Doug Parker is the retired Chairman and Chief Executive Officer of American Airlines, and the man most responsible for consolidation in the U.S. airline industry. He succeeded in his single-minded quest to lead the world’s largest airline, and he has government cronyism and taxpayers to thank.
Now he’s a board member at Qantas, and has a charitable foundation that supports minorities in aviation careers – especially pilots – though he shouts American Airlines interests from the rooftops even when they’re contrary to developing minority talent in aviation (by blocking non-traditional paths to becoming a pilot when it favors American Airlines competitive interests).
He owned over 2 million shares of American Airlines stock when he stepped down. At Investor Day in 2017 his company stock was worth about $100 million. Today those same shares are worth around $20 million. Lucky for him, he sold millions of shares before the crash – with today’s share price hovering around the lowest level since bottoming during the pandemic, when credit default swaps suggested high likelihood of bankruptcy for the airline.
Parker is taking victory laps with flight attendant union head Sara Nelson over their ability to work together to secure three rounds of massive subsidies during the pandemic. Here he is on Instagram:
Last week, @flyingwithsara and I were asked to speak at the #jffhorizons summit in Washington D.C. It’s always a pleasure to share a stage with Sara and the topic they asked us to discuss — how we worked together to pull the US airline industry through the COVID crisis — is one we’ve covered many times. So it was easy duty.
Interestingly, we found the story tells better with age. That’s because today’s audience is less interested in the blow-by-blow inside stories about the players of the time. Which allows for the broader message of the story — the lesson — to get more attention and discussion.
The story is that Sara Nelson, a labor leader, had the courage to reach out to industry executives with a plan that was good for the corporations but also good for her constituents. And we executives were willing to listen and to work together with labor. And all of us were willing to trust each other. The result was an incredible piece of bipartisan legislation that saved hundreds of thousands of jobs and kept the US commercial airline industry operating through a national crisis.
The lesson is we actually can get important, creative, bipartisan legislation passed in today’s polarized America. It won’t happen by continuously asking our legislators to reach across the aisle — that is extraordinarily difficult for them to do on their own. But it can happen if concerned citizens on each side of an issue are willing to work together to develop constructive compromises.
It just takes leadership. Not by congressional leaders, but by all of us — people like Sara Nelson that are willing to work with the other side for the sake of a better future for all. I know it sounds crazy, but it works. I’ve seen it. And I’ve got the story to prove it:).
For Parker and American, this was the heist of a lifetime. He spent all his time in D.C. lobbying and Nelson played a key role. Without Nelson’s cover with the narrative about workers, and bringing along 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 happened 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 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). Parker furloughed more workers than any airline CEO in history.
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.
American took about $10 billion in direct subsidies plus subsidized loans. It was the scam of the century, and now he’s taking victory laps. 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 $7 billion. 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 (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.
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, leave American Airlines struggling the way it is today.
Who was it who said a thief (and in this case, an accomplished scammer) sometimes wears a suit and tie?
@Gary, in all my interactions with Vernon, I was constantly impressed with his devotion to finding “the truth” and not convincing you he had it. More than once, I observed a conference presenter criticize a conclusion on one of his experimental papers. His regular response was to suggest a co-authored new project with the critic to address the issue. I’ve interacted with a lot of brilliant people. With little exception, their humility was profound.
Parker’s second biggest coup was to sell out to Isom and his America West cabal, who in turn completely destroying a once-vaunted airline and assumed its stories name for their ***y airline.
RIP AA.
Long live America West. Not.
Good story. Very thorough and balanced. A good read.
Parker’s biggest failure was leaving Isom in charge. That idiot may well destroy AA in record time. I fear I stayed on in a toxic work environment for lifetime flight benefits for nothing if the airline goes up in smoke.
US Airlines lost 97% of the revenue effectively overnight. The “heist” against the taxpayers kept airlines in business. Without it, no one would have survived. And if they somehow did, they would have emerged from COVID a fraction of their size. Americans want to travel again and see the world. I wonder how you would feel if flying wasn’t an option anymore because 90+% of capacity got wiped off the face of the earth?
