Now all he needs to do is keep the Board and the Unions from continuously undermining his efforts at genuine reform. Good luck with that, you go'n need it.
Two step plan to revive American
Merger with Alaska
New CEO
Not to be that guy, but it’s “AS.” (It probably should be ‘AK,’ but there’s a history with Alaska Star (eh, look it up.)
Also, my goodness, some of the folks on their sub-Reddit lose-it if you refer to it as anything other than ‘Alaska Airlines’ (dear heavens, don’t say ‘Alaskan’… *gulp*)
Also, also, huge fan of adding the double-A to anything, so cAArry on with thAAt, PeteAAU!
@Ben--You suggested that AA should merge with Alaska in order to gain a Pacific hub. God forbid! I wasn't even happy when AS joined oneworld. I (and most people in the PNW) would be outraged at that idea. If that were to happen, AA would likely pull AS down; I don't think AS (or any other merger partner) could pull AA up. If AA uscti be saved, it will have to be organically.
I would also remind you that AA did have long haul international flights (to NRT and LHR) from SEA for a while, but then baled completely, leaving AS in the lurch. AS's previous international partner was Delta. Both DL and AA were supposed to provide international long haul services that AS could feed with its extensive domestic hub at SEA. DL didn't pull out but instead became a competitor, setting up its own SEA hub. I suspect the combination of those two experiences factored into AS's decision to fly international long hauls on its own metal. Regardless, AA's flip-flopping on SEA long haul routes has to have left a bad taste in AS's mouth.
You want to fix American? It starts by eliminating the antiquated, angry union flight crews who have zero respect for customers and prove it every day of the week. It doesn't matter how much you coddle them and/or make excuses for their bad behavior (I'm looking at you 1990!). The bottom line is "Unions Breed Mediocrity"
@Some Things Just Need to Be Said--Nice try at pinning AA's personnel problems on unions but your apparent prejudices aside, how do you explain that most other US airlines' FAs are also unionized and don't have the problems you described? I can think of two words describing AA that provide the answer: bad management.
They completely gave up on Boston and let Delta eat their lunch. They allow BA to drive EU business in one of the most expensive ticket markets, including ridiculous surcharges from the whole US, thus poaching their own potential international business, nobody in their right mind would want to fly via LHR to connect, forget LHR as a stopover point. Serious international expansion is only chance for AA to be in the mix or eventually be acquired or go belly up.
I agree with you about the America West management team style. That style of management needs to go already.
Interesting theory on the Alaska/AA tie up. I think Alaska should be the dominant partner and their management team should take over. Similar to how the American West team was the dominant partner in both the US Air and AA mergers. I’d argue they gutted both airlines and it’s about time a good management team (Alaska) took over.
It’s mainly Devon may of the old America west ilk
He and his clan are the only ones left of the true America west mindset.
He has no idea how to compete or run an airline other than monopoly hubs but he runs the company and pretends on the current premium offering until isom is gone
Everyone at AA knows it too
Alaska is a well-run and conservatively managed airline. They have never gone bankrupt. They have a reputation for listening carefully to both customers and employees. They are early adopters of technology to improve their operations and passenger experience. And somehow, despite not having seat back entertainment, they have managed to grow and remain profitable, delivering excellent results to their shareholders relative to the rest of the industry.
Meanwhile, American is leveraged to the hilt. Nothing is working right. Their whole management team needs to go. They definitely aren't in a position to take over Alaska, and if they did, they'd just destroy it.
Alaska could be in a position to take over American, but it'd have to be after American takes a trip to bankruptcy court. And it'd only work if HQ moves to Seattle.
Alaska merger is an interesting idea. But i agree with @Alex that LHR should not be the preferred transit point for Europre. Landing fees too expensive. AA should make a very bold attempt at int'l expansion and stop dicking around for God's sake.
Delta came back from the crapper starting in 2010 so can AA.
There’s an obvious prestige and language equality in LHR. That being said, I’d love to see AA route more through other joint venture partners or even try to bring in a Central European airline (e.g., Condor) to oneworld.
We can only hope that Nat is able to make some real and lasting change. But you are spot on that it will never happen with Isom and his cronies there. Isom has been nothing but a massive failure, and the board should have fired him years ago. IF AA can hire a CEO who will actually lead and inspire employees will rally and it will have a positive effect on customers organically. Most of them are good employees who want to do a great job but who have been beaten down for years by management, had tools taken away and ridiculous policies enacted. Product improvements are a start. New leadership who have a vision and actually lead are the only thing that will turn AA around. Thanks for the write up. I'll keep my eye on Nat.
It's sAAd what's happening. Front-line employees vs. executives friction. An impotent BOD. No clear, well-articulated vision from the top. Fortress customers taken for granted. Overreliance on LHR. Nonsensical AAward pricing. A new CEO is long overdue.
A credit card company that flies airplanes...
Nat is super talented. I worked with him when he was just a Sr FP&A analyst at NWA back in 1999-2000. Everyone knew that he was going on to better things. Perhaps his biggest weakness was being a huge Duke basketball fan (just kidding!).
I also find it interesting that you are comparing him to Robert Isom. I also worked for Robert at NWA who I found to be fantastic. Robert was several levels ahead of Nat at the time, so I find it really hard to compare the two
This guy is worthless until he does something about situations like the following: Had an awful experience with Philadelphia PHL customer relations desk attendants at the International arrivals terminal. 3-4 female agents sitting doing nothing and not even willing to help with issues caused by an American delay. Didn't even scan the boarding pass, which incidentally we would have needed for bag tags for completion of our journey. On top of that the gatekeeper event at the front of the roped area questioned why we may want to even approach the desk. Who would approach the desk if they didn't need to? That agent should have also been able to easily see we needed bag tags.
