Leaked: American Airlines Planning For New CEO

Filed Under: American

I’m guessing this is more information than American Airlines probably wanted to be made public…

American prepares internal executive for CEO role

Executive search firm Hanold Associates has been given the task of finding a chief human resources officer (CHRO) for American Airlines, and in the process the firm probably revealed a lot more information than it should have.

The firm discloses that American Airlines is in the midst of a multi-year succession planning process, whereby an internal executive will become the new chief executive officer. As the firm explains:

The CHRO, who will be based at the company’s headquarters in Fort Worth, TX, will report to Elise Eberwein, American Airlines Group’s executive vice president, people and engagement. The airline is in the midst of a multi-year strategic succession planning process that is designed to prepare an internal executive for the chief executive officer role. “As that transition occurs, there are other key leadership transitions that will soon happen, including Elise’s retirement,” said the search firm. “After these moves take place, the CHRO will eventually report to the new CEO, who will be a key part of this interviewing and selection process.”

For context, Doug Parker is American’s current chief executive officer (CEO). He became CEO of America West in September 2001, and stayed CEO through two more mergers, first with US Airways, and then with American Airlines. There aren’t many people who are CEO of an airline for two decades, so that’s pretty noteworthy.

Parker has always seemed to me like a genuinely nice guy, much more so than some other airline CEOs. Unfortunately American Airlines’ performance under his leadership hasn’t exactly been great, to put it mildly. Those issues go back to way before coronavirus.

American Airlines will be appointing a new CEO from within

Who will American’s new CEO be?

My take on this is as follows:

  • It’s not surprising that American Airlines is creating a strategic succession plan, since that’s standard for any big company
  • It does sound like this transition will happen sooner rather than later, though maybe I’m just reading too much into this
  • The update that’s most interesting here is that American Airlines plans to fill the CEO role from within the company
  • The company also already knows who the next CEO is going to be, given that this person will be involved in the interviewing process

I’d say it’s highly likely that American Airlines’ current president, Robert Isom, would take over the CEO role. Isom is part of the same US Airways management team as Parker, and has been at the airline for a long time:

  • On the one hand, it’s admirable that American promotes from within
  • On the other hand, American really could use a new direction, and that rarely happens when you don’t get some outside perspectives

If Isom is indeed appointed CEO, I’d expect for it to largely be business as usual.

I suppose one wild card option would be Vasu Raja, American Airlines’ current chief revenue officer, who was previously senior vice president of network strategy. He was recently promoted and thinks a bit outside the box. Personally I think it’s much more likely that he might be under consideration for CEO after Isom.

I wouldn’t expect a lot of changes with Isom as CEO

An American executive speaks out

Following this info being made public, we have an update. Elise Eberwein, American’s executive vice president of people and communications, has issued the following statement:

This “description” is not imminent or accurate. It’s true we have a multi-year succession planning project underway. It’s true Robert is the ideal internal candidate. It’s true Doug will celebrate 20 years this year as CEO. Someday, not today, next month, or year, Doug will retire. Robert will likely become CEO if all goes as planned. That was made pretty obvious several years ago.

It is also true our HR department and my successor(s) on that side of the house have all left the company during the pandemic. We are out in the market with a search. The firm had my authority to make sure candidates understood that the chief human resources officer would report to me and would come in as part of a handoff down the road. None of this is happening immediately or even anytime soon. In hindsight, it’s clear we should have just left the reporting structure to me and those who want to report to the president or CEO would just opt out. I elected to make it very clear that excellent candidates shouldn’t let a reporting structure dissuade them from taking an interest, as I believe it is in American’s best interest to attract and hire the BEST candidate out there. That’s it.

I take full responsibility for any confusion, disappointment, celebration, or gossip this job search has created. This is the result of an overzealous phrase or too much inside ball on a process Doug and our Board of Directors are running. As for me, same answer. Time to prepare for the world to reopen; American is lucky to have both Doug and Robert in place to do just that. Cheers.

Eberwein states that it was “made pretty obvious several years ago” that Isom will likely be made the next CEO. While that may have been the internal plan, I don’t think that has been made public up until now. Not only that, but what may have been true years ago may no longer be true.

Bottom line

American Airlines is setting up a succession plan for a new CEO, and the new role will be filled from within. It has now been publicly confirmed that the plan is for Isom to become the next CEO of American. While Isom seems like a nice guy, many will be disappointed to know that “business as usual” is planned even after Parker leaves the company.

I’m guessing that American Airlines didn’t intend to break this news in the context of a story about a recruiting firm.

