It’s a big day at American Airlines, as the world’s largest airline officially has a new CEO.
In this post:
Robert Isom replaces Doug Parker as American CEO
As of April 1, 2022, Robert Isom has become CEO of American Airlines. He replaces Doug Parker, who has been an airline CEO for roughly two decades, seeing airlines through multiple mergers. Parker was the CEO of America West, then US Airways, and then American Airlines.
Since 2016, Isom has been President of American Airlines. He has been in the airline industry for over 25 years, and has basically followed Parker the entire way, having worked at America West, then US Airways, and then American Airlines.
This management change was first announced in December 2021. Apparently this transition was supposed to happen earlier, but Parker stayed on longer due to the pandemic. Parker is now staying on as Chairman of the Board of Directors.
Parker’s legacy at American
To his credit, Parker has had an absolutely incredible career in the airline industry. Has anyone else been CEO of a major US airline for 20+ consecutive years? There’s simply no denying that Parker has had a successful and rewarding career, seeing airlines through two major mergers, and eventually leading the world’s largest airline.
The length of his career leading airlines is especially remarkable when you consider his legacy. I mean, what can you really say? Under Parker’s leadership, American hasn’t exactly excelled with the passenger experience, labor relations, controlling costs, or financial performance. The airline has just kind of… coasted?
Under Parker’s leadership, it seems like American lacked a vision, beyond just trying to be all things to all customers, but not in a way that works. American can’t compete with Spirit on costs, and can’t compete with Delta (or even the direction United is headed) when it comes to product and innovation.
What I’m expecting from Isom as American CEO
With Isom now CEO of American Airlines, I’m expecting more of the same, and business as usual. American very much promotes from within, which I think is respectable on the one hand, but on the other hand it means there aren’t many fresh ideas.
Isom has been by Parker’s side for a long time, and seems to have a similar management style. I’m not at all expecting this to be like when Scott Kirby became United Airlines CEO, and really changed things up for the better.
Then again, Kirby really caught us off guard with the approach he took at United, given that he was also previously at America West, US Airways, and then American Airlines. When he moved to United, I think he recognized the opportunity he had to do things differently, and went all-in with a new strategy.
Who knows, maybe Isom will surprise us. But if I were to place a bet, I’d say that not a whole lot will change.
Bottom line
Robert Isom has taken over as American Airlines CEO as of today, replacing Doug Parker. While it’s theoretically nice to see someone else leading the airline, I wouldn’t expect the company’s direction to change. Isom was previously President of American, and is one of the guys who has been with the airline dating back all the way to the America West days.
I’d love to be surprised, as I’ve been with Kirby’s performance at United, but I’m not holding my breath.
What are you expecting from American’s new CEO?
I flew AA on March 25, 2022 at 1:38pm from Peidmont International Airport in Greensboro, when I arrived at gate B40 Mr. G. Nunez was on duty. The person in front of me must have asked him it this flight was going to Dallas TX.
The sign had a different location then Dallas. So when I approached him I asked him if the flight was going to Dallas TX. He said yes, about two...
I flew AA on March 25, 2022 at 1:38pm from Peidmont International Airport in Greensboro, when I arrived at gate B40 Mr. G. Nunez was on duty. The person in front of me must have asked him it this flight was going to Dallas TX.
The sign had a different location then Dallas. So when I approached him I asked him if the flight was going to Dallas TX. He said yes, about two minutes later he got on the speaker and said “Gate B40 is going to Dallas so do NOT come up here again and ask if this flight is going to Dallas.” And half of the customers found it amusing and laughed. I have never felt so Humiliated in my life. I thought that I could ask a American Airline a question as a customer. My experience with American Airlines is that at times your flight will be changed. Coming back to Greensboro on Saturday April 2, my flight gate was changed and my time was changed three times. So I would never understand why American Airlines have employees representing them in such an unprofessional ruled manner. He went on to make more rudely comments about your roll-on carry-on luggage. I have been flying with AA for years and I have never seen a custom service representative act so demonic as Nunez did. I will pray that this issue be addressed for the sake of American Airlines. Thanks for your attention to this matter,
Isom needs a new jacket! That one nearly goes down to his knees! Leftover from the 80’s?
Benjamin, I agree with you 100% !!!!
My money rides on biz as usual- USAir killed what was left of legacy AA. They should change their name to usAAir and paint the planes yellow. RIP AA.
