Leadership Shake Up: Vasu Raja Out At American Airlines

American Airlines Executive Vice President and Chief Commercial Officer Vasu Raja has been on a leave of absence of sorts. Technically, though it was discussed internally as leave, the official line was that he was working from outside the office – otherwise the airline would have had to file an SEC 8-K about the unavailability of one of its key employees. I believed American when they insisted Vasu’s leave was totally, like really, not a thing because they wouldn’t want to commit securities fraud.

Just a week ago the airline went around on the record saying “Vasu’s not leaving.”

However today American Airlines announced that Raja “will depart the airline in June.” There was no quote from Raja. There was no quote from CEO Robert Isom. Nothing about the tremendous value he’s added to the company. He’s just out.

Steve Johnson, who was kicked upstairs to the role of Vice Chairman with Doug Parker’s departure and Robert Isom’s ascension to become CEO, steps in immediately to oversee the airline’s Commercial organization and to lead a search for Raja’s replacement.

Johnson was Executive Vice President of Corporate Affairs, in charge of government affairs, legal and labor relationship at the airline since it was taken over by US Airways. Before joining US Airways he’d been at low cost carrier king Bill Franke’s Indigo Partners, and worked under Doug Parker at America West.

  • American doesn’t just continue to lag financially – while other airlines report improvement in managed business travel, American does not – as it executes Raja’s strategy to de-emphasize that segment.

    There was a bet that they don’t need to discount to fill planes, so they’d earn more revenue at lower cost, and Raja owns that bet. While this hasn’t been a board that holds management accountable in the past, I suppose at some point Isom needed to throw Vasu overboard to secure his own position.

  • Vasu is responsible for the airlines Sun Belt strategy, focusing on domestic small ball and avoiding competition on the coasts while relying on partners for long haul, but we wouldn’t see a premium strategy without Vasu Raja in place.

    He’s always claimed that ‘the schedule is the product’ but the rest of American leadership is very much low cost and current CFO Devon May probably even more so than his predecessor Derek Kerr was. Network architect Brian Znotins has strongly articulated small ball strategy for some time.

  • If nothing else, Vasu Raja has articulated American AAdvantage as a key pillar of the carrier’s strategy and how he planned to differentiate American Airlines. He committed at Investor Day to “offering the highest value per mile versus any other program” when members use their miles.

In an 8-K filing which included news of Raja’s departure, American shared that it was reducing guidance for its financial performance:

I’ve always had the impression, including in talking with Vasu, that he’s usually the smartest guy in any room but I’ve worried (and written) that he usually believes that he is and I’ve heard him make some dubious claims figuring no one had the smarts to challenge him. He is a really sharp guy though, may be humbled by this experience, and could certainly come back a very successful airline CEO.

Raja’s compensation totaled over $12 million last year. American’s 8-K filing did not disclose what any exit package looks like.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Employees on food stamps , and executives raking in the big bucks . Par for the course .

  2. If only the AA board would be replaced wholesale, the airline would statistically flourish because this board sucks. Remember when they held the CEO’s feet to the fire? No – that never happened. The board has allowed management to continue the cycle of destroying a great airline.

  3. This reads like a textbook HR exit with cause…Gary or someone reputable should do a little more digging.

  4. Next week, United will announce there is a new Executive joining. Kirby likes to bring American people over.

  5. @Brian – nice dig, Vasu is certainly known for dropping F-bombs but that’s been true for many years, 5 years ago the airline opted not to post a ‘crew news’ chat with employees that he did because of too many f-bombs (they AlWAYS posted these back then)

  6. Well……BYE!

    One down, there are many, many more from US/AW who need to be gone next.

    @Gary, you were pretty gracious in saying he was the smartest person in the room. I would’ve just said he was arrogant and left it there.

  7. @DunkinDFDubya, I believe he is legacy AA, not part of the US/HP crew…he joined AA in 2004, way before the 2013 merger

  8. Vasu and Kenji take over AA in 2 years. These US Airways guys have no business running an airline like AA. They should’ve stuck to their core competencies in running a second tier airline like US airways

  9. I hope AA quickly backs up Vasu’s commitment to a significantly higher value per mile for AA miles than its competitors. There’s still very real value in the AA program, esp for domestic premium cabin and some transatlantic. And it keeps me very engaged with AA in a way I wouldn’t otherwise.