What do you make of American Airlines’ plan to appoint Isom the next CEO?

(Tip of the hat to Cranky Flier)

  1. I don’t suspect it would be Robert Isom. He is of the same generation as Parker. They should be grooming 3-4 people in their mid 40’s to take the helm so they have options. At 56 I just don’t see it.

  2. I hear Trump is looking for work. “Make American Great Again” will adapt well as empty promises and creating divineness within employee ranks. He will fit right in.

  3. Having a succession plan for internal candidates is common. Doesn’t mean that when it’s time, they will go internal.

  4. @Joe Bloggs – I think Vasu is a longer term candidate.

    The way I’m reading this, I’d think that Robert Isom takes over next year at some point (Doug turns 60 next year). He’d likely be more or less a transition CEO (he’s currently 56) – transition as in 5-7 years. I’d tend to think they’d use that period to get Vasu up to speed on some of the non-commercial parts of the airline (his background is revenue management, network planning and commercial strategy) – Robert had a lot of experience coming from both the finance and the operations side coming into his current role as President; I think that transition period will allow Vasu to build up his experience on the operational side of the airline.

  5. Didn’t AA surprisingly lose its partnership with LATAM to Delta while Vasu Raja was head of network strategy?

  6. You are reading way too much on this. There is nothing confidential or shocking about a company saying it is “in the midst of a multi-year strategic succession planning process that is designed to prepare an internal executive for the chief executive officer role. “ The easy way to read that is to see how old the current CEO is and when he would usually retire. Now, all companies the size of AA should have a contingency plan in case the current CEO needs to be immediately replaced (death, illness, very bad decisions, etc…) In sum, I would be surprised if AA did not say what they said. BTW, if a company does not have a replacement for CEO internally it means they did a very poo job in recruiting and grooming talent that makes them go outside to hire one.

  7. I think Vasu would be better than Isom.Like you said,thinks outside the box sometimes. If we go from outside AA, why not try Marc Lore? He is about to leave walmart. Could bring new ideas to an airline from the outside.

  8. They need to scrub the whole leadership team and start fresh! Doug and Robert are cut from the same cloth and I wouldn’t look for any significant improvement moving to him. He’s even more old school than Doug. They especially need to get rid of the EVP of HR the CHRO will never be successful or thrive as long as she is there. Doesn’t anyone wonder why they can’t keep HR leaders!?? It starts at the top! I’m just sayin…

  9. Either Bob Crandall or Donald Trump. Need hard nosed business people to get the Airline moving in the right direction. Right now too much fat no responsibility and no direction. I don’t want to see another bankruptcy esp with this new gutless administration we just installed.
    Concerned Retiree

  10. Personally, I think this is much ado about nothing. But as an AA frequent flyer, I would love for Vasu to take over eventually. He’s the only one in there that occasionally surprises me/us with his ideas.

  11. Concur with @santastaco and @luke. This is simply a commonly held exercise annually in corporate America. Also I would not count Vasu out. Finance types often are favored to make the leap to the top chair.

  12. @Joey: Not sure what Vasu Raja had anything to do with LATAM leaving. They left solely due to two reasons:
    (a) Chile rejected the AA/LA JV
    (b) LATAM was broke
    And with what happened afterwards and Latam ending bankrupt, it was a blessing in disguise! Imagine if AA had invested in LA.

  13. I had a chuckle about the comment proposing Marc Lore of Walmart. I can hear the jokes now. American’s service is already at Walmart level. German friends just flew LH from FRA to CUN. Then CUN-DFW-KOA. First class, full fare. They were not impressed by AA service.

  14. Robert Isom = Doug Parker 2.0, given Isom came from US Airways and spent many years in Parker’s team.

    I’d rather AA go after Richard Anderson. Or someone from Southwest, Delta, or JetBlue who is interested in moving up the management chain.

  15. I would be happy with anybody who will take us away from the business model that Parker and Isom so assiduously foisted on AA, that of “The World’s Largest [Low Cost] Airline.”

    Several years into the New American and under the stewardship of Parker and Isom, American Airlines is a full-service, premium carrier IN NAME ONLY.