Taking over officially on April Fools Day. Good start.
Once this was a great Airline. Now they embody US Air for disregarding passengers, cold employee behavior and nickel dining their customers. That’s thanks to Parker and I have no doubt it will continue with his successor.
If AA was so great they wouldn’t have needed UsAirways to bail them out
A couple of observations about Doug Parker. On balance, he had a remarkable run. But he, as all human beings, wasn’t perfect.
I believe the hostile takeover of Delta was one of Parker’s biggest mistakes. But not necessarily for the reasons Tim Dunn implies. A Delta/US Airways merger would have been a complete disaster. And I base my opinion (which is all it is) on history. That combination would have been a “parallel” merger...
A couple of observations about Doug Parker. On balance, he had a remarkable run. But he, as all human beings, wasn’t perfect.
I believe the hostile takeover of Delta was one of Parker’s biggest mistakes. But not necessarily for the reasons Tim Dunn implies. A Delta/US Airways merger would have been a complete disaster. And I base my opinion (which is all it is) on history. That combination would have been a “parallel” merger - a combination of entities that duplicated and overlapped each other. The goal of parallel mergers is to eliminate a competitor and slash redundancy. Parallel mergers may work in some industries, but they’ve normally been miserable failures in the transportation arena. The classic case is the Penn Central.
The airline industry had gotten too big post deregulation. To use the euphemism of the day, “There were too many seats chasing too few passengers.” So consolidation and shrinkage were necessary for the industry to survive long term. William Seidman, an early proponent of airline deregulation, predicted that the industry would ultimately consolidate into a few large carriers if deregulation occurred, and that’s exactly what happened. But airline consolidation was ultimately accomplished through a series of “end-to-end” mergers, where airlines broadened their reaches and expanded without the need for a “slash-and-burn” strategy to streamline.
Much of the criticism about American’s workforce size and fleet performance is informed by incomplete data. American's board of directors and management know the situation far better than we do. Their data are real-time. The data we see are old. There are reasons why American’s workforce is the size it is - reasons we don’t fully know. There have been staff reductions recently, as the merger integration is mostly complete. And there may be more in the future.
To Tim Dunn’s rather unkind slur about being glad that Parker is stepping down: American’s board would have fired him a long time ago if his performance was as egregious as his critics suggest. But the bottom line is that it didn’t. If American’s board thought the airline’s direction was flawed, it would have hired someone from the outside, not Isom, to replace Parker. A corporate board’s job is to oversee the company’s overall direction. American’s board has a fiduciary responsibility to all of the company's stakeholders to hold executives accountable for their performance.
Everyone is entitled to an opinion, but none of us are allowed to make up our own set of “facts.”
You either don't know or ignore actual facts and data that are available to just ordinary investors as well as to analysts that specialize in understanding specific industries. No one is making up any facts; you just don't like them.
American Airlines spent tens of billions of dollars on new aircraft over the past 10 plus years and yet American NEVER gained a fleet cost advantage. When even Frontier Airlines shows that Delta gets 7%...
You either don't know or ignore actual facts and data that are available to just ordinary investors as well as to analysts that specialize in understanding specific industries. No one is making up any facts; you just don't like them.
American Airlines spent tens of billions of dollars on new aircraft over the past 10 plus years and yet American NEVER gained a fleet cost advantage. When even Frontier Airlines shows that Delta gets 7% better fuel efficient than American or United, it is a fact that you not just don't want to accept.
American has spent far more than Delta on fuel every time Delta's refinery has generated profits - as it did over the 2nd half of 2021 when Delta had a 25 cent/gallon fuel advantage over American and/or United. The refinery does not involve the financial risk of hedging which Southwest is now benefitting from now - but LUV also lost lots of money on hedging for years when fuel prices are low. The refinery had virtually no negative impact to Delta but has had a market benefit.
And American is paying hundreds of millions of dollars in higher interest expense than Delta because of the much higher level of debt.
American's newer fleet hasn't resulted in any advantages but has saddled the company with much higher expenses.
Delta is paying less for fuel not only because it is more fuel efficient but also because of the refinery strategy.
Those are just two areas of the company that Parker could have addressed but didn't. And those are facts. whether you like or know them or not.
My wife and I planned a vacation from Grand Rapids Michigan to Costa Rica in February. The flight from Grand Rapids was canceled. We were not able to get a flight out of Grand Rapids until the following day and subsequently forfeited the cost of our first nights stay in Costa Rica. Our return flight from Costa Rica to Miami was wonderful. It was on time, customer service was exceptional, and we were looking forward...
