Earlier this month American Airlines brought the former Northwest Airlines CEO, who led that airline through bankruptcy, onto its board. He had a poisonous relationship with labor, so naturally some work groups at American are concerned what the move signals for them.
The subject of Steenland’s addition to the American Airlines board came up at the end of the carrier’s ‘State of the Airline’ question and answer session with employees following their third quarter earnings call, and Parker explained that Steenland was added for his airline experience – something the board previously lacked – and not for a 15-month mechanics strike where he called management and replacement workers “the dream team” of maintenance groups.
Doug was CEO of Northwest when they went through some difficult bankruptcy times….maybe people because of that say ‘he had to go through tough times at Northwest with labor’ I know. That’s not why he’s joining the board. That was a long time ago.
Doug, what he brings, is great expertise frankly for our board. It helps me and the team as well. But our board – which is a fantastic board – doesn’t have anyone on the board with airline expertise, that has worked for an airline before. That has an impact on their deliberations and their ability to understand. Like I say they’re a fantastic board. But so we’ve been looking for a little while for someone that could address that need.
And Doug Steenland, in addition to doing that since he’s left Northwest, is a world class board member. And has been asked in many cases to become board members of situations like the Chrysler situation, of AIG, he’s on the board now of Hilton. He’s a lawyer by trade which tend to be good board members as well cause it’s largely a legal process, with really good airline expertise it helps our board.
…If we were gonna have issues with our labor it would be the management team, it’s not a board issue.
Parker noted as well that airline President Robert Isom “worked with Doug for a long time at Northwest.”
Now, two important questions to always ask to understand a situation or a decision,
- What’s different?
- Why now?
Parker identifies ‘what’s different’ in adding Steenland is that he has airline experience. It’s striking for Parker to suggest that the Board’s “ability to understand” has been “impact[ed]” by lack of relevant experience. But it seems to be an important question then, why now? Why does the board need experience running an airline now that it didn’t have before?
There seem to me to be three plausible scenarios.
- Opportunistic it just so happens that the discussions came up with Steenland, and he decided he’s available, so everyone jumped at the opportunity. If anyone had thought of it before, made the connections before (but Isom already had a relationship!), they’d have done it. It’s just fortuitous.
- It’s not really ‘now’. This was something in the works for awhile, perhaps before the pandemic, and it was simply delayed by the current Covid crisis. There seemed to be a critical mass of discontent with American’s management last fall after they lost their planned joint venture with LATAM to Delta.
- The board wants someone now who could step in and run the airline on an interim basis. When Jeff Smisek was removed by United it happened in a hurry because of a federal corruption investigation, and Oscar Munoz had no airline experience. Many have wondered in the past why the board would have put up with a management that had alienated shareholders, employees, and customers. My sense is that the pandemic gave Parker a pass, but perhaps not everyone is happy.
Sometimes a cigar is just a cigar, Parker answers ‘why Steenland’ but he doesn’t answer ‘why now’. Nonetheless it’s striking to hear the CEO of American Airlines say that American’s board has been impaired in its ability to understand issues facing the business prior to adding Steenland to its ranks.