American Airlines CEO Doug Parker On Face The Nation

American Airlines CEO Doug Parker appeared on Face the Nation today. The first question he was asked was, essentially, with all the subsidies you’ve been given why do you need to furlough anybody? [Sure, CARES Act payroll funding that precludes layoffs expires September 30th but American Airlines just took a new $5.5 billion subsidized loan from the government on Friday].

Parker says why yes! But his real plan is more government money.

He calls payroll support ‘a passthrough’ but that’s blatantly untrue. The original round of payroll support covered 75% of American’s 2019 payroll. They weren’t going to lay off 75% of staff, which means the rest of the money went to support spending they were going to do anyway (a subsidy).

American and Delta are the only large U.S. airlines furloughing workers the first week of October. Southwest pledged not to furlough anyone this year. Yet somehow all U.S. airlines are supposed to be given billions more to preclude layoffs that they won’t necessarily be doing anyway.

In total about 50,000 commercial airlines employees may be furloughed. Another $25 billion to preclude furloughs for 6 months is $500,000 per worker. That’s an annual run rate of $1 million per job.

Parker is clearly on national television because most of the money amounts to a straight subsidy – another straight subsidy.

He’s asked “how much money, and for how long?” Airlines aren’t going to recover by March 31, when another round of payroll support would run out and they could again furlough these same workers. American itself says travel won’t return fully by then. United says not until the end of 2021 at least. IATA says 2024. So this is just kicking the can down the road.

Yet Parker says people are starting to travel, quarantines will go away, people will go back to work, he hedged and didn’t answer the question.

If Parker would have said we only want payroll support for the people who we’ve announced will be laid off that would be a bad idea for the economy (paying people not to work, versus finding new places to be productive) but I’d respect it. Instead he pretends the next $25 billion in CARES Act payroll support he’s barnstorming for is about the workers and not about himself.

Parker by the way survived as CEO of America West, to acquire US Airways, because he successfully secured federal Air Transportation Stabilization Board funding after 9/11. US Airways received those subsidies, too. He clearly believes the path to profitability for his business runs through Washington.

He’s sold over $100 million in American Airlines stock while the company was buying back stock and loading up on debt before the crisis. During the pandemic he hasn’t even reduced his annual stock grant (he receives all of his compensation in stock).

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. At this point Parker must have nudes of all the AA board members, because I am out of reason for why he is still CEO.

  2. Delta is not furloughing anyone as of Oct 1. Only the pilots are currently on the potential furlough list and Delta has delayed that by one month to Nov 1.

  3. My husband has been working for AA for 15 years and has been told that he’s on the furlough list. This CEO Parker is padding his pockets at the cost of it’s workers. I’m sorry no one has investigated him before this. I don’t see him taking a pay cut.

  4. He really is expert at avoiding answering questions. This was all about getting on TV to try to spur Congress into giving more aid.

  5. Willow your correct people think the PPP money goes straight to the employees Yes and NO part of that money goes to “burden” which is the general costs of operation which included Dougie’s paycheck as well as propping the stock price. We taxpayers can not afford to continue to subsidize companies and failed state governments ( sorry for the political note) its all a fact. Remember everyone the bill will come due next year that means us.

  6. Airlines are probably the most heavily taxed industry in the US. They deserve EVERY dime they get back from the government.
    The notion AA should take CARES $ as % of retained staff is DUMB. That payroll support was to NOT furlough anyone until October while $200,000 a year pilots sat at home not producing.
    And lets not forget all the CARES $ that is a loan that must be paid back.

  7. In the real world, I think most people would say Parker did a good job in that interview sticking up for the interests of his constituents. Are those interests America’s interests? Hard to say. Our government likes to print lots of money and give it away. The airlines and their employees are at least as worthy as most groups now on the federal dole. Lots of people have been screwed by this virus and our unscientific panicked response to it.

  8. All the years of billions in profits… paid to the shareholders. My great grandmother would have put some of that $ away for the ‘just in case everything goes to sh#@ one day days!’. . And YES – Doug avoids questions… even when they come from those that work for him. And if you are going to say the pilots are sitting at home… SO is Doug while no one is flying and still getting paid 100%.

  9. I’m sorry, but if they decide to let the unionized staff stay, then they need to go back to the Management and Support staff who were laid off to offer their jobs back. Fair is fair.

  10. @dontwannahear it… Fair is fair? Management was on overload before Corona, duplicate roles, poor performance etc. The union and the flight groups are the ones driving and pushing for protection. They are the ones out there picketing. They are the ones who need to be ready once travel picks up. If furloughs extend to a year Flight attendants training will be 6 weeks, pilot training will be minimum 2 months. These workout can’t just jump back in. It’s better to keep them on the line to stay flexible and add markets back. However, I understand the need that misery loves company so there is that.

    All the best. I hope the cares act helps to protect some jobs if not all.

  11. Union reps in Tulsa keep giving bad, incorrect and false info to employees put in with truth. When you ask them about the constant “mistakes”, they deflect and basically blame the employee or company.

  12. Ball So Hard:
    If flight attendants are furloughed( which I hope they are not because I am one)for a year, re-qualification is not 6 weeks it’s only 3-4 days. Requal depends on how long you have been out. Initial(new hire) inflight training is 6-8 weeks depending on your airline.
    Pilots, on the other hand, do take longer to re-qualify on their equipment.

  13. They laid off my husband after he had a big surgery. They were not supposed to lay off anyone . He was in medical leave.

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