My wife and I planned a vacation from Grand Rapids Michigan to Costa Rica in February. The flight from Grand Rapids was canceled. We were not able to get a flight out of Grand Rapids until the following day and subsequently forfeited the cost of our first nights stay in Costa Rica. Our return flight from Costa Rica to Miami was wonderful. It was on time, customer service was exceptional, and we were looking forward to our flight from Miami back home to Grand Rapids. Fifteen minutes before boarding that flight was canceled. Feeling much chagrined, I contacted customer service at American Airlines and asked for compensation for our troubles. The return email indicated American Airlines was willing to provide us a $200 credit. $100 per person for the inconvenience, hassles, and stress associated with both the outgoing and incoming flights being canceled was someone insulting. $200 didn’t even come close to what I thought was fair and equitable. I only hope that the new CEO provides better customer service than the one who was in place when we took our trip in February
So why is Parker being praised for his remarkable career? AA can't compete with the low cost carriers, it can't even compete with it's peers DL or UA in the area of customer service, & innovation. So what has he accomplished? I am a former US employee & feel that what he did over 2 decades was only to benefit Dave Parker. I've heard it said that he cared for his employees. I don't agree with that one bit. He cared for Dave Parker.
His career in the airline industry is impressive. You personally may not like him but what he did in the industry speaks for itself.
LOL basically you're saying AA is s(something that smells really bad) and it will last (maybe)forever
While some people can't or won't read all that is necessary to discuss the leadership transition at AA, Ben's article is the culmination a large volume of airline-related social media discussion that took place over 10 years ago when Parker proposed USAirways' takeover of American. Many of the people who participated in those discussions no longer participate in airline social media but I had an opinion then and still do.
Many people did not...
While some people can't or won't read all that is necessary to discuss the leadership transition at AA, Ben's article is the culmination a large volume of airline-related social media discussion that took place over 10 years ago when Parker proposed USAirways' takeover of American. Many of the people who participated in those discussions no longer participate in airline social media but I had an opinion then and still do.
Many people did not believe that Parker was not the right person to lead a takeover of American and USAirways was not the right airline, even if they were the only legacy airline left that had not been through a merger.
American took over TWA just before 9/11 and then accelerated the dismantling of TWA post 9/11 including heavily imposing workforce cuts on the TWA side which resulted in strong pushback and new federal regulations. This was all before Parker's helm at AA but Parker tried to repeat the same strategy in his failed takeover of Delta while Delta was in bankruptcy, saying that workforce cuts would come from the non-union Delta side. To no one's surprise, there was strong pushback at the federal and local levels in Delta hub states. Parker pivoted and proposed to lay no one off as part of the AA/US merger; for over a decade, American has had far more employees to generate the same levels of revenue or less than its competitors, even adjusted for the differences in outsourcing and the number of wholly owned regional airlines with the result that AA's financial performance has been at the bottom of the industry even as they have touted their size and new fleet (which never generated a cost advantage).
Some of us believed over a decade ago that Parker was not the right person to lead an airline as complex as AA and we are glad to see Parker finally step down.
While many aren't optimistic about Isom's ability to correct the problems which Parker failed to deal with, it is fair to give him a chance to see what he can do.
I keep hearing how Doug was not the man to take over a complex airline like AA. Doug Parker just resigned as the CEO of AA so he in fact did take over AA. He has be compared to the low cost carriers as well as Delta and United as far as cost advantage. However he is not hurting for money. I think Doug did exactly what he wanted to do with AA and is still an overseer of yes the largest airline in the industry.
I see minor changes that might help the very infrequent traveler (assuming they can figure out the technology) but nothing to improve the core hard product. Unless you're sitting up front, it will still be an experience near that of the NYC Subway. Particularly if you're not in MCE.
Good riddance Mr. Parker. Ridiculously small bathrooms, taking out ISE, bungled cabin renovations, at every turn messing over loyal customers. Bye Felicia!
Sounds like Hilton Honors as well.
Meet the new boss...same as the old boss
Well, if you have employees who clearly despise their jobs and don’t miss any opportunity to let passengers feel it, a good vision will not change that.
I agree with Endre. Hoping that Isom has a vision that includes totally revamping the corporate culture to make AA a better place to work.
