How would you start the transformation? (realistic options please)
Hand AJ a copy of the book "From Worst To First" - there are numerous lessons that could be applied. Unfortunately though I don't think he has the human management skills to achieve them.
Also, stop spitting in the staff in the press. Look at why people are disatisfied - money is nice, but it alone doesn't motivate everyone to perform at their best (Southwest, Continental and even Virgin are examples of this). I think staff are looking for respect from their leader, not riches.