Before the pandemic American Airlines underperformed the industry. They had more debt and lower profit margins. They had managed to alienate customers, employees, and investors alike. Their own data shows they had chased away frequent flyers.
The airline had one excuse after another, from the grounding of the Boeing 737 MAX to disgruntled mechanics, for why they failed to meet their potential. Their response was to double down on their existing strategy rather than change course.
They’ve even promoted twice the executive responsible for last summer’s operations.
When American Airlines lost their LATAM partnership last fall the floodgates of criticism finally opened. People were openly asking how the Board of Directors could abide a plummeting share price and broken operation at an airline which seemed strategically adrift?
Alison Sider of the Wall Street Journal reports on how far this really went (emphasis mine),
The airline promised 2020 would be better, but investors were restive after years of lagging profits and share performance—some began discussing among themselves shaking up the airline’s management and reached out to potential replacements for Mr. Parker, including current and former executives at rival airlines, said people familiar with the discussions, though some of the talks didn’t advance far.
“It was a hard year,” Mr. Parker said. But “I didn’t feel particularly pressured.” John Cahill, American’s lead independent director, said the board wasn’t approached about any such plan and never considered a management change.
Doug Parker testifying on the need for subsidies to the US airline industry in 2001
American Airlines rolled out a new standard domestic product to their customers, and the CEO didn’t test it out himself before it launched and didn’t even bother experiencing the core product until it was in the market for 9 months. When the airline pulled meals off their flights in the current crisis the CEO didn’t even know in advance. And the airline has lacked a mission statement though they finally did come up with an anodyne slogan and he’s great in Halloween videos.
However now they have the excuse to end all excuses, the global pandemic. Although CEO Parker will have to revise how he sees his legacy.
Why would a CEO need to personally sign off on food service guidelines? Seems he has the right leaders to trust on those matters.
Same for the seat – should have leadership you trust.
Now the actual rollout of the seat shows that leadership underneath couldn’t make the right decision, but a CEO not trying a seat isn’t failure in itself.
@Greg: If you told me that the seat was going to be economy for a small sub-fleet, I’d agree. These are the Oasis seats that are supposed to form the core narrowbody Y & F product. Parker shouldn’t be involved in all the little details, but he absolutely should test it and perform final sign off on something like that.
So did someone at AA run over your dog or steel your girlfriend in high school. These articles (this one, the food two) are silly attacks. A lot of other board with professional travel writers have commented too, that this is personal, not factual attacks on people and product. DL and UA are doing much the same changes that AA is making (DL seat pitch is also 30 inches in coach; UA has eliminated most meals, etc. . .).
Not sure why the anger toward AA and not just factually reporting and commenting. I am considering dropping this site from my daily read due to the tone, unprofessional and lack of objectivity.
I hope the tone and attitude of this blog changes or your lose one reader at least.
Gary hates Parker and AA so much. So jaded. Its really sad. Its like he thinks if he hurls enough half truths out there the universe will remove Park from existence.
Also in that article it was said they never looked to change management.
“John Cahill, American’s lead independent director, said the board wasn’t approached about any such plan and never considered a management change.”
I too would have been surprised if meal service changes was a detail that made it up to the CEO of a company that large.
However, the new standard domestic seat product – the bread and butter of the airline’s revenue – I would expect all executives to have tried. Do we not expect the CEO of Marriott to stay at a Fairfield every now and then, especially if the Fairfield is cutting the size of the room in half and letting people share toilets, so he knows what he’s offering customers?
The Board is almost exclusively made up of deal makers/bankers, except for Cahill and Hart. It seems like a transactional crowd with little to add about running an airline beyond financial engineering. I’m very surprised, though, that AA’s relative performance hasn’t triggered a more actionable response.
Management changes the board can use when things get too “hot”. As things continue to decline, he will eventually be replaced with all of the usual buzz words talking about a moving the company forward and anything that is wrong, will be blamed on previous management.
