Dell Carty
Tom Gannam  /  AP
Former American Airlines CEO Don Carty takes a question from the media in St. Louis in this photo taken in 2002. Dell Computer announced Monday the appointment of Carty to serve as the company's vice chairman and chief financial officer.
updated 12/20/2006 8:08:15 AM ET 2006-12-20T13:08:15

Dell Inc. named Don Carty, the controversial former chairman of American Airlines, as its vice chairman and chief financial officer.

Carty has been a member of the Round Rock-based computer company's board of directors since 1992 and has chaired the audit committee for much of that time. He will assume his new duties Jan. 1.

"Don has had a long association with the company and we are delighted that he is joining our senior leadership team," Michael Dell, company founder and chairman of the board of directors, said in a statement.

Chief Executive Officer Kevin Rollins said the 60-year-old Carty is an ideal choice to lead "Dell 2.0," a turnaround plan announced several months ago to boost sales and improve customer service in the face of stiff competition from Hewlett-Packard Co. and others.

From 1998 to 2003, Carty was the controversial chairman of the board and chief executive officer of AMR Corp., the Fort Worth-based parent of American Airlines. He resigned after losing the confidence of workers.

By spring 2003, AMR had lost more than $6 billion in about two years, the company was running low on cash, and Carty said he needed $1.8 billion in annual concessions from employees or the carrier would file for bankruptcy protection.

Workers grudgingly went along _ at least until they found out that the company had secretly approved bonuses and pension perks for Carty and other senior executives. The resulting firestorm cost Carty his job.

Carty was replaced by a company financial wizard, Gerard Arpey, whose first act was a late-night meeting with union leaders to salvage the labor concessions and keep American out of bankruptcy.

Carty succeeds James M. Schneider, Dell's senior vice president and CFO. Schneider will remain on board through the end of the fiscal year to assist Carty's transition. Schneider recently agreed to become executive chairman of the board of Frontier Bancshares Inc.

Thomas W. Luce III, a member of the board of directors, will assume Carty's duties as chairman of the board's audit committee.

Dell acknowledged last month that the Securities and Exchange Commission had launched a formal investigation into unspecified accounting issues. Dell beat Wall Street estimates in a delayed third-quarter report, but the SEC probe could change those numbers.

"In terms of Dell trying to establish itself as a responsible corporate citizen and also a company that's on the mend and doing the right thing, tracking a very senior guy like Carty and bringing him in as chief financial officer could send some assurances to Wall Street," said analyst Roger Kay, founder of the technology market research firm Endpoint Technologies Associates in Wayland, Mass.

Dell has made a series of executive changes, luring five executives from General Motors Corp., HP, Amazon.com and Wells Fargo & Co. in recent months.

Dell last week tapped a former executive at computer services company Electronic Data Systems Corp. to help lead the company's $4.9 billion global services division.

In the new position of senior vice president of global service, Steve Schuckenbrock will report directly to Rollins. He'll also serve on Dell's executive management committee when he starts Jan. 8.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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