Robert Isom Explains: As CEO Of American, It’ll Be Meet The New Boss, Same As The Old Boss

Robert Isom was picked as American’s next CEO, more or less, in 2016 when the airline let go of Scott Kirby (who is now CEO of United). It’s been expected that this would happen in 2021 based on leaks from the company and then in late October current CEO Doug Parker received the Wings Club’s lifetime achievement award – he was retiring in all but the announcement.

The announcement finally came last week, with Doug Parker remaining Chairman and CEO until March 31 when he’ll become non-executive Chairman and Isom will step into the CEO role. I offered him an agenda for his new role should he choose to take it.

At an internal employee meeting last week (a recording of which was reviewed by View From The Wing), he discussed how he sees himself stepping into the role and just what his vision is. Some have suggested it’s not merely ‘meet the new boss, same as the old boss.’ Before he was carrying out instructions from others, now he’s the boss. But he made clear he sees it differently, that he was a part of all of the airline’s major decisions the past several years and his becoming CEO is about continuity rather than change.

Robert Isom explained his CEO transition, “I’ve been President for the last 5 years. The Board has been interested, and Doug raised his hand and said ‘I’ve been doing this job for a long time.'” He said he knew that all employees would join him in a round of applause for Doug Parker. (No one did.)

He also offered we’ll learn soon who replaces him as President, as well as other leadership reshuffles. Betting seems to favor Vasu Raja (though he’s still quite green in senior leadership, smart but with some clear blind spots) over Chief Operating Officer David Seymour who’s been with Isom longer and has continually failed upward. It’ll be an interesting test, as well as learning who – besides Elise Eberwein – may also be leaving.

There’ll be more news probably in the next week on how we align further with the business with our leadership team. The good news is I’ve had commitments from the team to really go and run and make sure we aggressively pursue our goals.

A flight attendant asked Isom for his vision for the airline as its new leader. And he offered again that he’s a continuation of existing priorities.

I’ve been President for 5 years. So that’s a long time in and of itself. And I’ve been involved in every strategic decision of this company for good, and I know during some difficult times as well.

So my vision is consistent with our purpose, which is to take care of people on life’s journey. Right now, today, that is all about welcoming customers back to a reliable product. That’s absolutely positively what we have to do to deliver to folks and also it’s the way we take care of ourselves too. It’s the way you have some certainty to your schedule. It’s the way you have a better experience with people on the aircraft itself. And then ultimately we’ve got to make sure that American Airlines returns to profitability this year.

We have to. That’s another one where if we don’t do it, it’s an issue for all of us in terms of our job security and what we want to do for our customers. But that’s not enough to sustain. That’s immediate priorities. We have to be on a path to make American the best airline in the business. And I’m intent on that.

We worked so hard during these last few years to position American in the right spot. We have the best network in the business. I love how we’ve set ourselves up domestically and are really getting as much as we can out of our hubs. The relationships we’ve set up to augment is allowing us to fly to places we couldn’t before because we wouldn’t have had the ability to connect the demand and so JetBlue and Alaska and some of the relationships we’re trying to set up in South America, we’re in a really good spot from a network position.

…Also the fact that we’ve got the newest fleet in the business, and that we prepared ourselves to weather the rest of the pandemic with the kind of cash we need on hand. Look, we’re in a really good spot. And ultimately having an experience that we can deliver to customers.

A pilot asked Isom about the airline’s intention to make culture a competitive advantage, suggesting it’s something that most employees don’t even know and those that have even heard of it don’t know what it means. And Isom says more of the same, but perhaps more focused on the bottom line.

It is about the same as it was four years ago, and even before that. We’ve got to figure out a way to take care of our team. We’ve got to take care of our customers. And we’ve got to find a way to make American thrive for the long term in terms of financial performance.

…We as a company have a purpose of taking care of people on life’s journey…but our team can’t be taken care of unless American is financially sound. Right now I am incredibly focused on getting out of losses and to where American can thrive for the future.

American has underperformed the industry financially, alienating shareholders. They’ve alienated customers and employees. They’ve focused primarily on operational reliability but haven’t delivered that, as they’ve offered a ‘me too’ (but a little bit less) inflight product. They lack a strategy for earning a revenue premium over competitors, necessary because of their lagging financials and crushing debt. So far it doesn’t sound like Isom sees that the current path is unsustainable over the long term.

