American Airlines President Robert Isom Promises ‘No Excuses’ While Doubling Down on Failing Strategy

American Airlines President Robert Isom spoke this morning at the Cowen and Company 12th Annual Global Transportation Conference. His message was:

  • We’re making no excuses, taking responsibility for our challenges
  • But it’s not our fault, our plan is great, it’s all because of the mechanics and grounding of the MAX.

American Doubles Down on Their Current Strategy

Isom essentially doubled down on everything that he and American leadership have said before. If only mechanics hadn’t engaged in an ‘illegal work slowdown’ and the MAX hadn’t been grounded the airline would have the financial performance they’re looking for. In fact their regional operation has improved, which he suggests proves they’re on the right path when mechanics aren’t getting in the way.

When the 737 MAX is re-approved to fly Isom says it’ll take “30 to 40 days” to take planes out of storage and to do required training.

American Thinks Their Big Problem is They Haven’t Been Able to Make Domestic Flying Worse

How has grounding of the MAX “slowed down margin-improving initiatives” you might wonder? Isom explains that ‘cabin standardization’ (Project Oasis) “has been delayed, we’re only about one-third of the way through. We thought that we would be much farther along with our modification program as a result of operations difficulties we had to put that on hiatus.”

In other words American’s major problem earning more revenue is that they haven’t been able to cram more seats into aircraft as quickly as they want, and they hope to return to switching more planes over to offering less comfortable seating on domestic planes in all classes of service.

Where Things Are Going Well

Isom pointed out new gates at Dallas Fort-Worth that has allowed them to grow to a peak of 900 flights during the summer, new gates that will come on in Charlotte allowing them to grow to 700 flights there and the replacement of Gate 35X at Washington National airport that will permit using larger regional jets.

He says they’re making progress “closing load factor gap with other airlines during off peak periods” and doing well with “instant upsell where we are able to offer customers post-booking ability to buy up to a higher cabin, we are now offering that both on mobile and web throughout domestic U.S. and expect further expansion.”

Adding that they’re beginning to see traction with prepaid baggage, Isom sees a “quickening of the pace produce of tech advancement.”

Finally American is “ending the era of extraordinary capital expenses” that have led to $30 billion in investment over 6 years, with an $800 – $900 million decline in 2020 before continuing to fall further. OF course they’ve also recently placed bog orders for more Boeing 787s and Airbus A321XLRs (only 60% of which were order conversions) in addition to new regional jets.

Should American Close Hubs, and How’s Their Culture?

Challenged with whether American should close one or two hubs that are underperforming, Isom suggested that without the MAX grounding and mechanics job action they wouldn’t be having that conversation with analysts because the network would be performing better. He defended their limited role at New York JFK, which to some extent already isn’t a hub just a point-to-point spoke for London and Los Angeles operations.

Defending their stance that the airline is making culture a competitive advantage, despite friction with multiple employee groups, Isom suggested that this “summer showed the importance of culture, having everyone on same page” but deflected that it also suggests they are failing at just that.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I couldn’t put it any better than @Parts Unknown.

    But I’ll chip in anyway: In an era of airline oligopoly, American’s management manages to achieve the triple play of cutting comfort, service and profits.

  2. Im done with American. Done. Done. Done. Out of my last 40 flights, 37 of them have been delayed, 25 caused me to miss my connection, 6 forced overnight stays due to delays and 8 cancellations.
    Now if you include the horrible experience even as an EXP…

  3. “We may be headed in exactly the wrong direction, but the problem is that we’re not doing it rapidly enough.”

    @Steve +1

  4. @John C – wishful thinking. If Parker hasn’t been fired yet – he ain’t going anywhere anytime soon – neither is Isom.

  5. Time to add this clown’s name to the list of AA execs needing fired. Parker, Isom, doesn’t matter. They gotta get away from this Project Oasis airline killer project.

  6. To be honest and realistic about what it is happening here at AA it is sad not to realize it is not our fault what happening now,now the best excuse is blame the mechanic and 737 ground but one of the question is so after we get the 737 off the ground and “mechanic start working” and after that we still having problem with delay customer service , operation problems with ramp people, and maintenance who we are going to blame apparently we can’t blame eather Mr Isom or Mr Parker because they are really really shure we ” US” the employees are the one’s responsible for what happening in AA . They didn’t know how run there small USAIRWAYS and neither run this beast.
    It’s sad that our investors still at this time belive what this 2 said to them we supost to be the best airline in the WORLD and yes we are the WORLD WORST airlines.
    I’M PROUD TO HAVE 33yr with this company I never never cross my mind to be part of something that is the way it is right now we here at DFW we are proud of our work and we really try to do the best to get the fright ,mail and bags on the plane and I’m to be a CREW CHIEF here at DFW.
    ASK THEM WHAT ARE THEY PROUD OFF
    WHAT ACCOMPLISHMENTS THEY HAVE
    1.no contract with mechanic and ramp
    2. No operation knowledge
    3. No relationship with employees at all
    4.it is always “my way or my way” that it. It is sad

  7. AA was underperforming long before the 737MAX groundings or issues with their mechanics. Plus, United and Southwest were also impacted by the MAX groundings and they are doing better than USdbaAA. So those aren’t valid excuses.