    No one on these boards has put forth a coherent alternative strategy for AA vs what Vasu has outlined other than ‘be premium’ which is not a strategy.

  10. My guess is the agency transition and impact on corporate bookings is what’s behind the move given the revenue miss, but we’ll find out more at the conference tomorrow

  11. @Rylan, thanks for that nugget. I did not know that.

    Regardless, the LUS/AW honchos need to be shown the door next.

    Just my .02, which in this economy is the equivalent of .000000000000001 sky peso.

  12. @ Gary — You sound like you approve of this behavior. I mean, is such language in front of employees or customers really appropriate for an executive at his level (or any executive)? Just because he has used this language for years doesn’t make it any less inappropriate.

  13. So so sad buh bye!
    Shedding crocodile tears all over
    Now with 500k one ways in business class the program is close to unusable
    He and his cronies have me in foreign programs abroad
    In other news one world partner awards are now non existent typically
    and if you find them in coach who cares?
    Things are so bad at American I’ve done the unthinkable flying delta who has/had the equally worst program before American crumbled
    but at least they fly non stop where I need to go
    I did 9 million miles with AA connecting to stay loyal and now guess what no reason to anymore
    Advantage Ponzi scheme
    charge so many miles to take back everything flyers earned

  14. I’m just waiting till AI or Musk clones Crandall’s DNA! American needs him badly and so does their stock! That was the smartest CEO of all time! Dump these mgmt clowns from UsAirwest and bring AA back to her former glory!

  15. Yucky stuff. The AAdvantage program was so pioneering in its day, but now it’s the same as any other program without its award chart. AA really needs to invest in corporate programs to get back to where it was. Nobody is willing to pay AA fares at NK service levels. AA also rarely competes against OAL fares without a nonstop in the market, so they have been losing people. Not a great commercial program.

  16. AA is trying to operate like a LCC carrier that wants to make money from its loyalty program.
    AA appears to have no strategy to retain passengers or their loyalty preferring to become a coupon shopping program.

    Flight dependability is poor and when flights are delayed or canceled with controllable problems, the answer from AA is a shrug.

    Loyalty has little or no value if it is only a one way street…

  17. AA is basically a credit card marketing company that has an airline as a side business vanity project. They have been in danger of going into a death spiral for a while.

    First step to turn it around: lock out the useless FA union that damages your brand on a daily basis, hire eager new hires that actually want to do the job, and develop a plan to offer an experience that commands a premium.

  18. One more casualty in the long, spiraling road to doom.

    AA used to be premium, now provides the type of junk service that people with means will avoid (see JD Power — highly below average satisfaction in the profitable First/Business segment). Nothing is more emblematic than this than removing screens from all its planes, including those who regularly do 5 to 8 hour flights — heard about this from countless people. Yeah, if I’m buying first, I’m going to avoid AA.

  19. I’ve interacted with Vasu both in person and by email. He has proven to be one of the most responsive airline executives I’ve ever dealt with … heads and shoulders above anyone from United. Based on what I saw and heard he was also respected by the rank and file, having “grown up” at the airline. AA’s loss will be another airline’s or travel company’s gain.

  20. Initial (non-professional) reaction:
    (1) I think the grandest professional slander that can be uttered in regard to an individual in a decision-making capacity is that of being a “brown-noser”.
    (2) Karma is a b****.

    I’m thinking back to that Holly Hegeman interview where, in essence, he threw the leadership of AMR Corporation under the bus – particularly when suggesting the AAL Group “wouldn’t end up like AMR”. I can’t help but wonder if that interview comes back to haunt him if he wishes to remain in the airline industry in a capacity similar to the position he’s leaving.

    A more tempered reaction – Raja would’ve been well served professionally if the airline had remained AMR Corporation, for AMR had a conservative, yet formulaic approach to grooming potential talent for advancement. The typical AMR play was the stint “around the system” – sales, operations, finance. AMR also cultivated a certain level of professionalism within the senior executive ranks – particularly those that would typically be tasked to present in front of audiences.