This is one of the most interesting commentaries I've read on this blog. Thanks, Lucky and everyone, for the interesting insights.
As a retired board director with some executive management experience (all non-travel-industry), it certainly appears the board is not holding Robert Isom accountable, with lots of evidence of groupthink and lack of creativity spanning several years. That said, the addition of Heather and Nat show some interest in change at the board/CEO level. I'm a firm believer in governance being separate from management; put another way, the company executives should not be on the board, but rather answer to the board. That gives true accountability for the CEO of any company. The overall trend is in that direction, though the transportation industry is one of the stodgier ones that follows trends slowly (they've got that in common with finance and healthcare industries, and I don't mean that as a compliment).
I am based in one of those competitive markets where I can be loyalty-agnostic and book based on convenience and price. While I fly AA, DL, UA and MX, I have found myself on AA increasingly in the last few years, as they greatly expanded their marketshare in the MSN market. As Lucky says, onboard customer service in the US is "consistently inconsistent." That said, in the last couple years, I've had more positive experiences on AA, out of the MSN market, than the other carriers, in terms of on-time flights, clean planes, useable WiFi, and reasonable onboard service. Having gotten accustomed to SkyMiles while DL was our dominant carrier, I have to admit I'm finding much more generous award redemptions with AAdvantage. The onboard service seems to be on a trajectory of improvement in the last year, with a long way to go, of course. So right now, AA is winning more of my business (but not out of loyalty), and is making significant gains in the MSN market, where it is actively competing.
No shade toward the other carriers. DL appears to have backed off the capacity to try to chase higher yields (not a wrong strategy as long as it works for them), and UA and MX seem to be making steady increases here, as well. If you look at the MSN market share data posted elsewhere, though, you can see a very significant increase in AA's market share here. Whoever gets me where I want to go with the least overall hassle is who I fly. I used to chase loyalty (and many in this market still do), but I feel a good earn-and-burn FF program is higher yield for me.
Can confirm. The YoY gains by AA in market share for both residents and visitors are both pretty significant. Finally having the space they needed to expand hasn't hurt, either.
AA-AS marriage is akin to SQ investment in Air India. Two opposite cultures cannot compliment but only devour each other. If Nat is a rising star in Team AA like you said, Isom will become a roadblock to Nat's path to CEO position. When Michael Bloomberg advised Trump to seek out the best and brightest people to fill his cabinet, Trump retorted " It is impossible because there is nobody in the world who is smarter than me. I am the smartest." He often reminds the world that he is the only genius who exists. Man's ego and pride rule the world. Both Board members and Isom must be removed simultaneously-- a very remote scenario. The chance to revolutionize the culture of the rank and file is equivalently remote because aggression and confrontation are the hallmark of American culture.
I agree with what you said, but there is a path for Nat: If Isom is becoming more governance/oversight-like (more of a board director) and less of an operational executive leader, the board could split the President and CEO roles. Some companies do this, though the two roles are more commonly combined. This would allow the CEO to more independently run operations with the COO, allowing the President (who, in this case, is also a board director), to step back and be more about broad brush strokes. I'm not saying they're likely to go with this option, but it would give Nat the flexibility to start building his vision while Isom is still there. It would give Isom a way to preserve his leadership and MAYBE not impede progress and change.
The Pieper / Garboden era is here. Whether Isom "retires" in another 12 months or 24 months is a bit besides the point. Turnarounds on this scale take time - this one will take 5-10 years. Let Isom continue to break even and pay debt down for now - that's all anyone can really do at AA for the next few years anyway.
I also disagree on the incremental announcements - they continue to build trust around the idea that American is actually going to do something to turn the ship around. One big announcement doesn't build momentum. And it makes the summaries of the announcements (one of which they emailed around the other week) that much more powerful.
It is very sad to see the decline from since Parker left ( I know things were not great, but I’d rather still have him). Isom slowly but steadily removed himself from facing the employees directly. Censuring open questions forums like Parker did . Taking the actual heat from their frustration. The monthly crew news completely eliminated . Pilots and flight attendants feedback are no longer a thing.
Censorship . Under Bobby Wells, the punitive method is the leading way to do things right . She has no experience in the department she leads and does not get it . She has never done a Live open question session with the flight attendants, because she knows she is incapable to give a live response . She prefers to hide behind a screen with pre submitted questions she feels comfortable answering ( and for what she rehears to response.
Hmm, AAL was equally excited over Vasu Raja- who accomplished little more than acting like King & driving the once great airline further toward irrelevance. Even before that, American foolishly bought two of the weakest, most troubled airlines thinking it was a grand idea (US Airways & America West)- then mistakingly bypassed brilliant executive Scott Kirby for weak CEO(s), and he has gone on to give UAL remarkable success. Nope Nat (odd name)..American is a conglomeration of lousy, failing airlines- and a few rides on them makes it easy to see what an inferior product they offer compared with UAL or DAL, and why they have been forced to charge less on overlapping routes. Nice try- unfortunately the airline is a lot further down a hole than hiring one smart guy can help them with now.
They also need to stop devaluing elite status. It decimates goodwill Andhra loyalty points don't really respect our reward loyalty. As they continue to move the goal posts and then give you back crumbs for frequently flying their planes and using their branded credit cards it makes little sense to choose their substandard planes and service over competitors. There's only so much juice to squeeze before the orange walks and they kill the golden goose. They've forgotten flyers aren't ATM's and stooges to be taken advantage of but rather people to be given a good product at fair prices and cherished as the reason they all have jobs.