  8. News flash on increasing on time performance- just pad the flight times even more. They just did that (30min) on their LHR to PHX route that causes an invalid connection which ADDS 3 more hours of misery to get home from PHX. Yes the clowns are running the show but they will look better on their scorecard while passengers just vote with their feet. Out and back just cost us another 6 hours of layovers as they did the same on the inbound connection too. Only 135k more miles to dump- thank God.

  9. The union groups at American wanted a merger and got it, so it’s time to shut up and move on.
    Gary has many times called out the lack of mission as a key element of successful culture and he’s spot on. Their efforts to create culture as a competitive advantage are just treading water. Parker and his team can talk about it every hour of every day and it will never get there as long as they have front line leaders that just don’t understand the concept.

  10. Most of the Employees that I have spoken with, Customer Service,Flight Attendants and Pilots have very little Good to Say about the Current State of the Airline. They feel Management is either Tone Deaf, Arrogant as Hell or Bat Shit Crazy (I am leaning towards The Last Option). How their BOD allows such Poor Performance, Unreliability on Multiple Metrics, Unhappy Employees and Mediocre product is really amazing. I have Flown AA for Years…but Parker’s Version of “going for Great” is Beyond PATHETIC.

  11. American simply gives no good reason to fly them. The prices aren’t low, the service is truly lousy, the hard product is the same or worse than competitors, the reliability is abysmal. The ability to earn reward trips by actually flying is pathetic. Food, when available is mediocre. IFE disappearing. They ensure that sales never occur by themselves or competitors out of Dallas. So despite living in Dallas, and being lifetime platinum, i only fly them when there is no viable alternative. They can’t match prices, they have to be 20% lower to even be considered, by me. I disagree with those who think Isom and Parker are out of the woods. The next recession will result in losses and the Board will face pressure to act.

  12. Traveling mostly domestically for work and mostly internationally for leisure, I’ve switched to Southwest this year out of pure convenience and it’s been fantastic. Covers all my domestic needs, all of my central American needs and will soon have their Hawaii routes figured out and working (even better then the Max’s are back). That leaves me to redeem the rest of my AA miles for international travel, then switch spend to a card that lets me transfer points to enough different programs to cover my travel needs. I’d love to finally cross 1MM with American as a backup, but even that is less urgent now.

  13. Gary, recently I flew paid domestic First with AA (don’t ask me why), and my bags were not priority tagged. The agent said this is because I am a lowly GLD not PLT or higher. I told her it shouldn’t matter, we were in first class. She said no dice, and pointed to the claim checks which did not have a “P” on them. I’ve emailed AA about this over a week ago and have not yet received a response. Incredible. I’ve let it slide so far because Dorian, but if I don’t hear back in another week or so, I want to escalate this but have no idea how. Any ideas?

  14. At present, neither AA nor UA seems to believe that treating the customers well needs to be part of their business strategy. I don’t happen to think that is a good long-term strategy.

  15. Sorry to hear everyone is having such problems with AA but I fly them almost exclusively and haven’t had a bad experience in years. I live in CLT, am lifetime Platinum and currently EP.

    Frankly, I do think the 737 Max has had a ripple effect and so has the issue with the mechanics so I agree with him on that. You can debate other changes but it isn’t right, like Gary seems to want to do, to look for EVERY attempt to slam AA. BTW, lifetime Gold on DL so fly them some as well (in addition to Frontier if I want a really cheap point to point flight) and really don’t have a bad experience on any of them.

    Guess some people are just a little more picky and demanding than I am. Oh well

  16. “Finally American is ‘ending the era of extraordinary capital expenses'”

    Not extraordinary enough to pay for the freaking center privacy partitions for J on the widebodies though….

    Full fare J ticket from HND-LAX, and I get a center seat (since I booked the day before), and I have to see me neighbor’s TV the whole time? Maybe they think I should just be happy the plane has personal IFE??

  17. Rearranging deck chairs on the Titanic means doing essentially nothing, or something extremely trivial, while ignoring a major crisis. AA’s current management have moved past playing with the livery the web site layout. They’re retrofitting planes to be even more uncomfortable, even in first class; they’re squeezing lavatories to sizes that even kids can barely fit; they’re monitoring call times even of EXP agents; they’re auditing any waivers granted by staff; customer experience is getting increasingly worse.

    They’re not rearranging deck chairs on the Titanic, they’re taking axes to the hole and making it bigger while saying the ship is sinking because the hole is too small.

  18. @AC: If you live in Charlotte, there is a good chance you were flying USAir before the merger. All my past experience with USAir was bad to the point that I would intentionally avoid flying them. In my view, the Parker’s AA is better than the old USAir if you are EXP but only very marginally.

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