AirTran Airways President Bob Fornaro got a big Halloween treat Wednesday --- the top job at AirTran, one of the nation's biggest discount carriers.
AirTran's board of directors named the 54-year-old executive as the company's new chief executive officer after a meeting Wednesday in Atlanta. The transfer of title was immediate.
With the move, which came just a day after AirTran reported strong profits for the third quarter, 64-year-old Joe Leonard drops his role as AirTran's longtime CEO but remains chairman of the board.
The shift of power was long anticipated, having followed changes to both executives' employment contracts in the past three years.
Leonard had already been turning over more and more duties to Fornaro, and the latest move should have little impact on the company, said Mike Boyd, a longtime industry consultant.
AirTran is "just moving the titles around," said Boyd, of the Evergreen, Colo.-based Boyd Group. "It's just sort of adjusting the titles to the reality."
Leonard's exit from the CEO post comes a little over two months after AirTran lost a months-long battle to take over Milwaukee-based Midwest Airlines. The acquisition would have opened a new growth base in the Midwest for AirTran, which is Delta Air Lines' largest rival at the Atlanta airport.
Some had believed that Leonard hoped to make the planned acquisition the crowning achievement in his eight-year tenure.
Leonard had hinted at plans to step down when he negotiated a new employment agreement in 2004 that would allow him to resign from his CEO duties and continue to work as chairman, at 70 percent of his base salary of at least $450,000. His new contract is for one year, but terms were not revealed.
"This has been in the works for a long time," Fornaro said during an interview in AirTran's offices in Atlanta. He said he and Leonard began discussing the transition about three years ago, and that he has overseen the day-to-day operations at the 9,000-employee company for the past two years.
"I don't see it as a major shift," said Fornaro. "Joe's job had become external, and I had been essentially running the company for the last two, 2 1/2 years."
Fornaro, whose new contract is for three years, said he will focus on setting a manageable growth pace and keeping the discount carrier's costs low so that it can remain healthy amid rising fuel costs and economic uncertainty. He said his pay will go up, but said the new salary won't be disclosed until a later company filing.
AirTran on Tuesday reported third-quarter profits of almost $11 million vs. a year-earlier loss. But Fornaro told industry analysts that the carrier will slow its capacity growth to 10 percent next year --- about half its pace in recent years --- and defer deliveries of at least 10 aircraft.
"I think the challenge for AirTran is to be successful with $90 oil or whatever oil is," said Fornaro. Crude oil prices soared to a record near $95 a barrel Wednesday.
Fornaro said Leonard will work alongside him at AirTran's Orlando headquarters, providing strategic guidance and dealing with politicians and community leaders in Washington, D.C., Atlanta and other cities.
He said Leonard chose not to be present when Fornaro's promotion was announced. "Joe is very gracious. He wants this to be about me and not about him," he said.
Leonard was not available for comment. In a news release, he said Fornaro "is well respected throughout the airline industry and has been well known for many years to the media, financial and investor communities for his strategic expertise, financial acumen and marketing expertise. ... Bob will bring energy, enthusiasm and expertise to the CEO role at AirTran Airways and is the right man for the job."
Fornaro "has really stepped up to the plate" as the airline's chief operating officer, said Veronica Biggins, a member of AirTran's board of directors.
"Joe did a fabulous job and is no doubt the mentor and tutor to Bob," she added. She said the board discussed the succession plan for about a year. "It is a smooth transition."
Fornaro's 2006 employment contract granted him 75,000 AirTran shares that transferred to his ownership over three years but became his immediately if he was named CEO. They are currently worth about $780,750.
AirTran's shares rose 17 cents Wednesday to $10.41.
The two men, both veteran airline executives, have had storied careers at AirTran. Founded in 1993 as ValuJet, the discount carrier's fortunes soared until one of its aging DC-9s plunged into the Everglades in 1996. The carrier resumed service later that year and was rebranded as AirTran, but was close to missing payroll by the time Leonard became CEO in 1999.
Leonard, a former top executive at Eastern and Northwest airlines, recruited Fornaro, who has been a senior executive in charge of route planning and marketing at several airlines, including Braniff and Northwest.
When other airlines began retrenching after the Sept. 11, 2001, terrorist attacks, Leonard and Fornaro ordered more than 100 new jets and began expanding the airline more than 25 percent a year.
"I think that was one of our finest moments," Fornaro said of the decision in 2002. "Those strategic opportunities only come up every once in a while."
THE BOB FORNARO FILE
* Job: President and chief executive officer, AirTran Airways
* Age: 54
* Career: Joined the Orlando-based discount carrier in 1999 as president, helping then-CEO Joe Leonard rebuild the airline after the 1996 crash of one of ValuJet's planes, as the airline was then called. Prior to that, Fornaro ran a consulting business and was a senior vice president at US Airways, Northwest Airlines and Braniff.
* Background: Native of Long Island, N.Y. Graduated from Rutgers university in New Jersey with a bachelor's in economics; earned a master's in city planning at Harvard University.
* Family: Lives in Orlando with wife, Karen. Has three adult children.