Everything Parker said can be reduced down to four little words…
“Let them eat cake”
heshould read Tolstoy. Just How Much Land Does A Man Need Anyway
Doug and Isom ruined AA. America’s oldest legacy airline once known for premium service and destinations. Isom should do himself a favor and leave before his reputation gets worse for being a CEO that has failed Americas once greatest airline.
Same plane, different name.
@ Paul — You should watch thr movie “Origin” and then report back.
Your dislike of Doug Parker is bizarre — much like the way many liberals now hate Elon Musk even though he is an obvious visionary. The US airline industry needed consolidation to survive. There is no capital intensive industry in the world that has as many players as aviation, and it was inevitable that the US wouldn”t have a dozen “major players.” With remarkable business acumen, he took his lousy hand (head of tiny, irrelevant America West) and built an empire — all while forcing the much needed consolidation. People like you like to whine about consolidation and airfares, but the reality is that these mergers have NOT resulted in higher fares (indeed, that”s now a bit of a problem for the industry).Compared to inflation in almost every other sector of the economy, airfares are still the same nominal price they were 30 years ago. And having three big players that can compete in the international travel marketplace is a huge benefit for America.
As far as the Covid bailout goes, Parker and the unions did exactly what any smart leaders in their positions would have done. And while you call it a “heist” on America, remember our hysterical leaders shut down the industry because they were stupid and afraid, and not because of actual science. Nothing they did with Covid ever helped America. If the gov’t had shut them down and NOT given them subsidies, we would have had MORE consolidation. Would you have preferred that?
@Chopsticks “The US airline industry needed consolidation to survive. ”
What airlines did was legal, and should have been in a world without government barriers to *entry*. Airlines needed chapter 11 to survive, and Parker scuttled American’s bankruptcy early by acquiring the airline in the midst of its process and cutting short changes that would have helped it prosper.
“As far as the Covid bailout goes, Parker and the unions did exactly what any smart leaders in their positions would have done. ”
Yes, they stole money, in legal fashion. But they should still be called out for what it was.
All I am doing here is saying that Parker’s narrative about it is bullshit.
Throughout Parker acted legally and in his own best interest. It wasn’t in the public interest. He wasn’t a savior – for his employees, the airline, or the country – and that’s the silly narrative I’m countering.
@Miles – that’s simply wrong. American Airlines would have gone into chapter 11. It’s been there before. US Airways was twice. Shareholders would have been wiped out instead of taxpayers. The idea that flying ‘wouldn’t be an option anymore’ is rather silly. Planes would still be there, and airports and gates, and pilots, and aircraft mechanics…
Amusing article for me….one of Doug Parker’s college friends. I’ve known the man for 40+ years and can tell you with confidence and in chorus with all his friends that the man has “no ego whatsoever”. In addition to being the smartest person any of us have known, he is also one of the most thoughtful and loyal people you could ever meet. Did Doug avail himself and his company of taxpayer funded subsidies? For sure. Who wouldn’t want to do everything possible to insure the survival of his Company, the jobs of his employees and the investment from his shareholders. My reading of Mr. Leff’s hit job was that Doug brilliantly and masterfully navigated career accession, mergers, asset triage, unions all with a goal of rewarding shareholders. A round of applause please for Doug who did it all with dignity and grace in the face of story seekers nipping at his heals.
I might be wrong but it sounds to me that “Chopsticks” may not have understood the article or…… Who knows, he seems to be defending Parker or maybe there is a vested interest here. I still stand by my earlier statement “Airlines, the most inept industry in the US” maybe I didn’t understand until now !
@Miles You get the award for stupidest comment on this entire thread. People like you always cry out for government intervention as if the world is going to end with insolvencies when in reality it’s completely and totally unnecessary. To Gary’s point, the airplanes, pilots, and mechanics don’t vanish into thin air simply because an airline goes bankrupt. As long as there is demand, new investors will take over to generate supply.
@Mike…The comment by Miles reminded me of a quote by Murray Rothbard.
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
@Mike Stratis “Doug brilliantly and masterfully navigated career accession, mergers, asset triage, unions all with a goal of rewarding shareholders. ”
He “brilliantly and masterfully navigated career accession, mergers” and while he may have had the goal of rewarding shareholders (he was a large one himself) he failed at that last miserably.
