American Airlines CEO Discusses Government Aid

Filed Under: American

We haven’t seen much communication directly from American Airlines CEO Doug Parker in the past couple of weeks, and that’s apparently because he has been in Washington fighting for government aid for airlines.

American Airlines has just released a video message from Parker, giving an update on the current situation at the airline, and what the $50 billion in government aid for the airline industry would look like under the CARES Act.

The video message is over five minutes, so to touch on some of the highlights (I’ll paraphrase parts, and quote others):

  • American is flying less than half of previously scheduled domestic flights, and those flights are less than 15% full.
  • American has reduced their flight schedule by 60% in April, and plans to reduce it by 80% in May, in light of record low demand.
  • “Are we going to be okay? I am happy to report the answer to that question is yes.”
  • Of the $50 billion in financial assistance for airlines, American is eligible to receive $12 billion of that.
  • “I am confident that those funds, along with our relatively high available cash position will allow us to ride through even the worst of potential future scenarios.”
  • This bill comes in two parts — half of the aid comes in the form of loans for airlines, while the other half is dependent upon airlines maintaining some service to all commercial airports currently served, and also not involuntarily furloughing any employees, all through September 30, 2020.
  • The lack of furloughs will keep everyone employed with full benefits, but there will be fewer hours available, so many groups will be at minimum paid hours for the next several months.

Parker finishes the video with the following positive message:

“So yeah, we’re going to be okay. We’re going to be okay because what you do is important to the world, and you do it exceptionally well. We’re not just going to be okay, we’re going to be great. We’re going to lead through this, confidently and safely, and when the flying public returns, we’ll be here waiting for them. Getting our country moving again and taking care of people on life’s journey. I am so proud to on your team. It is an honor to stand besides you and a privilege to fight on your behalf. Let’s go lead the way.”

That closing statement is beautifully put, in my opinion. I just wish the direction of American’s management over the past couple of years actually reflected that sentiment — what exactly is happening exceptionally well at American, and in what areas (other than aircraft density) is American leading?

I also found it interesting that Parker used the phrase “taking care of people on life’s journey,” because a few months back it was rumored that American would rebrand and introduce a new slogan. “To care for people on life’s journey” was one of the ones under consideration.

Maybe this is a soft launch for that new slogan? As I said before, I think the slogan is more appropriate for a nursing home than an airline, though.

Here’s the video message from Parker:

What do you make of Parker’s video message?

  1. 1. It is the slogan they have been using it internally quite broadly for months.

    2. While American is dropping cash incentive programs for front line employees and top managers are taking pay reductions, Parker – who has been paid in stock only since 2015 – is not reducing his stock grant. He tells employees ‘the stock is worth less’ as though they should sympathze that the drop in his portfolio the past month is greater than they will earn in their lifetimes.

    3. Taking governmemt money only requires no mandatory furloughs through September. Since the industry is hughly unlikely to fully recover by then the $12 billion Parker says he expects to get may not even stop furloughs .. just delay them.

  2. You could tell Doug Parker and the President had been working closely at the White House round table with the CEOs of the major US airlines a couple weeks ago.

    President Trump highly praised Boeing during the meeting and since then Boeing’s stock has sky rocketed. Ha.

  3. Why should probate people bail out airlines that only a small percentage of the population regularly use, or gain high quality service from?
    We are at a major cultural turning point globally.

    The thing that changed global movement for the ordinary masses, was the rise of the 747, and its huge economy cabin. Making travel affordable for millions more of the middle classes globally.

    As the larger jets are retired, many 787 and a350s have not only smaller layouts, but crucially with economy cabins just 1/3rd the size of their 747, a380 and a340 predecessors. The 777x is so far a very poor seller.

    The post virus economic and social shockwaves will speed up the demise of smaller carriers that kept the market competitive for consumers.

    It won’t be clearly seen for another 5 years, but even before this virus budget Iong haul carriers were failing. And the legacy and national carriers are becoming more elitist again in their strategies. You can see the trend in long term travel, away from mass market Long haul travel and towards long haul travel becoming for the wealthy again as in the pre 747 era.

  4. Socialism and bail-outs for corporations.

    Starving families can stand on their own two feet, damn them.

  5. Doug Parker, AA CEO, Sept 28, 2017 – “I don’t think we’re ever going to lose money again….”

    This quote will go down in infamy with other quotes of hubris like Bush 43 “Brownie, you’re doing a heck of a job” and Michael Dell “[if I were Apple’s CEO] I’d shut it down and return money to the shareholders.”

  6. I understand the idea of the bailout, even if I’m not a big fan of it, but couldn’t we at least get something like an EU passenger bill of rights in exchange for $12 billion?

  7. Did the US Treasury put in any caveats that the airlines could not use the money to “buy back” stock?

    The package looks better than what the UK is offering the airline industry, with our Chancellor basically saying don’t expect bailouts until you have gone back to your investors and explored all credit options with banks and other financial institutions. BA seem to be ok with the situation but VS and easyJet not so.

