Former American Airlines CEO Doug Parker co-hosted the Airlines Confidential podcast this week. He began talking about mass layoffs at Southwest Airlines, correctly calling it out as “short-termism” and a mistake.
He’s uniquely positioned to offer that judgment, having furloughed more workers than any airline CEO in history and spent the bulk of his career making short-term decisions like borrowing money to fund stock buybacks.
This week’s guest on the Airlines Confidential podcast was flight attendants union head Sara Nelson. Since retirement, Doug Parker has been taking victory laps with her over their ability to work together to secure three rounds of massive subsidies during the pandemic. Parker offers,
If not for Sara Nelson, the U.S. airline industry would have shut down in early 2020 and not resumed flying until demand returned…probably at least a year later…Sara’s leadership allowed us to get..payroll support…it was an amazing effort…it is important to me that I say that. At the time we were doing this together we really couldn’t publicly thank each other because we were working at opposite ends of the spectrum in D.C. But I told her then that one day I was going to let everyone know what she had done for them, and this is one of those days. So, thanks again Sara.
And Nelson responds,
Doug thanks but I’m going to take the opportunity to say this never would have happened without you. And I haven’t been able to say that publicly. You have actually done this several times in a room full of aviation people.. but it was really our efforts together that made this possible. As I was looking around the table March 18th of 2020 as we put that together…we were the only two people, with the exception of Nick Calio who was at the White House, who went through 9/11 together…we came at it from two very different perspectives but we had the same interests.
Nelson explained her approach to getting what she wants in Washington:
- define the problem to get peoples’ interest, to listen to us
- set your demands, in a crisis lead with very clear, simple solutions
- back up what you’re willing to do to get your demands
- add urgency
- go in with relationships already built
For Parker and American, this was the heist of a lifetime. He spent all his time in D.C. lobbying for it. Without Nelson’s cover with the narrative about workers, and bringing along Democratic leadership (and in one telling ordering around Democratic leadership), it would never have worked. Together, they robbed the American people of $54 billion in direct cash, $25 billion in subsidized loans, plus money for airline contractors and tax subsidies as well.
- To see this, just look at the second and third round of subsidies (“PSP 2” and “PSP 3”) which were passed when we knew the worst of what was happening in the industry, and they were already bringing back workers. The total number of furloughs happened and was known. And the combined $29 billion from those two bailouts at most involved 15% going to cover the costs of those employees, and 85% going straight to the airlines. At American that meant taxpayers taking a haircut instead of shareholders.
- The money was supposed to go to keep workers attached to airlines so airlines were ready to fly when customers returned. That did not happen.
- American shed 30% of non-union staff, threatening them with the end of the first round of subsidies (that they’d get a better deal on health care and travel if they left ‘voluntarily’ rather than sticking around).
When future funds were authorized American told non-union workers that if they had found new work elsewhere they could not come back and get paid. The airline kept employees separated rather than connected, and kept more of the cash.
- And Parker’s American didn’t keep pilots current, so lacked the pilots to fly when rebuilding schedules to sell to passengers. That led to operational meltdowns.
- The money even went to Delta and Southwest that had pledged not to furlough workers.
American took about $10 billion in direct subsidies plus subsidized loans. It was the scam of the century, and he and Nelson are patting each other on the back for it. That’s shameful. But very on-brand.
What turned Parker from an obscure and likely short-lived leader at America West, whom we might never have heard from again, into the man probably most responsible for the race to the bottom in U.S. commercial aviation was his persistence in obtaining government subsidies after 9/11.
Doug Parker Testifying For Airline Subsidies, 2001
In his telling, he was relentless in securing government cash even in the face of formal rejection. That positioned him to ultimately take over twice-bankrupt US Airways which had sloughed off pension obligations on the federal government, and ultimately with the help of labor unions (whom he somehow convinced would be better off under his leadership, which turned out wrong) and the Pension Benefit Guaranty Corporation he took over American Airlines. And that’s how the big heist was set up.
Considering those $10 billion in direct cash from taxpayers during the pandemic, it’s striking that the company’s entire market cap is now about $10 billion in total. Parker avoided bankruptcy by pretending this was all about workers – the same story he told himself about why sought to merge with airline after airline (he says that was never about his own ego, even though a deal with United fell apart when it became clear he wouldn’t lead the combined entity).
It’s a key part of his legacy so he’s desperate to spin the story – as much as self-deprecating Halloween skits that are now getting United’s Scott Kirby in trouble.
Never forget that the acolyte of Bill Franke from his days at America West (who turned Spirit Airlines into an ultra low-cost carrier, controls Frontier today, and gave us Wizz Air and Volaris) made U.S. aviation the consolidated lowest common denominator business that we now experience.