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. So glad I sold mine three years ago!

    Other than its Flagship lounges, has AA done anything pro-customer in the past three years? Project Oasis is a cramped disaster. Removing video screens and still no seat power on the US Airbus fleet (oldest mainline planes flying?). Catering cratered. And then there’s the new AAdvantage which pretty much disqualifies non-US based elites (unable to get co-branded credit cards) from keeping their status!

    So I sold my AA stock (after a reasonable increase in market value) and started putting my OneWorld flights into BA’s program where I’ve managed to keep Gold/Emerald status after many years as an Executive Platinum, actually now having better benefits while even flying AA. And get myself 50K Gold status with AS

    Doesn’t sound like the new CEO plans anything but more of the same…and what a shame that is.

  2. Terrible management. While other airlines are using widebodies to alleviate the global freight backup we are sending them to Cancun with 80 to 100 passengers. Golden opportunities being wasted. Yet its all the workers fault. Last in every airlines measuring metric. AA sinking fast and Isom says he wants to maintain the current course. A bad joke at best

  3. As an investment contrarian, I throw money into stocks that get devastated by a downturn. (Ex: banks after holding crisis. Etc.)

    I though AA would be an easy play… and while there has been upside, not as much as one would think.

    The pandemic has been a much slower recovery, as people are still freaked out about life and travel.

    But still, while it’s obvious that death rates now are almost exclusively the intentionally unvaccinated, there’s nothing that you can do to stop those lemmings from rushing over the cliff, and trying to take the rest of us with them.

    Imagine if after the financial crisis, people kept insisting on buying sub-prine investment packages of bankrupt loans. Morons.

  4. AA management present and future can’t manage their staffing issues. They are out of touch with their employees and that’s why they continue to have staffing issues over and over . Delta doesn’t have this problem nor does United. Invest in your employees and stop trying to make their lives miserable. So many came back off the leaves just to cash in their sick time.

  5. Understaffed airlines like AA will continue to have staffing woes and are out of touch with their employees. Delta and United haven’t had any of the problems that AA has had this past year. They will continue to take your money upfront and cancel at the last minute . It’s not hard for the other airlines to have great staffing levels .

  6. I fly American all the time. Prices are good, I get a seat assignment, I’m at the airport in plenty of time. I wait for boarding announcement, I sit down on my seat and shut the f*** up. Tell me again what else I need to fly from LA to NYC in 4 and a half hours?

  7. I agree with Liberal Capitalist that the current AA leadership continues running the company akin unvaxxed behaving at the end of the Covid pandemic.

  8. The “Tempe Team” needs to go back to Arizona so American can return to the great airline it once was before Parker and Isom arrival.

  9. As I have said before, another baboon from the America West pack takes over and keeps AA in a ditch.

    Reminds me of the movie Madagascar.

    Spirit will have competition for the next 5 years.

  10. More platitudes and incompetence? Sounds like a pretty seamless continuation. A shame, I’d held a vague hope that AA might have stumbled on to actual leadership but that was a false alarm.

  11. To his credit, Isom at least says that AA cannot be what it wants to be unless it cuts its losses. Parker has accepted significant financial performance in the best years the industry has seen. A President can easily be overruled by a CEO that has a different vision; it is indeed possible that Isom will do what he knows needs to be done but has not been able to do.

    Operations are measured on a consistent, quantitative basis for all airlines. Other than baggage handling, AA consistent performs before on DOT metrics than United and Southwest. The most notable statistic is how poorly United does in DOT customer complaints – and it extends beyond just refunds. AA has had spectacular operational failures but ends up overall with better on-time and cancellation rates than United – which shows how poorly United’s day to day operation really is compared to American.

    AA’s biggest challenges are strategic – increased competition from S. Florida to Latin America and giving away its own presence in major east and west coast markets to partners with the hope that AA will gain by succeeding in long-haul international markets where it has never done well and where it still has significant cost disadvantages.

    Isom has his hands full but the bar isn’t real high in doing better than Parker.

  12. LOL. Absolutely hilarious that AA’s Board would have him succeed Parker. More of the same? Yeah…just what AA needs more of. As an employee of an AA major competitors, by all means please keep the status quo, Robert!

    He lasts 3 years, tops.

  13. His strategy sounds like it’s essentially to get more profitable. That is a goal, not a strategy.

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