American Airlines Chief executive officer Doug Parker will step down next year after two decades of running the airlines and will be succeeded by the airline’s president, Robert Isom, on March 31, the company announced on Tuesday.
Parker’s retirement as CEO of the largest US airline is the latest in a wave of leadership changes at the country’s major airlines and newly appointed executives. mission to promote their recovery from the Covid pandemic.
Southwest Airlines CEO Gary Kelly will step down in February, handing over the reins to another longtime chief executive, Bob Jordan, in February. Scott Kirby, who was fired from the US presidency in 2016, jumped United Airlines and became CEO of that carrier in May 2020. Isom, who took over Kirby’s job in 2016, has been Parker’s heir apparent ever since.
Parker, 60, will continue to serve as American’s chairman of the board.
“It probably will happen sooner, but the global pandemic – and the devastating impact it has had on our industry – has already occurred,” Parker said in a note to employees on Tuesday. delay those plans.
From 9/11 to Covid
Parker’s career as an airline CEO spanned 20 years, tied to two crises: 9/11 and the Covid pandemic. Parker later helped win $54 billion in federal aid to cover payroll costs, with thousands of jobs at risk in the depths of the pandemic.
Sara Nelson, president of the Association of Flight Attendants, writes: “No other CEO has worked as hard, spent so much time in Congress or the administration, or felt the urgency of keeping people connected with each other. our job – not once but three times” the largest group of flight attendants, who pushed for the aid package, worked closely with airline CEOs, including Parker. “The industry is standing strong today and could lead us out of the biggest crisis in aviation history.”
Parker became CEO of America West 10 days before the September 11, 2001 attacks. After the attacks, while many carriers struggled to recover, Parker considered the environment full of Challenges are suitable opportunities for reinforcement.
He oversaw two mergers – with US Airways and in 2013 with American Airlines, at the end of a wave of US airline consolidation that made American the largest US airline. . He was CEO of America West and US Airways combined many years earlier.
After the Great Recession ended in 2009, airlines were saddled with huge debt and high legacy costs, leading to a series of bankruptcies and another round of mergers. Once again, Parker saw a rare opportunity to create a larger airline of the size and scale he could never have achieved at US Airways.
This time, the target was Americans, who went bankrupt in 2011. Parker designed the merger between US Airways and American, creating the largest airline in the world as American emerged from its Chapter 11 bankruptcy in 2011. 2013. Parker is again the CEO while Isom oversees. merger of two service providers as executives.
Parker and Isom jointly oversee the expansion of international and domestic partnerships, including Alaska Airlines and JetBlue Airways. The latter sparked a lawsuit this year from the Justice Department, alleging that it would lead to higher airfares and poorer customer service. The airline has denied the allegations.
Parker and Isom also introduced new ticket classes such as no-frills basic economy class and premium multi-seat selection enhancements, a trend that has taken place among major airlines, as well as a major overhaul of the body planes. narrow to fit more seats on the plane.
The Covid pandemic has disrupted a string of profits for the US airline industry, which has been fueled by cheap oil and strong growth in travel demand, making Parker even in times of crisis overly optimistic.
“I don’t think we’ll ever lose money again.” Parker said on the company’s investor day in September 2017. Parker lost a bottle of wine bet to a UBS analyst that the airline’s stock would hit $60 before the analyst’s birthday next year. 2018. Shares of American peaked in January 2018 at $58.47. Shares of American are down about 70% since then, ending 0.2% lower on Tuesday at $17.89, a smaller daily drop than other carriers.
Labor and loss
Isom, 58, who has a three-decade seniority in the airline industry, will become CEO of an airline that is still losing money as it tries to rebuild a business that has collapsed during the pandemic.
“Our goal is to make American the best airline in the business,” Isom said in an interview Tuesday. “In 2022, it’s all about delivering a product that’s as reliable as possible for us when customers return, and bringing profits to Americans as soon as possible.”
In the first three quarters of 2021, Americans lost nearly $4.8 billion after losing $9.5 billion last year as Covid forced countries around the world to implement travel restrictions and potential customers who avoided taking the flight. Americans have entered the pandemic with more debt than their rivals and piled on more to weather the crisis.
Aviation analysts were quick to point to Isom’s operational experience and his ability to provide continuity as the airline emerges from the pandemic.
Jefferies analyst Sheila Kahyaoglu wrote on Tuesday: “The Board’s decision to select an internal candidate reflects the Board’s confidence in the airline’s strategy.
Helane Becker, aviation analyst at Cowen, said Isom’s operational experience “suggests us to focus on improving on-time performance and other aspects of the operation.”
Americans have been more active in resuming flight operations during the pandemic than most competitors Delta Airlines and United, now led by ousted American alumnus Kirby.
That has hit the airline hard, as the roughly 2,000 flights it canceled over Halloween due to high winds have halted operations at its largest hub at Dallas/Fort Worth International Airport, and the company struggled with staffing shortages.
“There were hiccups and growth issues that we had to work through, but we were very well positioned,” Isom said. “We’re going to make sure we have an airline ready to go when customers want to travel. Right number of people, right number of planes.”
In addition to hiring hundreds of new employees in a tight labor market, Isom and his team will negotiate employment contracts with unions representing pilots, flight attendants and other workgroups.
United’s Kirby, in a response to an American Airlines Instagram post announcing the CEO transition, congratulated Parker for running more than two decades at the helm and thanked him. for his friendship and mentorship.
He also congratulated Isom.
“I’m happy for him, but the game is on!” he wrote.
