American Airlines has more debt than competitors and financially underperforms the industry. It’s had unhappy investors, unhappy employees, and unhappy customers. In fall 2019, after American lost its joint venture with South American megacarrier LATAM to Delta, there was a lot of speculation that management would be ousted. There was a low-level leadership reshuffle, but no one at the top left.
Then the pandemic hit and, like with the grounding of the 737 MAX, poor performance was largely excused. The Board of Directors of American Airlines, which has been built to include even a former college buddy of CEO Doug Parker, has largely given management a pass.
In June the American Airlines operation melted down over insufficient Boeing 737 pilots. At the end of October it melted down over insufficient flight attendants. The airline rebuilt its schedule where anything going wrong, from weather to sick calls, would cause it to crumble. Those things happen regularly in the industry, and they lacked the margin for error. They even took $10 billion in direct taxpayer payments to keep all employees active and ready to fly… but did not do that.
A listener of the Airlines Confidential podcast asks whether recent problems at American should lead to consequences for top management?
And host Ben Baldanza, former CEO of Spirit Airlines, suggests there’s a case to be made for this – not just because of the recent flight cancellations, but because of an ongoing history of underperformance across a variety of metrics.
It takes a lot to run an airline. And airline’s management certainly should be held accountable for the way the airline runs, by its customers should be held accountable for its customer service, by investors should be held accountable for its financial performance, by its employees it should be held accountable for how are we treated and do we have good jobs and things like that?
And I think there’s no question that American has struggled on a number of issues over the last number of years. I don’t think that one weekend of 2300 cancellations is the reason to clean house and bring in a whole new team. But I think some could make the case that American has underperformed Delta for sure and United now too who’s being more aggressive and seems to be much more progressive on a number of issues.
So whether or not the Board at American thinks that, and whether or not investors are strong enough to push that, and whether or not customers would vote with their feet and say they’re not going to fly American which is kind of tough if you live in Dallas or Charlotte or Miami. So I don’t know it’s a tough issue and I think clearly that level of accountability has to matter, but whether or not there’s enough at American to say that a wholesale change happens I’m not sure.
Baldanza ultimately concludes that there’s not better replacements for current management such that the Board of American Airlines should pull the trigger, but he’s clearly sympathetic to there being cause to do so.
American Airlines is already preparing for CEO Doug Parker to retire so it would take a lot for that to be forced earlier than planned. Here’s a tribute to Parker’s career, produced by American Airlines for his “Wings Club Lifetime Achievement Award” and my take on his legacy from before the pandemic, the two are quite consistent since the ‘official’ version focuses on his ability to take taxpayer money on multiple occasions.
The video is worth watching just for its introductory segment, by the way, with American’s Steve Johnson saying that when Doug Parker traveled to New York after US Airways 1549 he left his briefcase in the parking garage – and they had to evacuate US Airways headquarters in Tempe thinking it was a bomb.
American Airlines President Robert Isom is expected to become CEO, so that means more or less a status quo future. Meanwhile David Seymour was elevated to Chief Operating Officer at the airline after overseeing its disastrous summer 2019 operational meltdown. Operational meltdowns don’t appear to have consequences at American Airlines.
Doug Parker has criticized the board he built for its lack of airline experience. He brought on Isom’s former mentor at Northwest which may make the leadership handoff even safer.
We won’t miss Parker. May he hasten his retirement.
Please leave Doug. Just go.
Wait CEO from Spirit right ??? LMAO !!!
I won’t fly them. My dad was a former AA exec and he won’t fly them either.
I’ll bring up college football:
Texas beats Texas Tech and Texas Tech fired their coach
Texas beats TCU and TCU fired their coach
What would it take for Texas to play American Airlines? lol
That’s why industry awards like this are a joke.
His biggest accomplishment historically was having Dr Pepper blow out of his nose
His results speak loudly and clearly (NOT!)
What’s extraordinary is how many people they got to film this video and drink that tainted kool aid Jim Jones style
I got into a little argument with an AA flight attendant during a crew layover in London. Our companies crew hotels are the same. She commented that our flight attendants are stuck up snobs. I countered with our JD Powers ratings don’t show that but…OK that’s your opinion. Your CEO Dougie Parker TOLD you 100,000 employees that if you do what THEY tell you to do, you’ll make a profit. YOU have nothing to do with AA’s profitability. On the other hand, our CEO tells us that we have EVERYTHING to do with profitability. If we’re doing our jobs, stay within the box BUT…if you feel the need to go outside the box, do the right thing first. Solve the problem whether it be an internal process or taking care of our passengers. If you have a better way to do something, let us know, we’ll pay you a nice bonus for that information. So, how’s Dougie’s “do what we tell you to do” working out, huh?
