American Airlines Inc. and its holding company, AMR Corp., employ approximately 81,000 people and, as of its most recent yearly report, brought in $25 billion in revenue. Even so, chronic financial problems forced the company to seek bankruptcy protection on November 29, 2011. As a result, American is in the midst of a merger with US Airways Group Inc. that is expected to create the world’s largest airline; general counsel Gary Kennedy said he expects the carriers to be fully integrated by the third quarter of this year. The $11 billion deal was announced on February 14.
In the meantime, US Airways president Scott Kirby and American’s chief restructuring officer, Bev Goulet, are leading the team integrating the airlines’ routes, planes and other assets. The combined operation will be called American Airlines, will be based in Fort Worth, Texas, and is expected to operate regional hubs in six cities.
US Airways chairman and chief executive officer Doug Parker and his Ameri­can Airlines counterpart, Tom Horton, chair the transition committee comprising senior leaders from both airlines.
Kennedy, who reports to Horton, called the airline business "demanding and unforgiving," often "buffeted by external factors beyond our control, including weather, natural disasters, high fuel prices, political instability, disease, epidemics and environmental and safety regulations. It is also capital- and labor-intensive, and a magnet of intense media and governmental scrutiny."
LEGAL TEAM AND OUTSIDE COUNSEL
Kennedy leads a legal team of 33 attorneys, with 28 support staff, paralegals and administrators. He described his management style as "macromanagement and letting people focus on their jobs."
When hiring, he looks for "experienced, highly motivated lawyers with diverse backgrounds who can communicate complex legal issues clearly and succinctly to our business clients. Oral and written communication is a highly valued skill set.
"We have a relatively flat organizational structure with an open work environment," Kennedy said. "Our attorneys specialize in practice areas and have a significant amount of autonomy." He added that the legal department has had "pretty good retention during the bankruptcy and merger," reflecting employees’ dedication to the industry and "looking for the upside when we get out [of bankruptcy]. There’s not a lot of attrition."
Kennedy’s shop performs a substantial amount of work in-house, particularly in airline-specific areas such as U.S. Department of Transportation and Federal Aviation Administration oversight. Because American is a global business, it engages outside counsel for "a significant amount of work."
Among the firms Kennedy works with are Weil, Gotshal & Manges (bankruptcy and corporate); Paul Hastings (labor); Debevoise & Plimpton (aircraft finance); Fort Worth, Texas-based Kelly Hart & Hallman (commercial and employment litigation); Dallas-based Haynes and Boone (corporate) and McKool Smith (patent); and Houston-based Yetter Coleman (complex commercial). Ken­nedy said he places premiums on client service and diversity.
"Pro bono work, diversity and inclusion are fundamental aspects of our legal department and how we give back to the community," Kennedy said. American has signed both the Pro Bono Institute’s Law Firm Pro Bono Challenge and the Diversity Call to Action. The company supports a number of pro bono programs in association with the Dallas Volunteer Attorney Program. Attorneys in Ameri­can’s legal department are expected to perform pro bono work.
Regarding alternative billing, Kennedy acknowledged having limited experience. "We don’t have the volume to make it work in a particular field," he said.
"There is no typical day in the office," Kennedy said. "It seems we move from one crisis to another. That’s why our attorneys have one of the best in-house jobs in the country. It is one of the most intellectually challenging and stimulating jobs to be had." He gets to the office by 8 a.m. and officially ends the day by 6 or 7 p.m., but in reality his work day is "never-ending." He uses after-work hours primarily for conference calls related to the bankruptcy and merger.
"Given my long tenure in the legal department, combined with the 10 years I spent on the business side of the house, I’ve had the opportunity to be exposed to many areas of the law and the airline business," he said. "It makes it easier to contribute to both the legal and business aspects of the company."
American’s corporate challenges are evident but, in a tough business, "we do our part to ensure that we run a safe, legally compliant airline so that we can transport our passengers safely and comfortably to their destination." Asked what he most enjoys about the job, Kennedy said, "I love the fact that we operate more than 3,500 flights per day, 365 days a year, with almost 900 aircraft in the fleet. We carry more than 100 million passengers each year. It never gets old. It is exciting and challenging, yet difficult and frustrating every day."
His career highlights include being named general counsel 10 years ago "when we were still suffering from the effects of the 9/11 terrorist attacks. When I took the job we were poised to file for bankruptcy, and we finally did so in 2012. Working on the bankruptcy case for the last year, culminating in the announcement of the merger with US Air, has been a tremendously difficult, yet rewarding experience."
ROUTE TO THE TOP
Kennedy graduated from the Univer­sity of Utah in 1977 with a Bachelor of Arts in communications. He earned his J.D. at the University of Utah S.J. Quinney College of Law, graduating in 1980. He worked for two Salt Lake City firms — Roe & Fowler (1980-1982) and Suitter, Axland & Armstrong (1982-1984). He joined American as a staff attorney and after seven years moved on to run the airline’s real estate and construction business. "The job I always wanted was the GC job, and I made sure that our CEOs over the years knew that," he said. "I was lucky enough to land the job 10 years ago."
His advice for a new general counsel? "Surround yourself with talented attorneys, both in-house counsel and external lawyers."
A native of Lindenhurst, N.Y., Ken­nedy favors outdoor hobbies, such as backpacking or fly fishing in Colorado, Montana and Wyoming. He’s married to Michele Valdez, a nonpracticing attorney. They have four children. His community activities include service as a volunteer case worker for Dallas Court Appointed Special Advocates, a board member of the Women’s Center of Tarrant County in Fort Worth and an adjunct professor of law.
LAST BOOK AND MOVIE
The Path Between the Seas: The Creation of the Panama Canal, 1870-1914, by David McCullough, and Zero Dark Thirty.