Credit: randomduck via Wikimedia Commons
He’s the godfather of consolidation – fewer airlines, fewer choices – while cramming more people onto planes with less room. He led the race to the bottom – and when you stopped buying his tickets after 9/11 and the global pandemic, he made you pay for it anyway. Yet his strategic blunders, such as falling behind Delta and United in passenger experience and relinquishing slots and gates in New York to Delta, plus loading up on debt to fund stock buybacks leave American Airlines struggling the way it is today.
Consumers’ wallets lead the race to the bottom. Let’s not kid ourselves.
Gary, thank you for emphasizing what a lot of us already knew–management and the ownership class exploit workers, passengers, and taxpayers so that they can obtain excessive profits–I’m still furious over these stock buybacks, while these airlines still forced pilot and other retirements.
And before some of you rush to knock on unions–yeah, you bet unions fought for funding staff during the pandemic–but the unions and their members did not do the stock buybacks once the airlines got their funding–management did the stock buybacks and other egregious abuse here.
So, when will there be accountability, or are we just going to keep letting these oligarchs and their mercenaries get away with it at our expense? It seems like the latter, yet again. Shameful.
I’d love to see someone make a critical movie or TV documentary about this.
COVID was the biggest scam of mankind in so many ways. From the false death rate to the ineffective what was suppose to be safe and effective jab and of course it was grifter’s paradise. Everyone from a single con artist getting thousands of dollars from their so called day care they ran to big business. No surprise the airlines got in on the action.
Congress and then-President Trump were on-board the authorization of the corporate bailouts to firms in the acitation industry and also a lot of other industries. A lot of small business owners also got a slice of the pie during the Covid-19 economic bailouts, and in the latter case there was a ton of “fraud, waste and abuse” — to use the popular language of the day from the most corrupt US Administration ever (i.e., the Musk-Trump-Vance regime).
Unions have a problem. They can’t kill the golden goose. And at the members run the real risk of having their leadership get too cosy with the bosses. When that happens, you get cronyism, often even out in the public once the union is fully entrenched. The stench here is reAAl.
@George N Romey — No. Just no. Such revisionist history. How disappointing.
COVID was a once-in-a-century global pandemic that killed at least 10 million people worldwide and over 1 million in the United States alone.
The illness was most certainly NOT a scam, sir. Each of us likely knows someone who died from it–maybe you’re special and you don’t, and if so, I’m happy for you and yours, sincerely.
Yet, how people responded to such uncertainty and tragedy, for better and worse, absolutely is ripe for concern, skepticism, and hopefully, some lessons learned.
But, please, do not diminish or deny the very real suffering that many experienced. We’re all still very much processing it.
Relatedly, if we were to audit the PPP program, that’d be swell, because it wasn’t the working poor that benefitted from that ‘scam’–it was excessive greed by small, medium, and large businesses, alike. I think a lot the folks that benefitted that are insecure because they abused the heck out of it, get new cars and second homes, and didn’t really help or keep their employees. Shameful.
Excellent post, Mr. Romey. I started sounding the alarm on day one and never gave up. The evidence is clear. The only fraud that may exceed the scamdemic is “man-made climate change”.
Rule #3. Never bite the hands that feeds you.
As the Project on Government Oversight (POGO) revealed in a report published Wednesday, over the course of several weeks before President Joe Biden was inaugurated, the Trump administration went on a spree of eliminating flags on PPP loans, the majority of which went directly to personally enriching the richest Americans. Officials in the Small Business Administration (SBA) eliminated 2.7 million flags between December 2020 and January 2021, as the administration was in its lame duck period.
Special preference was given to the largest loans, which often also went to the largest corporations. On January 16, 2021, four days before President Joe Biden’s inauguration, Trump’s SBA wiped 99 percent of special review flags, which were given out to every loan above $2 million for separate investigatory purposes.
@Therichgetricher — Yup. So, PPP was a huge amount of fraud. Yet, no accountability. It wasn’t those checks to individuals that caused inflation–it was partially the extreme abuse of PPP.
@Mike P — You really are the definition of a denialist:
“Denialism is a person’s choice to deny reality as a way to avoid believing in a psychologically uncomfortable truth. Denialism is an essentially irrational action that withholds the validation of a historical experience or event when a person refuses to accept an empirically verifiable reality.”
I’ve witnessed you repeatedly traffic in blatant lies and such tactics on here regularly: conspiracy theories, cherry picking, false experts, moving the goal posts, and other logical fallacies.
So, you deny COVID and climate change… what else? Tell us, who won the US 2020 Presidential election? Which genocides didn’t happen according to you? Is the Earth a sphere? I’ll wait.
@GUWonder
Trump, musk, Vance are a godsend and are breaking the back of the far left parasites that make up the federal government.
@ Mike P and @ George N Romey: Turn off Fox “News” and go talk to a real scientist. SAD!