    The US Airways management has striven to be more relatable by being semi-informal. That Raja was perhaps able to “code-switch” to appeal to (or perhaps appease?) Parker, et. al. doesn’t surprise me with Raja being fairly youthful at the time of the merger. Unfortunately for Raja, he’s been great at verbosity and grandiosity – or, as James Brown once sang, ‘Talking Loud and Saying Nothing’. As such, he chose to adapt to the informality of the current organization. And, as such, he’s been hard to take seriously since the merger.

    Now, all that said, I’ll offer a (slight) defense of Raja. Though he had a position of significant decision making authority, he still reported to someone of higher authority. Whose to say that he didn’t merely execute a series of dicta from above?

    I think the experience of Scott Kirby at American may be instructive here.

    Some may view the departure of Raja as vindication or victory – a step toward meaningful change at American. To that, I’d say the succession management remains in charge.

  21. Stop with the Bob Crandell this isn’t the 1980’s. AA needs a brand NEW change from Ceo on down. There is a reason why UA got rid of Brian Zontoas. I hope that the shareholders force Isom to go outside of AA to replace Vasu. I am hoping for a Brett Hart, or someone from the DL tree. AA needs a lot of network changing. Also, stop dropping the ball on PHX. PHX could be what DEN is to UA.

  22. I can back up what @aaway said.

    In his book “Twelve Years of Turbulence” AMR/LAAs General Counsel Gary Kennedy said he did that stint around the system as that was Crandalls preference.

    The top heavy US Airways management team at AA did try to make the company less boring and more fun (see those videos of Doug Parker dancing) but it was inevitable at some point that the hateful old AA culture would return.

    If only they kept Kirby.

    Even better, if only they kept Horton and Vahidi.

  23. So, we see the wagons (board) circle to defend itself, and eject one of its more capable, but not especially liked, workers. Although AAdvantage continues to continually crumble around the edges, I thing it could have simply imploded without Raja’s oversight.

    Said it before and will say it again, there needs to be a wholesale sweepout of the dinosaurs of the board.

  24. The only reason I fly AA living in a competitive market is because of the network and the loyalty program. Vasu was never wrong.

  25. AA continues to alienate its best customers through some very backward policies.

  26. Agree with @Greg. This almost certainly has to do with the disastrous NDC rollout and the kicking in the teeth of all corporate contracts and deals with corporate TA/TMCs.

    The good news is UA and DL sat quiet and did not follow suit.

  27. Every time I read an interview with him, I was struck by his (unearned) bluster.

    I suspect that his departure has something to do with AA angering travel agents, making it harder (if not impossible) for corporate travelers to book AA fares on their (required) corporate portals, and then making it harder for the public to buy fares on their channel by adding a ton of upsells and extra clicks (simply to avoid basic economy). Not to mention botching the roll-out of the business program and NDC.

    It’ll be interesting to see if the goofy “America’s best small town CRJ200 airline” commercial strategy will change. Was he fired for the bad strategy, or was he fired for executing it poorly?

  28. More of the AA C-Suite needs to go. AA is in a bad place. Their only jewel is the mileage program. If they devalue that, they are just a turd of an airline

  29. Vasu is an symptom of a much larger problem in the C-Suite at American.

    Doug Parker and his hand picked sycophants decided not to invest in its premium product when the competition (and demand) went long, at the worst possible time. Of course, having a board of directors with zero airline experience only makes it worse.

    Isom and Vasu pulling over $40M in annual/total compensation speaks for itself. But Isom is getting good at PowerPoint defending his ridiculous pay package, so he has accomplished something for $30M.

  30. I think Robert Isom will be next. How do these guys live with themselves? Their full time employees ( Flight Attendants) are on food stamps while these guys made millions annually.

  31. When the talk going around is that someone isn’t leaving, it’s a sign that that someone is on the way out or some want that someone out.

    This sort of reminds me of how InternetBrands has dealt with the Community Director role on Flyertalk. It’s a role that has since been downgraded in a way by IB via the change of personnel that was done for that role in the fall of 2023. Since IB has gone even more cheap to try to placate the private equity bosses, even the IB Admin on the site was very publicly complaining about his pay. So it’s not surprising that the Moderators are trying to find a cheaper way to do the Moderator Dos while the masters of IB and FT try to hold the costs down for the site. What will the AA equivalent of that be, to make sure Vasu Raja’s replacement is given a less meaningful role and that others are given more to do for less cost to the company and decentralize the havoc?

