In a meaningful sense U.S. airlines are no longer private businesses, they’re vassals of the state. And that’s not surprising. While the largest carriers have given only a small potential ownership stake to the U.S. government in the form of warrants in exchange for subsidies this year, they’ve been effectively converted from commercial enterprises working to satisfy customers into political creatures working to satisfy “the powers that be,” as American Airlines CEO Doug Parker calls them.
Speaking to a group of American Airlines pilots at the end of last week, a recording of which was reviewed by View From The Wing, Parker said lobbying in DC is “frankly where I’ve been spending all of my time.” He’s been making “trips to DC and back for the past month and a half” though not while politicians have been gone during the party conventions.
Last summer Parker described the seminal moment in his career as obtaining government subsidies from the Air Transportation Stabilization Board after 9/11, when the government was reluctant to provide support. He took over US Airways which was also bailed out by the federal ATSB. And he took over American Airlines with the support of the government’s Pension Benefit Guaranty Corporation which preferred to see a merger prior to exit from bankruptcy, precluding the airline from offloading pension obligations.
Doug Parker testifying on the need for subsidies to the US airline industry in 2001
Right now the greatest potential returns come from seeing politicians rather than passengers as the customer, and right now the product that he has to sell is continued air service to small towns and avoiding layoffs.
The industry’s CEO with the highest affinity for government handouts seems to have the least motivation and ability for running a successful company during the good times.
This is a form of moral hazard. Banking industry, certain state governments, etc. all taking unnecessary financial risks because they know they can get the feds to pay up once every dozen years when there is a black swan like terrorism, financial crisis, or a pandemic.
Bill I could not agree more. I worked there a few years ago. The environment his leadership has created was the most hostile I have ever experienced. All they care about is enriching themselves and how they can boost their stock price. The way they have handled the coming furloughs is a perfect example. They just notified thousands of workers via email that they were either furloughed, and if not to list all other bases they are willing to relocate to. They will be notified on Sept 15 and be expected to start Sept 30. Two weeks to sell your house, uproot your family, find new schools, etc?! There is just no humanity there. I vividly remember a guys wife was in the hospital for a cancer surgery and the company would not give him time off because he was on probation. Its things like that, that show what kind of people are running the company.
@Bill +1
Bill your spot on with Parker as a AS FF I am saddened that a deal was made with AA and Parker still there. As has been gleeful in their “selling this” to us FF ( I am a MM with AS) but the feedback to Positive feed back to AS has been less than anticipated and many disdainful of their decision. As Anderson was at Delta Parker is at AA. Witness Anderson got fired at Amtrak!
The underlying issue is not Parker but how much and how long can the US Taxpayers continue to fund the airlines in this manner? We all know that there is going to be at least a 10% across the board in permanent job loss, period. With some industries losing more some a little less here’s where the over expansion will come home to roost with much of the travel industry. Look no further than the anticipated pilot shortage that is gone now, in fact many will lose their jobs permanently that is just a fact of life.
My opinion is we need to “take the hits” now and move on.The downside is there sufficient space to absorb those who lose their primarily positions and transition to a new career that is the real question.
Bottom line we taxpayers can’ not continue to support the airlines.
You skeptics. The share price will be 60, before it sees10.
We just need a level playing field with those wicked Middle Eastern Carriers
@Corey: As far as employees being furloughed and the time they are given to relocate all coincides with their union contract in which the employees voted on, correct? I personally think any industry where customer service is your primary goal, employees should be retained based on their performance and not their seniority. There will probably be a lot of good employees getting notices because they only have 5-6 years seniority where you have the “entitled” 30 year employees keeping their job because of their seniority. One thing about working for an airline is you have options to relocate, all airline employees know what they sign up for. It would be up to them to make that decision based on their situation. Not trying to sound cold but everyone has a situation and what you do for one employee you have to do for all.
This validates that none of them have spent a minute on the quality of the operation, since the 1990s. As Doogie might say, “Someone has to be last.”
Victor to say people sign up for being relocated on 2 week notice is ridiculous. It is a cold world, I understand that. When a company constantly reminds you of that…it shows where there priorities are. Every business is about making money, when you treat employees bad they deliver a bad product. Just look at their performance.
Also, I am not pro/anti union, I have worked at both. How would you determine an individual performance? A company like AA would do just what you said, get rid of the high cost employees and bring in cheaper workers. I saw numerous employees get fired from union jobs because they where bad employees. AA workers definitely need union reps because as the company has shown they would screw the workers if it ment the CEO could make an extra dollar.
Every day I see another post about American Airlines. They are awful to their employees, putting them at risk for the virus. All while stories of mismanagement abound. Every day a story of confusion. They shouldn’t be running so much as a shoeshine stand let alone an airline.
Parker and Carl Icahn could be brothers!
Corey, I’m not saying that they “sign up” for this but it is a possibility. With the airlines, you have a choice to relocate. Some companies don’t give you that option. I happen to know for a fact AA treats their employees VERY well and they are compensated VERY well for the repetitive job they do and the flexibility they have. No and I mean NO other company gives you the freedom airlines do. I think the real problem is a lot of airline employees are treated like children which is why you have poor customer service. Some think they don’t have to deal with certain situations but when you are in customer service, you have to deal with the good and bad people. If you cant handle this then you don’t belong in customer service. Exposing anyone to COVID-19 is unfortunate but again, this is their job so either the airlines shut down or do what they can to minimize employees contracting COVID. Again, AA does give their employees a lot.. ask any fleet service worker who got their generous bonus right as COVID started…
@Corey: “A company like AA would do just what you said, get rid of the high cost employees and bring in cheaper workers.”
