratch yours" play. Hereís how it works: the troubled company’s CEO calls the partner company CEO and asks for a letter of recommendation. Once received, the troubled company CEO can run around and show it to those more gullible in an attempt to regain some credibility with key stakeholders, employees, or whomever.
Let’s back up a bit here.
WCWS (What Crandall Would Say) if someone suggested back in the day that he ask Sandy Weill (former Chairman of Citigroup) or Jack Welch (former Chairman of GE) or Phil Condit (former CEO of Boeing) to send him and the airline a letter of "support"?
A good bet is that the person who came up with the silly idea would be subjected to a barrage of "F" bombs and "bullshits" and "WTF is wrong with youís". Heíd also tell them they were weak, crazy, or both, and he probably would have fired them on the spot.
C’mon guys. Companies are forced to ask for letters of "support" from their business partners when they can’t get anyone independent with any credibility to support their "truthiness."
You know what truthiness is, right?
Stephen Colbert, of "The Colbert Report", came up with the word "truthiness" just moments before taping the premiere episode of "The Colbert Report" on October 17, 2005. Essentially, as Wikipedia explains it, "it is a quality characterizing a "truth" that a person claims to know intuitively because it "feels right" without regard to evidence, logic, intellectual examination, or facts."
Sounds exactly like the "Standalone Plan" to me.
So when faced with a situation in which not one Wall Street analyst has come out in support of the airline’s plan to emerge as an independent entity, who’s left? Those people who have a financial stake in your future. Or, to put it another way, you ask the people who make a lot of money selling the troubled company products to endorse you and/or your plan.
But as for the content of the letter itself, as you see below, itís not exactly a ringing endorsement of the American "Standalone Plan".
Pandit’s Citi makes billions off the AAdvantage credit card. But all he can write is how important American has been to Citi over the years and that American can count on Citi’s support.
All very bland and non-committal.
Perhaps what the letter doesnít say is more telling.
For instance, Vikram does not say they have studied the "Standalone Plan" and after that study, they heartily support and endorse it.
More importantly, it does not say that they are opposed to a merger with US Airways.
The management endorsement isnít exactly ringing either. Pandit says, "You have one of the best teams in the industry." So the CEO of one of your largest business partners can’t come up with anything better than "one of the best?"
Saying a team is "one of the best" or "among the best" in an industry with five airlines of size, is like saying "Mexico is among the most powerful countries in North America" or "Udonis Haslem is one of the best players on the Miami Heat." It says they don’t think you are the best, and they may, in fact, think you are far from it, but are trying really hard to say something kind.
This brings back the question of where is this advice coming from? The Hale memo was embarrassing in how obvious it was that Captain Hale had been "asked" to put his name on a memo he had not drafted. But at least that embarrassment was mostly contained internally. Now we have AMR publishing letters from suppliers and suggesting they say a lot more than they do.
Asking for letters of support for Tom Horton’s truthiness from key businesss partners such as Citi or Boeing or GE is not going to inspire confidence in AMRís "Standalone Plan" behind closed doors, no matter what "spin" is being put out there externally.
While AMR management claims they aren’t worried about US Airways or the desires of their employees (i.e., that "distraction" thing), their transparent attempts to get others to deliver their message for them belies that claim.
The problem is — the whole process is pathetic.
Hereís some advice for the brain trust who keep giving AMR management this advice — quit spending time playing games to make it look like there is independent support for your plan — you’re not good at it.
Drafting a note for one of your execs stating the pilots like your plan or begging your suppliers to send letters is not independent. And when you do it, it is obvious to everyone as to what has really happened, and you then lose even more credibility.
Instead, why don’t you find just one truly independent analyst with some credibility to say that your truthiness plan is superior to the US Airways merger plan?
Not your McKinsey analysts who have been paid and are being paid millions by you, not the suppliers that make a fortune selling products to your airline, not your own executives whose paychecks you sign, but real independent analysts that do this kind of work for a living.
Obviously, we know the answer to this. There are no independent analysts who have done so. They, instead, prefer to deal with real facts and figures, not truthiness and "planted" stories.
Oh, and while you’re at it, ask one of those independent sources to state publicly that the American Airlines management team is better than the US Airways team.
There have been several analysts who have publicly written that the US Airways team is better, but I donít recall an external analyst saying the same about AMR.
No, to do this, the AMR management team and Tom Horton would have to face the facts — not the truthiness they believe to be the case. Tom Horton would also need to get over his personal issue of truthiness — that his management team has the same amount of respect on Wall Street that the group at US Airways does.
It simply isn’t true. Bob McAdoo’s comments that we discussed in our Market Review earlier are merely the latest comments that support this belief.
Instead of distributing weak "atta boy" letters from other business partners, the AMR management team and Tom Horton should get out and show people the "Standalone Plan" and persuade people who might be skeptical instead of talking to people who are paid to agree with them.
The airline should be trying to convince its unions, who have hired strong independent advisors like Lazard and Jeffries, to give up their hopes of a merger with US Airways because AMR’s plan offers a much better future.
But no, all we get is more truthiness.
That’s the problem.
To convince people with facts, you need a plan that works and that is better than the US Airways plan that has now been presented to both the unions and analysts.
And therein lies the problem ñ no such plan exists.
Instead, Tom Horton and the American management team continue to try to hide the ball and use delay tactics in hopes they can somehow get out of bankruptcy before the facts overwhelm the "created" truthiness.
The airline appears to be running on "process" and ignoring substance.
Ignoring the world around you, pretending things arenít as they really areÖand pushing your truthiness through solicited "atta boy" letters from business partners sounds sadly more and more Uniquely American to me.
*Holly Hegeman is Editor and Publisher. Hegeman founded PlaneBusiness Banter in 1997. It is currently the most widely read weekly publication covering the U.S. airline industry. Hegeman is often called upon by members of the media to comment on the industry, and most recently was on ABC World News Tonight, commenting on the potential US Airways/American Airlines merger.
Holly is a former senior contributing editor for TheStreet.com in New York, where she analyzed the airline industry for four years. Holly also created the airline industry research area of the Motley Fool Investment website in 1995. She covered the industry for the Fool until 1997.
Prior to her founding PlaneBusiness, Holly served as senior vice-president at two Wall Street investment firms.
Hegeman also served as a consultant to then-Chairman and CEO of American Airlines, Robert Crandall from 1994 to 1995, where she worked on a number of communications management projects. She also authored the 1994 AMR Annual Report along with Crandall.
Holly is a graduate of Loyola University in New Orleans, and completed graduate level work at Griffith University, Brisbane, Australia, University of New Orleans-Innsbruck, and the University of Tennessee.
Holly was the recipient of a Rotary International Journalism Award, and is a past president of the New York chapter of the International Association of Business Communicators. She retains her membership in PRS:NY, a select group of New York-based communications professionals, and is a member of SABEW, the Society of American Business Editors and Writers.