  32. Raja’s going won’t be the only shake up that hits the organization. They need scapegoats and excuses to seem like they are taking action as part of trying to placate the shallow squeaky wheel types.

  33. Definitely looks like it could be termination for cause to me. I guess if they give a commercial justification then OK, but if they say nothing then that’s why. If it really is because of NDC then I wonder whether displeasure from BA or other long-term strategic partners is a factor.

  34. “ I’ve always had the impression, including in talking with Vasu, that he’s usually the smartest guy in any room but I’ve worried (and written) that he usually believes that he is and I’ve heard him make some dubious claims figuring no one had the smarts to challenge him.”

    As someone who has actually worked for Vasu for a brief time (he was my managing director when we were both in Corporate Planning at AA in late 2011, right before he went back to Revenue Management), I can say that the above quote is 100% accurate when it comes to Vasu. There were few people that could match him on airline knowledge, but when challenged, he used to double down on whatever he had said.

    I only saw him bested once, ironically in a conversation with an Ivy League airline nut who was interning with AA for the summer just for fun. He was both smarter and better versed in the airlines than Vasu, something exceedingly rare. He pointed out the errors in Vasu’s logic during a meeting and Vasu responded extremely aggressively and basically said that he’d flex his political muscles to get his way regardless. We all laughed it off since this kid was just an intern from Princeton who was just doing this for fun for the summer.

    Anyway, I guess Vasu is one of the very last LAA people to go. I am not surprised, he was smart and politically savvy. I do mourn the old AA every time I fly them though. During my six years at AA, they went noticeably downhill and now they’re an LCC in all but name.

  35. Let me start off by saying I absolutely love American’s Terminal 8 in JFK. What other major American airport has such a desolate and spacious and empty terminal. Great for me not so much for AA.
    Someone needs to take the blame for killing the lucrative northeast and west coast business. It’s going to cost way more to win back former customers than it would have cost to keep them in the first place. Someone has to pay the piper.

  36. I’m curious as to what occurred here. Certainly seems like a “for cause” axing, but what cause(s)? It could also be that Raja was a sacrificial lamb to buy CEO Isom more time if he’s coming under pressure from the board.

    Strange thing is it has appeared that the whole company was on board with Raja’s general vision and strategy. It would seem odd for the company to turn on a dime and oust Raja based solely on the strategies he implemented. The CEO ultimately is responsible for that anyhow. We’ll know more by seeing how long Isom lasts as CEO…

  37. @MRK got any more stories?

    Could be more specific with that Raja incident you just mentioned? I find it hard to believe that there aren’t more people smarter than he is

  38. The “leadership” that took over AA is infused with the “plucky little airline in PHX” mentality.

    They tried to superimpose the HP mindset on AA with disastrous results.

    BA was very unhappy with the distribution theory Vasu espoused.

    AA is a global airline, the America West’s small and cheap mindset is not what they need.

  39. Did AA oust the CCO without having a replacement ready to step in? Do they not engage in succession planning? Stunning for a major corporation of its size. But when a big company is overtaken by a much smaller one, and its executive team wrestles with running the big new toy, this is the result I guess.

  40. Well, looks like the restated revenue earnings which cratered AAL’s stock but which also took 2% of UA and DL in earlier trading might be a hint? Isom ain’t to take the fall looks like Raja was it. He likely deserved it.
    As someone who was always a solid defender of AA I have become one of their harshest critics. The airline is a joke. It certainly means to win the race to the bottom.
    @Dwondermeant has it on AAdvantage. I am in the middle of an ~850K RT PHX to LHR. How much???
    Outbound PHX-LAX, dispatch stole our aircraft for DFW, +1.5 hrs. AT LAX a FO called in sick, not the first time this has happened to on a holiday weekend on AA, a replacement had to be found in DFW and ferried on another late flight +2hrs. Then we had to deplane to a bus at LHR. Not covered stairs either. An elderly gent with two crutches was left to make his own way down the stairs, he was wheelchaired on and was not a faker. At least a staffer carried his bag. I got him and his bag off the bus. Oh, and it took an hour for my checked bag to arrive.
    Let’s see: “Because great is what we’re going for” Good idea killing that one. “You’re why we fly”. Well, no, we’re not. I think our credit card spend is.
    I am so grateful I obtained BA Gold. I had been wrestling with which OW carrier got my business.No more. After decades of EXP and CK this latest episode has done me for AAL.
    So good riddance to Mr Raja. Even if it was all about the schedule he couldn’t even get that right. Yes. I think he will be much better suited to a job at PIA.

