There’s a rumor swirling around that American Airlines may bring back former CEO Doug Parker to replace current CEO Robert Isom. When I first heard this, I thought “wait, there’s no way the board would do something like this, right?” However, the more I think about it, the more I think “wait, that’s exactly what American’s board would do, of course.” Let me explain…
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Airline executives speculate Doug Parker may replace Robert Isom
In recent years, American has been falling further and further behind both Delta and United when it comes to financial performance. In reality, Delta is still strongest, while United has been pulling ahead at American’s expense, as it seems to be a zero sum game between the two airlines.
Simply put, the company has lacked a cohesive vision for so long. Premium… not premium… now premium again… who is to say?! It has now gotten to the point where management realizes they need to invest in customer experience, but one wonders if it’s too little too late, especially with the pace at which Delta and United are also investing in their products. It’s not easy to make up ground in these circumstances.
I’m not alone in wondering who will fix American, and when they’ll replace CEO Robert Isom. If American had a competent board, we would’ve seen a management change a long time ago. While I’m sure the board doesn’t want to admit that it has been asleep at the wheel, sooner or later, something’s gotta give.
The issue is that several board members are doubling down and don’t want to admit defeat, since they’re the same people who were behind the decision to choose Isom over Scott Kirby to lead American next (Kirby was president of American, and was then told he’d never be CEO, which is why he left to go to United, and there’s a lot of bad blood there).
So that brings us to the latest rumor that’s swirling around. Brian Sumers, who writes the Airline Observer (a paid subscription for full access) recently attended the IATA AGM in Rio de Janeiro, which is the one event each year attended by virtually every airline industry executive. While a lot of important stuff happens in official meetings, what’s equally interesting is what’s discussed off the record, and at the bars late at night. Airline executives love to gossip (who doesn’t?!).
Sumers explains that one of the most common topics of conversation among executives was whether Isom will make it through the end of 2026, and who will eventually replace him. I’ve shared my take in the past on who I think would be a good fit to replace Isom, but it seems industry executives have a different theory. The leading candidate to replace Isom, according to other executives? Well, it could be former American CEO Doug Parker (who was previously CEO of US Airways, and CEO of America West before that — he’s one of the industry’s longest serving airline CEOs).
The idea is that Parker has the industry experience and respect needed to turn the airline around… or something. Keep in mind Parker is still somewhat in the industry, as he’s on the board of Qantas. And he’s “only” 64, five years younger than Delta CEO Ed Bastian.
Parker would do nothing to fix American’s underlying problems
As a person, I respect Parker quite a bit. He seems like a kind, fair guy, he’s surprisingly pro union, and he has certainly done a lot for the airline industry over the years, being a leading voice during tough times (including going to Washington asking for bailouts).
However, if you ask me, Parker and Isom are almost identical in that regard — they’re both nice guys, but they lack a vision. Even as American started its slow descent under Parker, he had the same “oh, everything is fine” narrative that Isom now has. I actually suspect this might’ve been one of the reasons that Kirby was passed over in favor of Isom — Kirby is absolutely cutthroat, highly competitive, and wants to win, while neither Parker nor Isom have that mentality.
Replacing Isom with Parker would do absolutely nothing to fix American. The single biggest thing that American needs is a CEO who can excite employees, and who can get them to rally behind a vision. Period. End of story. Without that, there is no turnaround, because employees are just confused and indifferent, given the lack of direction they’ve been given.
Personally, I also think it needs to be an outsider, so that the board shows employees that they’re serious about change. Simply rearranging the America West deck chairs doesn’t send a message of actual change to employees. I’ve said it before, and I’ll say it again — someone like Air France-KLM CEO Ben Smith would be the person to turn the airline around.
Now, do I think the odds of that happening are actually good? No, probably not. That would be way too out-of-the-box for American’s board. And American is an airline that probably more than any other promotes from within. That’s great in theory, but it’s also why there’s such groupthink, and how we’ve gotten to this point.
American actually has some decent executives now — recently appointed Chief Commercial Officer Nat Pieper is a bright guy, and I think he has the right idea with strategy, and he’s also sort of an outsider. That being said, my impression is that he might be more of a Glen Hauenstein type than a Bastian type (Hauenstein was Delta’s former president, and he was really the guy behind most of the strategy, even though you almost never heard from him).
Meanwhile Chief Customer Officer Heather Garboden has been the person behind many of the positive changes in recent times, but again, she’s from the America West “club,” and I’m not sure a 20+ year veteran of the company is really the person employees are going to rally around, because they’ve been let down too often. For that matter, I don’t know enough about her to wager a guess as to whether she can actually be innovative — virtually all the positive changes we’ve seen from American in recent times have just been obvious areas where the company is catching up with the competition.
