AMR ANNOUNCES NEW LEADERSHIP; DONALD J. CARTY STEPS DOWN AS CEO AND CHAIRMAN

DONALD J. CARTY STEPS DOWN AS CEO AND CHAIRMAN EDWARD A. BRENNAN NAMED EXECUTIVE CHAIRMAN PRESIDENT AND COO GERARD J. ARPEY APPOINTED AS NEW CEO

* Executive Chairman, Edward A. Brennan's Bio and photo * CEO and President, Gerard J. Arpey's Bio and photo * Arpey's Remarks to the Board of Directors * Statement by Don Carty

FORT WORTH, Texas ? The AMR Board of Directors accepted the resignation of CEO and Chairman Don Carty today. The Board named Edward A. Brennan as Executive Chairman and current President and COO Gerard J. Arpey as the new Chief Executive Officer. Arpey continues as President.

Ed Brennan, on behalf of the AMR Board of Directors, thanked Don Carty for his years of service and dedication to the company. They were especially grateful for his stewardship during the most difficult years in aviation history.

Carty praised his successors and said the appointments of Brennan and Arpey will "begin to build a bridge back to the path that promised a new culture of collaboration, cooperation and trust."

In a statement, the Board of Directors said, "In making these appointments, we have great confidence in the team of Ed Brennan and Gerard Arpey."

Ed Brennan, who has served as a member of the AMR Board of Directors for more than 17 years, has the "breadth of experience leading and directing some of the most venerable companies in America and will serve American incredibly well," the Board stated.

In appointing Gerard Arpey, the Board noted that, "His commitment to this company is unwavering. His dedication to its employees is unsurpassed. And his experience and business acumen in this industry is unrivaled."

Arpey promised to work to rebuild trust in management throughout the company and said he looks forward to the value Brennan?s counsel will bring to the company.

First joining American in 1982 as a financial analyst, Arpey served as chief financial officer of AMR from 1995 to 2000, during which time the Company experienced strong profitability. He also led the successful efforts to spin off Sabre from AMR.

And since becoming Chief Operating Officer in 2000, he has guided the Company?s operations out of the depths of the September 11th tragedy to the forefront of industry on-time performance and reliability.

"I will continue to lead by example," Arpey said. "Actions, of course, speak louder than words. And you can expect me to ensure my actions are consistent with the high standards we set for all employees of American Airlines and American Eagle."

Arpey vowed to do his very best to lead American "through these extraordinary times" and "restore the confidence of all employees in their great company."

Carty, 58, has spent more than 20 years at AMR, where he has served as CEO and Chairman since 1998.

Brennan, 69, is the retired chairman, president and CEO of Sears, Roebuck and Co. Prior to his retirement from Sears in 1995, he had been associated with that company for 39 years.

Arpey, 44, has devoted his entire professional career to American Airlines, where he began as a financial analyst in 1982 and became a corporate officer in 1989. He holds a FAA multi-engine instrument rating and is an avid private pilot.

EDITORS? NOTE: DUE TO THE FLUIDITY OF THE CIRCUMSTANCES, MR. ARPEY WILL MAKE HIMSELF AVAILABLE TO THE MEDIA AT THE APPROPRIATE TIME.

from the WSJ:

AMR CEO Carty Resigns
Amid Fallout Over Perks

AMR Reaches Compromise
On Concessions With Unions
By SCOTT MCCARTNEY
Staff Reporter of THE WALL STREET JOURNAL

AMR Corp. Chairman and Chief Executive Donald J. Carty resigned late Thursday amid discussions between the company's board of directors and its unions.

Chief Operating Officer Gerard Arpey will replace Mr. Carty as CEO.

Negotiators for American Airlines and its unions reached a tentative deal to keep the company out of bankruptcy court, a union official said Thursday.

The president of the pilots' union said the deal would change the pay cuts approved by unions last week and would shorten the nearly six-year term of the concessions to five years.

The deal would also provide incentives for "additional cash compensation," said the union leader, John Darrah. While the pilots' union board has approved the deal, it is still contingent on approval by the flight attendants and transport workers, Mr. Darrah said in a message to members.

The company's board of directors, which met Thursday, also needs to vote on the deal.

Employees and investors waited all day Thursday for the board of American parent, AMR, to say whether it would file for bankruptcy and was rumored to be discussing the fate of Mr. Carty.

Under pressure from Mr. Carty, the company's three unions last week voted to give up $1.8 billion in job, pay and benefit cuts to keep the carrier from filing for bankruptcy-law protection. However, as the voting was ending, the company disclosed in its year-end financial filing that it had granted hefty "retention'' bonuses for seven top executives and spent $41 million to create a trust to protect pensions of 45 senior executive, should American end up in Chapter 11.

The disclosure infuriated union leaders, who hadn't previously been informed of the perks, despite the company's pledge that it had revealed its books. Two unions said they would hold new votes and the third threatened to withhold its president's signature from its contract. Those moves would put the dispute in court and likely force American into bankruptcy.

Board members had planned only to meet in person for one day, but people close to the situation cautioned that negotiations could drag on beyond Thursday, or more time might be given for unions to consider a compromise to end the standoff. Separately, the boards of the Allied Pilots Association and the Association of Professional Flight Attendants were also in session Thursday, and the Transport Workers Union was involved.

Mr. Carty and other senior American executives negotiated with union leaders for a resolution late into the night Wednesday, in advance of the AMR board meeting.

Though American posted a huge $1 billion loss for the first three months of the year, Mr. Carty said earlier this week that prospects for the airline had improved slightly. Still, he has said it needs the givebacks to avoid a bankruptcy filing.

The new airline-bailout bill from Congress will bring American more than $400 million in cash, and travel has begun to pick up slightly with the end of the war in Iraq. Mr. Carty said bookings across the Atlantic were a bit better, and the economy in Latin America, where American has extensive operations, seemed to be bottoming out.

"There is evidence we'll begin to see a rebuilding of traffic,'' he said on Monday.

Internal factors are still in turmoil, however.

In February, Mr. Carty set a March 31 deadline for union leaders to approve tentative agreements on $1.8 billion in contract concessions to keep AMR and American out of bankruptcy-court reorganization. After winning approval of tentative pacts, AMR filed for a 15-day delay in making its year-end 10-K filing to the Securities and Exchange Commission and gave unions the same 15 days to ratify the agreements.

In response to union outrage, Mr. Carty and six other executives canceled the bonus plan, which offered as much as twice their base salary if they remained with the company to January 2005. But the trust covering supplemental pension benefits would stay, Mr. Carty said.

In 4 p.m. New York Stock Exchange composite trading, AMR shares rose 24 cents, or 6%, to $4.04.

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