  41. “He committed at Investor Day to “offering the highest value per mile versus any other program” when members use their miles.” In my eyes they’ve done just that, for my needs AA miles are far more valuable than any other US carrier – and nobody is even remotely close (especially DL, of course).

  42. @Christian and @ glenn t and others re: “board”. I’ll throw in my two cents (about 4000 AAdvantage miles) worth: the AA board is the root cause of AA decline. I’ve flown AA nearly 4 MM and a multiyear ExPlat across the past several decades. Consequently, I’ve personally experienced the withering decay of this once proud airline. In fact, I defected for a while to UA and my experience as 1K was far better. Would still be at UA except post Covid schedule changes that made some connections untenable. Until there is an overhaul of the AA board, not much will change. Just a bunch of guys clipping a director fee and a chicken dinner. AA will continue as a laggard. The vibrant Dallas – Ft Worth economy and the local pax deserve a better hub anchor than AA. .

  43. @A220HubandSpoke

    I don’t have a ton of stories since I only worked for Vasu for a short time, but I can share the following that I remember:

    I can confirm that Vasu’s use of the F-word was pretty legendary. I don’t think I ever had a conversation with him where he didn’t use it, and he often used it even when it didn’t even make a lot of sense to do so. It wasn’t malicious or anything though, that was kind of just who he was.

    Vasu’s opinions and views on things changed very quickly depending on which position that he was in. I remember him talking a lot of crap about Revenue Management when he was an MD in Corporate Planning, only for that to instantly change when he got the International MD job there. I can still picture him smiling and talking about “The Power of the Hub” after joining RM. He was very short term focused and seemed to care greatly about climbing the corporate ladder (and I guess he was successful in that).

    To another poster, I didn’t mean to imply that Vasu was literally the smartest person at AA, but he was very smart and very good at using his significantly greater than average knowledge of the airline business to get whatever he wanted. He wasn’t shy about bullying people and could use the combination of those three things (smarts, knowledge, and bullying) to get what he wanted for the most part. Of course, he may have acted differently with top leaders, but I certainly saw that at the lower levels. Make no mistake, Vasu is a very smart guy who understands how to get what he wants.

    Although he was a very charismatic guy, he was willing to step on people who got in his way (at least those of lower level). I still remember an old boss telling me “Vasu LOVES firing people”. While I can’t verify that personally, I have no reason to doubt it either. He definitely had a lot of confidence too.

    For what it’s worth, I don’t think Vasu had anything to do with AA’s fall, that was sealed the day they agreed that LUS would run the combined company. Would people like Horton and Virasb Vahidi have been more successful? I don’t really know for sure obviously, but I can say that in the handful of meetings that I had with Virasb, it was clear that he really cared about creating a premium airline and focusing on premium travelers (his whole “Circle of the Customer” thing).

  44. Well, Vasu and many others were probably overpaid. Especially when I see that the backbone of customer loyalty are the teams that are on the planes- the flight attendants are who we interact with and are foundational to loyalty. During the pandemic, healthcare systems realized who the essential workers were (staff nurses, respiratory therapists and phlebotomists) most of the people that were undervalued, a dime a dozen; until now. Staff nurses were paid and higher than expected wages but why should the CEOs and other C-suites take millions in salary and bonuses while there is such a dramatic lack of basic pay for the rank and file? And the only justification to increase their pay is to increase the cost to the customer. Just venting but I think a gesture to win customers back and retain others is for the c-suites to receive the same pay that the attendants receive for a year and give the rank and file a significant pay increase.

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