Right now it doesn’t pay to change much since the industry is toast for quite some time, probably at least until next spring. And no matter how much travel bloggers and some others pretend, it ain’t coming back anytime soon and it isn’t safe on a packed plane like AA is flying at times.
I knew he was headed for moment after he made the statement “American Airlines will NEVER lose money again”.
This lack of having any plan for “worst case” scenarios is plaguing our society. Now everyone wants to be bailed out, and there is no Pandemic plan. We’re all screwed.
I just about lost it when I saw DUI Dougie chugging from the red solo cup in the Halloween video at the 28 second mark: https://youtu.be/DQAd7XJrEt4?t=28
It’s not like AA has any other primary business than transporting customers and a seat or food affects every single customer. I can’t see how that shouldn’t be reviewed by the CEO, if not that then what else should they be reviewing?
How do I opena savings account whats the name of the bank that gives u miles on ur depisits?
The CEO is absolutely responsible for the product his company provides. As a long time employee of AA I’ve seen how he asks for input from employees and then doesn’t give credence to the observations of the front line employees.
I happen to agree with Gary and his opinion of AA. I have flown AA with great loyalty for over 30 years and am a multi-million miler with them. Unfortunately during this time I have witnessed an excellent, class-leading airline with the best loyalty program decline into what today is a minimally acceptable experience (even worse that US Airways used to be). I’ll still fly AA when it makes the most sense but whenever possible I now choose Delta.
American may have a strategy of competing directly with Spirit, Allegiant and other low-cost, no-frills airlines, but in my opinion, this is exactly the opposite of what they should be doing. They should focus on attracting customers (particularly profitable business travelers) not losing them to other carriers.
Gary is right, Parker is simply out of his depth. Parker was fine running a small regional discount airline out of Phoenix. The problem is that he’s trying to run this airline the same way and the differences haven’t registered with him. Obviously this is a disaster.
What’s needed is a new CEO. American needs someone who actually understands accountability and more importantly, customer service. Parker’s actions have -partially inadvertently- turned a pretty well run airline with a huge base of loyal customers into a dumpster fire. The way to reverse this would be to bring in someone very high up in Starwood, for example, someone who truly understands that if you treat your customers and employees well, people will intentionally choose to spend money with you. Basically try to reverse what Parker has done. I don’t have much hope though, since the current board has been myopic enough to retain Parker despite his obvious ineptitude.
Less than 30 days out from travel date, tried to order meals well no luck, the order things is broken, called tech support they have no clue but said try again in 24 hrs. Should work.
Doug Parker and his cronies should have been fired a long time ago. I worked there and witnessed the wreckless spending (spending like drunk sailors) by the CFO Derek Kerr ( and Doug. They were cocky, greedy and irresponsible. Doug took all his compensation in stock because he knew that if the stock did actually go up, he stood to make a killing. Thats why he directed Derek to buy back billions in stock, trying to artificially boost the share price. Sheer greed. Unfortunately for him and other investors, it went the wrong way completely. It is a legacy US boys club there and they should all be fired, including the Board of Directors. You pay these guys at the top based on the quality of their decisions and from what I saw every one they made was the absolute wrong one (Oasis, Buybacks, New Campus, $1B out of contract increases for Pilots and FAs). Good luck to those still there until Douggie Fresh aka Doug runs the place into the ground!
I’m a million miler with American. Now as it turns out I have to tell people that my gold card means absolute nothing. But I have to maintain it because they still let me have one bag free. Looks like I chose the wrong airline. Really sad because they really were great in their day.
I think Mr. Parker and the C-suite should return to salaried only. He was too kind to forfeit his salary for that pittance the Board awards him in stock options.
I hate to compare a Middle East carriers leadership to this BUT, the CEO of Qatar Airways most certainly is involved in the seats and meals served, so i would say the leader of a company should be at least privy to and understand the impact of such changes to the product which is the model and of its existence. Service!