One thing is for sure — the board can only ignore reality for so much longer. Or I dunno, maybe they can, because little about our corporate world makes sense.
Bottom line
American CEO Robert Isom just hasn’t been doing a great job leading the airline in the right direction, at least when you look at the company’s financial performance compared to that of competitors. While the idea seems sort of wild to me, many other industry executives reportedly think that the most likely successor to Isom is a return of Parker.
Replacing a nice guy who lacks strategy with a nice guy who lacks strategy just doesn’t strike me as a wise decision. Then again, American’s board is the whole reason we’re in this situation to begin with, given that they opted for Isom over former president Kirby to take over at American.
I’d like to think that there’s no way this could happen, but who really knows…
What do you make of the rumor of Parker returning to American?
American really just needs a strong commercial-side leader to counterbalance all the America West people in the finance organization (of which Heather Garboden is very much one of them ).
Doug Parker isn't the person to hire that commercial leader. He's the one that successfully purged AA of all the commercial brains from Old AA and the smart US people that all went to UA.
@Lee and James K
I think you are missing Ben’s point. Iger of Disney, Jobs of Apple, and Schulz of Starbucks came back to the helm of the company because their respective bosrd members were smart enough to realize their mistake and was quick enough to take corrective action to steer the company in the right direction. As Ben pointed out there are still some on AA’s Board that refuse to admit their mistake and...
@Lee and James K
I think you are missing Ben’s point. Iger of Disney, Jobs of Apple, and Schulz of Starbucks came back to the helm of the company because their respective bosrd members were smart enough to realize their mistake and was quick enough to take corrective action to steer the company in the right direction. As Ben pointed out there are still some on AA’s Board that refuse to admit their mistake and are actually doubling down. Bringing Parker back probably won’t help AA much as he is not a visionary. Iger is a visionary and plans things years ahead and Bob Chapek who was CEO before being ousted by the Board is basically the Alex Cruz of the airline industry and most if not all of the Disney cast members loathed him. I concur with Ben that American Airlines should really consider bringing an outsider as CEO to show the employees, the customers, the shareholders, the media and the general public that it is ready to change the airline’s direction for the better.
I sure hope the AA board grows some balls and finally puts someone in a leadership position over there that can make them a half-decent airline. We're moving to Miami in September and just (reluctantly) status matched from Delta to American as we don't really have a choice being hub-captive and traveling throughout CALA a lot. Every flight I have had through Miami this year has been riddled with rolling delays, zero communication, and plenty...
I sure hope the AA board grows some balls and finally puts someone in a leadership position over there that can make them a half-decent airline. We're moving to Miami in September and just (reluctantly) status matched from Delta to American as we don't really have a choice being hub-captive and traveling throughout CALA a lot. Every flight I have had through Miami this year has been riddled with rolling delays, zero communication, and plenty of attitude from gate agents that can only be described as the most frustrated and bitter workforce that exists in the entire network.
I disagree with the narrative that AA cannot "catch up" to Delta and United. Putting TVs on planes, investing in app enhancements, and improving the onboard product can be done in years, not decades. The service culture is a different story, but look at how much things have improved at United in the last six years under Kirby's leadership. I would argue that pre-pandemic they were similarly poor service airlines with a lot of disgruntled employees.
The question is whether the AA board will have the ability to admit to themselves, and to each other, that the current path is not working and a true outsider (i.e. Ben Smith, although there are others) are what they need to transform the airline. I feel like they are starting to realize they need to change the strategy, and this is reflected in some recent hires (i.e. Rhonda Crawford, who was brought in from Delta to transform passenger experience). If they take the same approach to the "top job" and hire someone from outside with a "turnaround" narrative to sell, I really think they could create the best airline in the US.
Just think about it: AA already has the greatest advantage of all, which is a network of hubs and strong presences in the cities with the highest concentration of wealth, power, and influence: New York, Miami, Washington DC, LA, Chicago, Dallas, Boston. Delta (and to a lesser extent, United) rely on people going out of their way and connecting because the others are "so bad" in comparison. Who's going to Detroit, Minneapolis, Raleigh, Salt Lake City, Seattle (in comparison)?
Combine the AA network (remember, Rasu "the schedule is the product" Vaja?) with a product that appeals to the affluent people who call those cities home and a decent "back-of-plane" experience for everyone else and I think you could have a winning formula for something truly great over there.
Doug Parker csn’t dance. But he can fart in the wind.
Did Bob Eiger return to Disney? Did Howard Schiltz return to Starbucks?
Did Steve Jobs return to Apple?
Did Steve Jobs return to Apple?
Yes indeed.