Delta has touted its environmental credentials and year-after-year highlighted its inclusion in the Dow Jones Sustainability North America Index. But outgoing American Airlines CEO Doug Parker took a jab at Delta over this index in remarks to employees following the company’s fourth quarter earnings call on Thursday, a recording of which was reviewed by View From The Wing.
In reviewing highlights of the fourth quarter, Parker told employees that American was added to this index. It’s the only passenger airline included. And that means they “threw out Delta.”
We got added as the only passenger airline in the Dow Jones Sustainability North America Index, which is a mouth full but here’s what it is. There are people who want to invest in funds that they know the stocks in those funds are dedicated to sustainability.
So the Dow Jones goes through and selects companies that they believe in each industry represent the best in terms of sustainability and they added American Airlines to that index – threw out Delta by the way – and put us in.
Just before the pandemic Delta claimed they’d be carbon neutral starting in March 2020. But they were doing this mostly through the magic of carbon offsets, which frequently don’t do much and even increase carbon output.
Months before that Parker threw down against United over the environment in an employee meeting saying they fly older, less fuel-efficient planes than American.
While there may be a future for biofuels, right now they’re impractical and largely a stunt. United has focused on measures like that, but they’ve also invested in direct carbon capture, literally removing carbon that’s been emitted from the environment. That technology isn’t far enough along, but holds promise if enough companies invest and can bring down the cost.
It’s helpful to companies to be included in ESG funds, because that represents more demand for their stock. And it’s easy to invest on the basis of Environmental, Social, and Governance criteria when everything is rising. We’ll see how popular these funds are in a down market considering,
- ESG funds necessarily give up returns for other goals. That’s fine and appropriate as far as it goes, but it’s not how these funds are usually sold. If you’re taking profitable investment opportunities off the table, you’re necessarily going to do worse than you’d otherwise do with an investment portfolio. Non-ESG funds can invest in all of the same vehicles if they’re the most profitable, plus other profitable investments that these funds cannot touch.
- And you’re creating profit opportunities for other investors. By ignoring investment in non-ESG companies you’re leaving those on the table and indeed making them more attractive to other investors by not bidding up their price and competing down their returns.
- Most ESG funds don’t really put their money where their mouth is by not shorting non-ESG companies.
It’s perfectly commendable for an investor relations team to pitch a company to these funds, but American really does seem to lag United on investing in a portfolio of green efforts not to mention on being woke, more generally.
As for Delta, it’s not the first time Parker has taken them on in employee comments.
Parker is an idiot. He cannot operate an efficient, profitable airline. So, to deflect, he touts diversity, inclusion and climate change.
Here’s to your retirement underneath a rock large enough to hide your fat butt, Doug.
All true ….
Parker needs to spend some time in his new coach seats…..
I think Woke Dougie is back on the sauce again.
This past week I took Delta to LAX and flew back on AA. Night and day experience.
By the way, there were only 4 people in first class on our American Eagle that we connected on through Chicago.
I do not know, but this may be an indication of the public walking away from Doug and AA.
I may not care for my customers, and have a worthless FA throw off two year old’s and let them refuse to serve a full meal service, but we make up for it by using a shoe horn to fit in our victims into their tiny seats and toilets that proves we’re better than United and Delta because we have new planes. And it’s ok that I don’t make money flying planes because I rip off American taxpayers.
The only one stupider are Dougie’s customers, who continue to take the crap that he shovels on to their plates.
So hypocritical to tout ESG but treat people, their customers, with such contempt. Parker needs to climb down out of his ivory tower and spend a month as a hidden boss flying in Coach. If United gives me better service and a better travel experience, I cannot care less about AA’s environmental rating.
Besides, lots of news articles right now that ESG rating companies are using smoke and mirrors to create artificial ESG ratings to satisfy the funds looking for that qualification. I look at returns on my investment in a company, not whether the CEO wears a BLM wrist band.
The only environmental factoid that matters is that American burned 25% more fuel to generate less revenue than Delta – and still loses a billion dollars more – in the 4th quarter.
Not only did Delta pay 26 cents/gallon less than American because of Delta’s refinery strategy but Delta also operates a far more fuel efficient fleet as evidenced by their revenue and fuel burn numbers.
So, dumb Doug can throw all the dirt he wants but the real facts are clear for anyone that bothers to do a modicum of research.
Maybe if this moron had focused on customer service instead of his leftist causes, then American would not be considered one of the worst airlines in America.
Mr. Parker should be nice to Delta Airlines as he will be non-revving with them soon.
Dougie’s overt destruction of a once great legacy carrier has qualified him to become Biden’s advisor on airlines to continue the self-destructive trend in Washington.
Amazing how it took two ex-airline CEOs to pummel Amtrak and negate any sense of customer service.
I have no idea what the relation of the ESG fund critiques are to American Airlines being listed in an index, but since we’re going to go there, the idea that ESG funds leave money on the table has been debunked time and time again
https://www.mdpi.com/2071-1050/13/23/13253
https://www.morganstanley.com/ideas/esg-funds-outperform-peers-coronavirus
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/most-esg-funds-outperformed-s-p-500-in-early-2021-as-studies-debate-why-64811634
@Jim debunked? that’s one thing to call it. You can do well by doing good as it were but you necessarily take profitable opportunities off the table which means not doing as well as you could.
Saying they did well over a period of time – which is all your links suggest – does not dispute this at all. Of course a set of stocks can do well for a specific period of time. Outperforming S&P in a defined period is a non-sequitur. And non-ESG funds can invest in these same stocks PLUS OTHER PROFITABLE NON-ESG STOCKS!
https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-Reward-Or-One-Mans-Ceiling-is-Another-Mans-Floor