The only thing more amazing about the “success” of the Covid scam, is the number of people who still haven’t figured out they were fooled. That doesn’t bode well for society when they attempt another one.
“It is difficult to free fools from the chains they revere.” Voltaire
Gary, It’s important to add that Parker has been prosecuted three times for driving while intoxicated. While everyone has the potential to make a mistake, three time offenders are not that common.
What does this have to do with running an airline?
Doug is marching around shilling to eliminate competitors to American such as JSX. He has claimed repeatedly that JSX and others are a danger to safety due to the terrorism risk. Flying, as we know, is pretty safe, and there are, in fact, screening procedures in place. But, coming from Doug Parker, it’s pretty rich to hear someone who has a history of not controlling his own actions for protecting the public on the roads lecturing others on whether the skies are safe. Just terrible leadership.
@Andy S — Haven’t you been DOGEd yet? Just wait for your Social Security, Medicaid, and/or Medicare to no longer pay out to you. Tick-tock, mother…
@Mike P — Unbelievable. You, of all people, YOU quoting Voltaire? You’re the least Enlightened among us. You do realize Voltaire advocated for freedoms of speech, of and from religion, for the separation of church and state, and was also against slavery. Based on your prior comments, you regularly support the opposite. Try to be more consistent, sir!
Can someone explain to me who the ” far left parasites that make up the federal government.” are? The National Park workers that got fired? The Department of Energy? The National Nuclear Security Administration. The list goes on. All those fired were far left parasites?
@Andy S and Mike P — I presume you’re the same person using different names, but fella(s), like, what happened–you skipped Gary’s post about your king’s new $5 million ‘gold’ card for Russian oligarchs–like, you missed the party. So, head on over there, and vomit, so I can mock you more.
@MikeP Or the number that will never get caught.
Gary, you forgot to mention that almost all of the airlines that took PPP loans still forced their management employees to go on involuntary company offered leaves of absences. At United and Delta, management employees had their pay cut 20% until the PPP “ran out” and told to take one day a week off to make up for it. In many cases, these employees still worked their full 5 days a week at just 80% of their normal pay. This was directly in violation of 4.b.i of PSP1.
@patrick — You must be new–welcome, sir. There are right-wingers who troll on here (two of them are Mike P and Andy S, though there are others). Feel free to troll the trolls. I sure do.
“How can an otherwise sane individual become so enamored of a fantasy, an imposture, that even after it’s exposed in the bright light of day, he still clings to it- indeed, clings to it all the harder? No amount of logic can shatter a faith consciously based on a lie.” Lamar Keene
With all due respect Gary, your hatred of Parker is idiotic. YOU may not like the current US airline industry, but millions of Americans benefit from affordable fares and reliable flights EVERY DAY — and Parker contributed greatly to creating this dynamo of the American economy. Prior to his arrival on the scene, US airlines kept going broke, and now that is very rare You talk about the post 9/11 loans AWA got from the Feds, but you don’t mention the hundreds of millions of dollars American taxpayers made from that loan. With Covid, our government (aided by media hysteria) shut down the economy, destroying airline demand. This would have decimated the industry, and it wouldn’t have been able to bounce back so quickly when people started coming to their senses in 2021. This was probably the BEST return the Feds got from the billions they printed during Covid.
One more thing Gary who was president when Covid happened? and who started authorizing the stimulus checks? I’ll give you a hint. It wasn’t Biden.
@Mike P — So now you’re quoting ‘psychics’…woof, now please give us your ‘hot takes’ on chemtrails, the Moon landing, JFK, the Illuminati, Soros, the Deep State, Q, fluoride, 5G, and all of the other ‘false flags’…my oh my, this freakin’ guy.
“It is easier to fool people than to convince them that they have been fooled.” Mark Twain.
@Mike P — That’s rich! You do realize that Twain was one of the most radically progressive public figures of his time (and perhaps since)–a proud liberal, an atheist, and an activist for social equality. Have you even read his work, or do you just selectively quote him because you think it’s insulting others? Mike, Twain is the antithesis of you. Bah!
You state a lot of twisted facts here. It’s clear you don’t like him, but he “stole” the money? Seriously? You know bailouts happen in many industries, right? Are all of them stealing, too? And you know taxes can’t be stolen right? Cause we vote for them and all? And if they hadn’t given the bailouts, then our taxes would have just covered more unemployment instead?
Unions are the problem in all industries.
it sounds like it came right out of Trump’s playbook. she clearly states that she was in The Whitehouse working this deal out. and thanks to trump refusing to allow congress to do its oversight work, they didn’t even have to hide what they did then, and can talk brazenly about it now.
And they are not facing lifetime incarceration in a federal prison???
and some corporate sycophant want to blame unions???
Unions are NOT THE PROBLEM