At last week’s American Airlines employee town hall one flight attendant asked CEO Doug Parker whether he regrets American’s decision to let airline President Scott Kirby go and elevate Chief Operating Officer Robert Isom to the role of President. Kirby has since gone on to become United’s President.
What did you ask me, Scott, was that a mistake? Look this is personal so I’ve got to be careful, right. But I’m so happy with where our company is right now, the leadership team we have in place. Robert Isom is phenomenal and making a huge difference in this company. Scott’s an amazing executive and is doing great things at United.
The problem we had was we had a lot of really good executives. And as we sat at the board level and talked about succession planning, we had a real concern about our ability to keep that team together. Someone was going to leave. So rather than watching and guessing who that was and trying to react we were proactive.
We’d like to keep me, Scott and Robert and keep doing what we’re doing for the last 20 years together but it doesn’t look like it’s going to be the case. So let’s not let something happen that we didn’t manage so what do you want to do, what’s the best scenario of two of those three, and we decided the board decided it was me with Robert.
So we had to have Scott go do something else. And he did, he’s at United and he doing a great job he’s fantastic.
But that’s what happened and it was the right decision. So I feel good about that one as well. Actually I feel terrible it was one of the worst days of my life when I had to have that conversation with Scott, because he’s a friend of mine, we worked together for 20 years. But it was the right thing to do for the long term for this company. That decision I believe has served American well and will serve us well in the future.
Here’s what I think happened as the Kirby situation unfolded.
- United considered American’s COO Robert Isom for their President role. He disclosed this to Doug Parker.
- Parker and the Board discussed whether to make a counter-offer to Isom. They realized they couldn’t keep both Kirby and Isom. They decided to keep Isom by offering the President job at American.
- The game theory may have worked something like this: If they lose Isom, they’re still likely to lose Kirby at some point. Kirby will want to be an airline CEO, but Parker isn’t ready to go anywhere. So if Isom leaves they eventually lose both. But if they retain Isom, he’s never been an airline President and he’ll stick around awhile.
- So Kirby was out and he went and got the United President job.
- Since American was firing Kirby after all his years at America West, US Airways and American they didn’t get a non-compete in exchange $13 million and lifetime travel as severance.
- Kirby scored a big win by pocketing a severance and a new airline President job — but he probably thought it would be bigger. United put Oscar Munoz in charge of the airline when dumping Jeff Smisek as part of a federal corruption probe. However Munoz didn’t have airline experience and he had health issues. I imagine the expectation was for Munoz to become Chairman and Kirby to take over as CEO reasonably soon.
- But then a United passenger was dragged down the aisle of a United-marketed flight and beaten by officers. Munoz even responded to the incident apologizing for the inconvenience to others and not the beaten passenger. Munoz didn’t get elevated to Chairman as expected.
Investors don’t love much of what Kirby has to say but if there’s a leadership change it seems most likely to be at the top so he may get his CEO shot after all still.
Scott Kirby is one of the most ‘by the numbers, in the spreadsheets’ executives in travel. US Airways refused to add inflight internet until 2012 when he could actually see the numbers that customers were booking away from the airline because they didn’t have it. It was Kirby (and Andrew Nocella who departed American for United with Kirby) who pushed for AAdvantage to copy Delta and United in its transition to a revenue-based program, rather than adopting its own model.
He’s a phenomenal executive sorting through problem operations and one of the most earnest and interesting people to listen to in the industry. My thinking at the time was that both airlines might be made better by the change, although it’s not clear that Robert Isom has taken a decidedly different tact at American than Kirby had. And while United has its problems Kirby isn’t likely in my estimation to ever be a proponent of customer experience.