  16. I would love for them to go after Richard Anderson to restore American Airlines back to being a legacy professional and great airline again not LIKE SPIRIT AIRLINES OR FRONTIER AIRLINES…

  17. I think that Isom is a good, smart guy but I agree perhaps more transitional due to his age. Vasu is very personable, young, so intelligent, and great at thinking “outside the box.” The comment above about losing LATAM under Vasu: I agree with other posters that was not his fault. Chilean Sup. Court rejected the alliance, and then Delta sunk a bunch of money to get a foothold in the region via LATAM ownership stake, but it looks like it was a really bad move for Delta. Also freed up AA to partner with GOL, and AA is re-focusing on MIA and all of South America, too. Under Vasu, AA now has a great feed for more Asian long hauls out of SEA via partnership with AS, and out east with the JetBlue (B6) partnership, AA overnight became the major player out of BOS and NYC, while B6 now has longhauls they could never do with the fleet they have.

  18. Thank god!! Bring back AA screw this usair crap!!! Airline has sucked so much wish they could break the merger up and just have AA BACK FIRE ALL the executives that came from that terrible carrier and are now taking AA down with them!! Yuk!! I agree with above person bring Crandall back!!

  19. These kinds of planning processes aren’t earth shattering.
    That said, one look at Vasu’s track record and it seems clear that the best thing AA could do is get rid of him…. so much international added and cancelled under Vasu that it makes Pan Am look like a well-run company.

    Mountains out of molehills, this report.

  20. What….is their current CEO not doing enough favors in DC to get more and more of our sweet sweet tax money? They trying to find someone with a softer mouth?

  21. It’s past time for Parker yo leave. Why hire Isom? He’s parker 2.0
    How about someone who believes in great customer service and really cares for employees?

  22. It would be nice to see American return to their old ways of customer comes first. Could that happen by promoting from within? Doubtful.

  23. I will love AA have an CEO take care first at his employees, and them automatically the Company will run to go up to the top of the list, AUTOMATICALLY, DONT FORGET .

  24. Both isom and Parker are detrimental for the airline. Since the merger AA has downgraded to a poor service as usairways used to be.

  25. As an AA employee and former US employee, please bring in fresh blood with a global perspective, The moment DP took charge, I knew we would be America West on steroids. I like Doug and feel a certain gratitude towards him, but I want to see AA be the best and I only see us a bottom feeder in it’s present form.

  26. Most companies, even one with a handful of employees, do succession planning. It’s both a way to find potential people for promotion and grooming them for bigger things as well as preparing for the future. This goes from the very top to the very bottom. People retire, are recruited by other companies, get sick, die or “fail” the grooming process. Any professional of a certain calibre can tell stories of being contacted by recruiters acting for an unnamed principal. Both recruiters and companies like having a “bank” of potential professionals in case of need, and they weigh internal vs external candidates. There are times when you want someone internal, and others when an external is preferred.

  27. I would imagine the toll this past year has taken on Parker and every other airline CEO. The future looks even more problematic, particularly if the bailouts cease. The legacies may need to totally restructure their operations towards more price oriented leisure flyers and less premium long haul flyers.

    No surprise that Parker might be signaling to the BOD he’s thinking of taking an out down the road. He’s built the world’s largest airline. There isn’t much left for him to do. Why would he want to preside over another Chapter 11 restructuring?

  28. Isom and Parker, execs from the airline that charged for water. Get new blood, not the USairways mindset.

  29. funny how US+AA supposedly have groomed Parker’s successor for over a decade…. only to have the fruits of their labor enjoyed elsewhere,

    …..all while the board is so uncertain about any of the ones in the C-Suites (or within 1-level reporting of them) that they have to pay the king’s ransom that is executive search firms

    how is Vasu any different from someone like Isom ?

  30. Seems like Hunter would be a good fit for the CEO role. Maybe the “big guy” can make that happen for him?

  31. American will have big shoes to fill. Lord Dougie went to the WH and sat next to Trump with his hand out during a round table discussion with the airline ceos at the beginning of the pandemic. He saved people’s jobs.

  32. No, our tax dollars saved people’s jobs….all he did was nearly run the airline into the ground.

  33. The only way forward for AA is to ditch the entire executive suite including Parker, Isom, Raja, and Eberwein (plus their water-carriers.) There is no question that the airline that used to carry the “AA” brand has been so severely diminished by these clowns that it will be a tough sell to acquire a team that can actually restore the “shine” to American Airlines.

  34. I would love to see AA move forward and bring it back to what it used to be. My choice for CEOs would be.
    Robert Crandall (Crandall Forever)
    Richard Anderson
    Gordon Bethune
    Better yet new fresh blood

  35. Okay as a recently separated employee of American Airlines due to the pandemic. The language used by the Communications officer to “respond” was condescending, elitist and rude. Her verbiage and word choice is very indicative of the culture of the company.

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