  8. I think like the banks have to do with all their stress testing and mainting sufficient capital in the event of a downturn so should the airlines receiving bailout and any other industry that is crucial to the domestic and global economy.

  9. AA double-charged me for two checked bags in January. The check-in agent responsible was unable to cancel the second CC charge. Online refund request rejected. Hope Doug gives that $60 to the greenest FA in the company.

  10. Amen Jake! Tired of AA being demonized for desification. . .DL is by far the worst. Since moving from a DL hub to an AA (former USAir) hub city, I can say the DL isn’t all it’s cracked up to be.

    As much as Doug Parker gets slammed on several travel sites, I think out of the big 4 US airlines AA will come out of this much stronger, smaller but still the world’s largest and with the one world airlines, they can fill in gaps. I see this alliance getting stronger and more seem less.

    DL has too many big planes, too many old planes and too many weak partners. Almost all the airlines they invested in are on the brink. I do think they will recover, but look for the unions to come in and change the culture.

    UA. . HA. . good luck. AA dodged a bullet by dumping Kirby. UA goes back to third place globally and 4th or 5th place nationally.

    Keep it up Doug! Lead the way!

  11. @ henry LAX – you just put a smile on my face. It’s always good to remember the foils of past and present idiots in this country – even though, I would kill to have Bush 43 back in office right now! 🙂 Unfortunately, our standards have lowered over time.

  12. @sunviking82 – totally disagree on AA vs. DL. I live in an AA hub, but am elite on both AA and DL. DL is way better than AA across the board — from customer service to operations to inflight experience. I will take DL over AA whenever I can justify it.

  13. AA has treated its flight attendants horribly. While offering its pilots buyouts including 60% of one years salary, it offered no money to its flight attendants, the one group of employees who are the most exposed to the virus. AA is playing with flight attendants lives because the older flight attendants are the ones who have enough seniority to take buyouts. AA offered them passes and health coverage for two years. AA had flight wearing chemically ladened uniforms for three years and now this latest insult. It’s disgusting.

  14. I applaud Doug Parker for addressing what employees have concerns about. He does not address the inevitable, which is the fact many will be laid off once the bail out money runs dry.

    At this point, he is acting based on a wing and a prayer when many other experts in the field are stating it will take much longer for the industry to recover. There has been a undeniable change in the culture of how individuals and businesses look at the necessity of flying, especially businesses.

    With the current changes in the way we are doing business, many companies could and potentially will implement cost saving measures of online apps such as Zoom to do business (especially international meetings) they once flew executives to in expensive business class seats. At this point, we are simply putting a band-aid on a wound that requires immediate surgery.

    Questions for Doug:

    Why are employees who have underlying critical medical conditions who fall under the Americans with Disabilities Act and have been placed under medically ordered quarantine being penalized with points and potential levels? Although these individuals are not being tested due to the fact they are not sick enough to be admitted into the hospital, these underlying health conditions do not warrant being penalized for something out of their control. Afterall, if their medical doctors are placing them under medical quarantine for their health and well being, wouldn’t it be wise to simply treat these individuals as though they are potentially COVID19 positive? This type of draconian policy and procedure is no different than what the airlines proposed would happen to employees if the federal government didn’t approve a bailout.

    Why are employees who decide to help the company save money by taking a voluntary leave of absence being penalized with a stipulation stating they are not eligible for bids and transfers? Per the union contract Article 9, filling of vacancies, paragraph N, the contract specifically states that:

    ***Employees on a leave of absence will be offered a transfer if they are able to return to work within (14) calendar days of the transfer offer. The Company, at its discretion, may extend the time to report.***

    Doug, please don’t disregard the little people because some of us come from very humble beginnings such as yourself, many who have ideas that could potentially help American Airlines in both the short and long term. Doug, there are diamonds in the rough you are overlooking and we come from walks of life very similar to your upbringing.

    We are here, do you hear us?

  15. Mnuchin mentioned taking an equity stake in airlines as part of the bailout, which is only fair to taxpayers. Now I’m not seeing anything about that?

  16. Doug Parker, I hope you spend some of the $12B to take out seats and give us social distancing. It is DISGUSTING how close the seats are, and how FILTHY the plane is.

  17. @Lucky:

    Your quote in the before-last line of Parker’s message, ” I am so proud to on your team” (in italics), is interesting: One word is missing. “to BE on your team”. Either you omitted “BE” and it’s just a typo, or HE omitted it and it’s more of a freudian slip since, as we well know and as shown by the stock decline and AA’s abysmal passenger treatment, He hasn’t been on any team, more AWOL than anything else, and has let the ship sink completely. Is this the guy who once said that “American will never again lose money” and “The stock will soon be at 50 “?

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