This isn’t what I said, I said based on performance, those employees should keep their job.. regardless of 1 year of service or 30 years of service.
Clearly we have different views on how AA treats employees. I worked for them and hands down they are the worst employer I have ever worked for. For example, a coworker’s wife was hospitalized for cancer treatment and the company wouldn’t give him a day off to be with her.
My very first day on the job, the very first thing our leader said was, “AA didn’t ask for you to be here, you asked us for a job and we said yes”. While technically true, it just shows how AA views its workers. For that to be the very first thing you say to a new employee is weird.
Just look at the employee surveys, very little trust in management. How can you trust AA executives who take on debt to buy back shares. I mean it worked out great for CEO who made 100 million selling his shares shortly after that, but it shows they could care less what to the company or its employees.
Working for them thought me the value in being happy where you work, money isn’t everything. Also, compared to other airlines their compensation is far from the very best.
Well @ Corey.. I’ll say we are both adults and can agree to disagree. Sounds like you had a bad experience that was more of a “local” issue than a company issue. I will admit there are some managers who could be a little more empathic and I too work for AA, Delta and Alaska. Not sure if you worked in a Hub or field station. Pay is definitely the same or better than other airlines according to my group of friend who are all in the aviation industry. Could leadership have made better decisions? Absolutely. A unionized workforce does put a strain on making “exceptions” for some employees because what you do for one, you had to do for all and as we both know you have some really good employees and you have a few bad apple that will ruin it for everyone. I’m sorry you had a bad experience in the business but whats most important is that you are happy now! I guess we will all see how this turns out.. take care and be well.
Victor…” Pay is definitely the same or better than other airlines according to my group of friend who are all in the aviation industry”
That statement alone shows you have no idea what you are talking about. Pay at AA trails DL and UA by a considerable amount.
@Mark. Not sure what parameters you are using but I would check those facts to the average 10+ year employee at the Big 3. Not sure what carrier you work for.
I know first hand AA sucks to work for. Thank god southwest took me on 7 years ago. As far as pay they are finally kinda catching up to the industry or southwest. They do treat there stockholders better than employees. Hense why there balance books are far by worst in the industry.
As far that’s getting laid off by seniority 30-year employees including myself have been laid off and been relocated three times that is part of the business we’ve all been there and you just have to earn your time.
One thing nobody is addressing that American airlines is eliminating Union administrative jobs and bring it in management to take over those jobs.
Yes, American airlines is laying off a lot of people but it’s mainly Union people more than what they should be and taking the management that should be laided off and putting them in jobs that we’re Union jobs to save their managers jobs.
Doug spending his time looking for a handoff would be better spent looking at trying to fix his damn airline’s problems. Then again, he’s part of the problem. Made deals with the unions to gain their support during the merger, was slow to adapt to what was really needed to run the airline responsibly, and purged too many of the original AA leadership (who’d dealt with problems of this magnitude) and replaced them with far less experienced people who helped run US Airways into the bottom feeder they were known to be.
The contrast between Parker and Scott Kirby is astounding. Kirby’s making tougher calls and coming out ahead at every turn. Looks like the Board made the wrong decision on who to fire three years ago.
I dont know how the non union position employees get treated. But where i am at, Straight up this is the most spoiled I have been. I have worked much harder for way less money without even given the option to relocate by taking somebody elses job with lower senerioty. Yes we did vote on the contract and i have never been able to vote on a pay raise untill this year. I know horrible timing during corona.In real life outside of AA you have to move up the ranks for a pay raise and most companies always have an excuse to say you are not the perfect worker on evaluation to avoid your pay raise maybe good but not good enough. In real life companies pressure you to avoid osha regulations but when uncle sam backs your paycheck suddenly it is ok spend the extra money ,spend millions. By the way the contract only require 8 days notice ,30 days is a curtisy and we dont know yet if the government will extend and we keep our jobs yet, sep 14 we only find out our award incase gov does not throw more cash in.
Hey Duggy, throw a bone to those few customers you have and eliminate those change fees.
American Airlines CEO Doug Parker stole from employees and cost employee their jobs. Employees were told if they took concessions they would reap rewards later. He did not honor agreements made with employees. He threatened them to take what he offer and get even less. He treated American Eagle employees the worst. They did not reap and rewards. They were striped of planes they were promised. Pay increases did not come. Many lost their jobs.
Employee in very expensive city had agreements to top out within 2 years, an agreement made at the time of hire, was later changed to 8 year last I heard. This was stealing thousand from low level employees who agreed to move to very expensive cities to work at LAX, JFK , SFO…. People moved to place where the cost of living was 3 to 4 times more. Some left families behind, therefore they now had to support 2 homes. Some sold there homes and moved in with family or a smaller place believing in 2 years they could afford to buy a new home in their new location. Some borrowed money to make it through the move and the 2 years believing it would be okay and they could pay back everything after the 2 years. All these employees should have been grandfathered in and American Airlines CEO Doug Parker should have honored the agreement made at the time of hired. If they wanted to changed it for future employees, who accepted the 8 years agreement at the time of hire that would be acceptable. It is not acceptable to renege on an agreement when employees made financial agreements and decisions based on that agreement. I sure he would not like that if it were done to him or a member of his family. He made life very hard for these employees.