And it all came at the expense of taxpayers.
“Who wouldn’t want to do everything possible to insure the survival of his Company” is a fair enough take, but it shouldn’t doing so in such amoral fashion shouldn’t be *lauded*.
My objection – and the reason for writing this – was the self-serving and misleading narrative Mr. Parker offers. And since it’s such an important matter of public policy, involving tens of billions of dollars, the truth matters.
“the man has “no ego whatsoever”.”
I have written many times that “self-deprecating Doug is the best Doug.” But there’s no question that his career and decisions were driven by a desire to run the largest airline himself, and that the actions he took to do so came at the expense of many.
Privatize the profits.
Socialize the losses.
Rinse (do the PR book and speaking circuit)
Repeat.
Don’t forget AA immediately turned around and invested $200M in Gol. How’s that doing now?
Nicely written article. Thank you!
Doug Parker might have been great for any corporation that does not have customers, for sure. He may actually succeed in that given how his lieutenants are continuing the race to the bottom. He talks about better future. Find me a single flyer on AA that can say that anything is better on AA than it was before him.
Ralph got it.
America’s speciality is corporate socialism and socialism for the wealthiest. This enables the privatization of the profits, socialization of the losses, and then going on to seek the next marks to fleece in much the same way as before. Doug Parker played that game well — including by getting unions to go along for the ride in lobbying on Parker’s behalf.
I once owned a food business that was forced to shut down for a month by a state due to a fire.
The thought NEVER occured to me that the taxpayers should pay my bills and employees (38) even though I did not have business interruption insurance. Of course I only had 38 voters, not the hundreds of thousands of employees that the airlines have . PROOF once again that there is safety in numbers.
The AA board didn’t want that merger. But Parker wouldn’t go away. I think he showed up to shareholder meetings. Now AA will fold.
What an absolutely bizarre article.
So much for American exceptionalism. Make America Great Again? That’s a laugh. We’ve fallen behind in everything. We’ll get further behind if the GOP has their way and eliminates every regulation and government agency that regulates corporations. We can’t have the fox guarding the henhouse. That’s what they think will work. It won’t.
I’m a union member 35 yrs from Piedmont to American. I was laid off from 2002-2007. Stephen Wolfe and Rokesh Gangwall gutted our airline from ’96-2004. They used 9/11 as a good reason. I would fact check the layoff information. I think Wolfe and Gangwall laid off many more than Parker. Parker bought us out after 2 bankruptcies as head of America West and got us out of trouble and called me and thousands back to work ’06-’08. At the pandemic, he had an opportunity to gut like Wolfe and go into bankruptcy but he did the right thing for the majority of us. You want bad CEO’s try Wolfe, Lorenzo. Yes they all including Parker walk away with golden parachutes which irritates me however Parker demonstrated a lot of good things for common people that worked for him.
In the Don Henley song “Gimme what you got” a man with a briefcase can steal more money than a man with a gun. They should all (corporate and union heads) be investigated and locked up, but if the lobbying of the government isn’t corrected, this will continue.
I remember how we as employees felt as a trusted CEO of our company along with the union held a meeting with all employees in maintenance departments basically demanded concessions to overt bankruptcy and then when we as employees reluctantly agreed what did the do rounds of layoffs bought out TWA this was on Carty’s term as Ceo he then walked out the front door with a very lucrative Golden parachute while the employees could barely keep their own families feed, and we still aren’t up to industries wages, so why is this allowed to ha0pen again because of the Board of investor sure we will vote you get what you want as long as you grease our palm to hell with the uneducated we out smarted them again stupid employees scared to get laid off will agree to all of what we make them believe. Solution : FIRE ALL BOARD OF INVESTERS AND HAVE EMPLOYEE OWNED PERIOD.. ITS THE EMPLOYEES that keep the company profiting month after month years of profits walk right out the door. Vote that the company or corporation is owned through contributing to its success.
Isom sold his house in Charlotte and Dallas. Bought a house in Grand Rapids. Hope he is on his way out. A vile human being that everyone detests at AA.
I would never accept a dinner invitation from D.P.; he will make U pay…..