With Isom as CEO and Parker as Chairman little will change. I’ve not seen AA perform well before they merged with America West / USAir. After that, Parker, Isom and other AAers couldn’t figure out how to combine the Union contracts for years. Isom was amidst all this mess. Unlike Kirby, he stayed at AA and was mentored in AA’s ways by Parker. With his “mentor” as Chairman, little vision is forthcoming.
First, American wasn't the world's largest airline by revenue in 2021 or for several years pre-covid. Delta holds that title. American flies a whole lot more seat miles than Delta but gets less revenue for each seat mile, has higher costs on many items including fuel and maintenance (the two cost items that should be most changed because of the newer fleet that AA boasts about) and AA doesn't get near as much revenue from...
First, American wasn't the world's largest airline by revenue in 2021 or for several years pre-covid. Delta holds that title. American flies a whole lot more seat miles than Delta but gets less revenue for each seat mile, has higher costs on many items including fuel and maintenance (the two cost items that should be most changed because of the newer fleet that AA boasts about) and AA doesn't get near as much revenue from non-transportation sources that deliver higher margins or lower coasts - which the refinery does for Delta.
Second, Parker didn't just coast; he put American and every other airline he has run into a controlled descent and then bailed out just as the consequences of his decisions became apparent. He managed to merge America West into USAirways just as HP was circling the toilet and then did the same between US and AA. There is no award or honor for running some of the worst businesses in the airline industry for 20 years and then bailing out when the consequences are about to become dire.
Third, hold off about 3 years before patting Kirby and United on the back. Kirby has taken a higher customer service approach to United but the finances could be as stretched as American if not worse. United pushed the regional jet model harder than any other airline and Kirby only doubled down on ending that reliance during the covid era. UA will have to spend tens of billions of dollars on fleet replacement in order to just be able to operate the number of flights that United needs to operate to support its schedule. American's financial problems are heavily due to its massive fleet spending and its stock buybacks. United's financial model isn't a whole lot different.
TL;DR
I'm not sure where/why you think Parker "bailed out".
Perhaps because you seem to have the mergers "backwards".
You stated "managed to merge America West into USAirways" when it was the other way around. (Parker's) America West merged USAirways into itself. The fact that they chose to adopt the more recognized name of the 2 airlines does not change the fact that the SEC declared America West the surviving airline. Parker did not...
I'm not sure where/why you think Parker "bailed out".
Perhaps because you seem to have the mergers "backwards".
You stated "managed to merge America West into USAirways" when it was the other way around. (Parker's) America West merged USAirways into itself. The fact that they chose to adopt the more recognized name of the 2 airlines does not change the fact that the SEC declared America West the surviving airline. Parker did not "bail out", he kept the same job while changing the name of the company he was CEO of.
Ditto for when (Parker's) USAirways merger American into itself.
From a passenger point of view I don't care for what Parker (and his team) did to their airlines they consumed. However; (as Lucky pointed out) he has remained in the industry a long time, the last 20+ years in the same position. As lacking in innovation his airline may be, he did take a small regional carrier and (mainly through mergers) turned it into one of the worlds largest (by several metric, is the largest) airline.
Merging with a larger airline to avoid the financial consequences is "bailing out"
And the point of a for-profit business is not to produce the most widgets or for an airline to fly the most capacity but to generate the highest profits.
American can claim that it is the largest based on how "busy" it is but it doesn't lead the airline industry in any metric that matters to business or to consumers....
Merging with a larger airline to avoid the financial consequences is "bailing out"
And the point of a for-profit business is not to produce the most widgets or for an airline to fly the most capacity but to generate the highest profits.
American can claim that it is the largest based on how "busy" it is but it doesn't lead the airline industry in any metric that matters to business or to consumers. Alaska and Frontier/Spirit have both released investor updates that compare themselves to the rest of the industry and American is right next to United at the opposite end of Alaska and the ULCCs in those metrics. American is partnering with and acting more like an ultra low cost carrier because they have not succeeded in the industry group (legacy/global) that they chose to compete in; given that Parker ran American longer than either America West and USAirways, those comparative statistics represent a complete failure for Parker. Given that there are no larger airlines for him to reverse acquire, Parker realizes it is time to step down.
Maybe he'll pull a Kirby, I'll say if AA would just give me consistent good service, a decent operation, and interiors similar to the legacy AA A321's that would go a long way.