As a retiree I saw how Parker and his America West crew ruined a great airline like AA
Parker should have been fired years ago instead they give him an award. The world is nuts!
Very true! He should of been fired years ago! He ruined AAL. Bob Crandall is sitting back shaking his head!!
Clean house of all the current upper and middle management “leadership”. No more Team Tempe
Your AA hate boner is gross and just never seems to stop. All you Crandall fan boys need to COPE HARDER.
Quit rewarding trash “journalism”
Yet more proof that the Board and top half dozen management positions need to be replaced with capable people.
Bob Crandall, made AA 30 years here as F/A not always agreed with his decisions I’m proud to be AA employee I believe we are the best Airline
Don’t you ever get tired of bashing AA?
AA oh the hell. No please. I deserve better. I’d rather fly on DL. JETBLUE or United…….
Why are you always bashing AA. This seems to be a personal vendetta Gary.
It just seems time to be posting positive news about travel and air travel in general. Our news seems to be a negative feed in society. Why not turn your column around with what airlines are doing right and why people should travel again!! Positive energy!
I don’t know….Baldanza himself was terminated from Spirit…just saying….!
Sadly for the tens of thousands of us who were part of the greatest airline in the world, built by Bob Crnadall, we have had to witness the disaster of spineless Board after Board installing inept and incompetent managment after thier ill fated decision to move on from The Chariman. Just when it seemed like it couldn’t get any worse, along comes Doug Parker whose managment has succeeded in making it worse than USAir. Now the Board has gone from a bunch of rubber stamp robots to being controled by Parket installed flunkies so he will continue the freefall unabated.
Nice to have a article where everyone makes a negative comment. I wont fly AA, I will only fly X. I worked AA and they X%$@# . AA has the worse customer service, etc.
Please tell me ONE airline that is the BEST . Which airline is it that does not drag you off the plane to put someone in your seat? Which airline is it that cancels your flight due to “weather” and the next available seat is 4 days from now? Which airline does not treat you as cattle? Which Airline does not have PAX fighting with crew and PAX? Which Airline does not lose your luggage ? Which Airline flies you to every airport? Which Airline does not cancel flights after you have paid for reservations? Which Airline does NOT raise prices as you get closer to the departure?
Which Airline Does not have PAX like these Above that responded who are Karen’s because they did not get their Pre Flight Drink?
IF ALL your comments are negative you need to revaluate your life because it SUCKS.
Bill Baldanza leaves a trail of poor airline management in his wake. Just saying. He’s the guy driving the getaway car with Robert Crandall, Stephen Wolf and Doug Parker in the backseat. When they run out of gas (cash) they simply steal another car (airline). Or declare bankruptcy. What a gig.
Crandall was the CEO who publicly stated the US Government was absolutely wrong to direct them to place locked hardened doors on all US planes before 9/11. He stated, “We can’t afford it”. He stated the government should stop trying to regulate and oversee the airline industry.
I never heard him apologize.
Rather, he ran, not walked, to Washington DC demanding the government make AA not liable for 9/11 and the government implement a security system for airlines. The TSA was founded because of AA and it’s bully attitude that they knew better. A CEO can make or break a company. Crandall broke AA. I rest my case.
Those of us who remember Ben at US Airways laugh when we hear him critique other airlines especially on customer service. Ben wrote the standards for treating your best customers poorly.
Putting Bob Crandall even on the same planet with the other three mentioned just reflectes how uninfomred the commnetor is. The Chairman left behind a highly successful and powerhouse airline. The other three only had major train wrecks to show for thier incompetence and arrogance.
@IP
Just a few facts to keep you informed:
In 1993 AA lost $935 million under Bob Crandall. That’s a lot of coin on any planet.
Southwest kicked his ass from every direction. He blamed everyone but himself.
In 1997 AA grossed $16 million under Bob Crandall. He then screwed over his employees forcing his pilots to go on strike for a fair contract. President Bill Clinton ordered the pilots back to work and saved his greedy ass. Just 5 months later he retired with a bundle and became a board member of several companies, including Haliburton.
“…I’ve never invested in airlines. And I always said to the employees of American, this is not an appropriate investment… –Bob Crandall
Not only is Crandall on the same planet as Wolf and Parker, he’s from the same gene pool.
Keep in it real,
Jimmy Mack
Spell-checking myself…. that was $16 Billion in 1997. Billion with a B.
Keepin it real,
Jimmy Mack
@Mikey But it is just so easy…