Brian Sumers, in his excellent subscription newsletter interviewed former American Airlines Chief Commercial Officer Vasu Raja and passed along a story about Vasu – and American cancelling its order for Airbus A350 widebody aircraft – that I hadn’t heard before. Usually complex large supplier relationships are handled diplomatically. Not so with Vasu.
Raja, then a vice president, abruptly told Airbus senior management that the airline did not want to take any Airbus A350s. Airbus executives were shocked, my source told me, because American’s deal, which it inherited from long-time Airbus customer US Airways, meant the airline could take the airplanes at an insanely cheap price. How could American not want the planes?
“Vasu out of nowhere deadpans and looks at them and says, ‘You know what, let me explain it to you this way. You are selling a great lawn mower. Actually, you’re giving it away for free. Here is the problem. I live in a high-rise penthouse.’”
Sumers added that “No other mid-level executive, my source said, would use language like that in a business deal with Airbus” given how “buttoned-up” American Airlines is. That was true in the per-merger days for sure. In 2012 the airline once begged me not to use a photo of one of their vice presidents wearing a pants suit. But the culture changed and so Vasu was unleashed. He became known for his non-stop F-bombs.
American Airlines did take delivery of an A350 simulator, and mostly rented out time on the sim to Delta.
This may be my second favorite ‘airline meeting with Airbus’ story, behind the time in the 90’s that the Chinese thought Airbus sold buses to bring passengers from airport terminals out to remote stands.
[Airbus Chief Operating Officer John] Leahy and his team explained the structure of Airbus and discussed the Airbus forecast for Chinese aviation. When the meeting ended in exactly 60 minutes, the Chinese airline chairman, through the translator, thanked Leahy for his visit, but said they wouldn’t need his product. You see, Leahy was told, the airline was installing jetways and no longer needed buses to move passengers.
Of course American Airlines ordered the A321XLR and then earlier this year more A321neos. Telling off Airbus about their widebody product didn’t create an insurmountable hurdle in the business relationship.
The only thing funny about that story is that Raja thinks AA is akin to a “high-rise penthouse”.
A high rise penthouse full of airline schedules. They weren’t trying to offer anything else in that penthouse.
and it is noteworthy that AA is bemoaning the delays from Boeing for the 787s that AA has on order – not unlike what UA is facing – while DL is receiving the 14 new Airbus widebodies it has on order, the only US airline that is receiving Airbus widebodies.
It certainly makes sense for AA to have ditched the A350 in the name of fleet simplification but far less so than UA which flies or at least few many more longhaul routes that the 787 can no longer fly because of Russian airspace restrictions.
In fact, United is supposedly working on a deal to acquire used 787-8s and 777-300ERs to make up for 787 delivery delays. Even though United has 350s on order, it has pushed the order back so many times that Airbus is unlikely to have any significant amount of delivery positions available for 5 years or more.
Meanwhile, Delta will receive 25 new build Airbus widebodies in 2024 and 2025 before the A350-1000s start coming in 2026.
Vasu clearly had no clue what he was doing in many regards and not taking the A350 might not affect AA much but it will dramatically impact UA and the competitive balance in the industry as DL gets new the most capable and efficient new generation widebody capacity among the big 3 for years to come.
Gee, Tim, it’s a class in logic with you. I kiss Ed’s butt, Ed kisses Guillaume’s butt, therefore I must kiss Guillaume’s butt. Airbus planes are garbage, especially their big wide bodies. UA, as always, is correct in this regard. See, I can kiss butt for my favorite too.
You gotta love the arrogance that bled over from AmericaWest. I wonder why this band of stunningly incompetent nitwits is still in charge. It’s not because they’re capable of running a massive airline effectively.
The comment may have been brazen, but he is obviously sorely mistaken. The A350 is clearly a VERY capable airplane. The A359 and 789 are essentially interchangeable. Now, there may have been a lot of other reasons for AA to not take the A350, but his comment just reeks of his arrogance while being factually incorrect as well.
Maybe American Airlines should’ve taken the A350.
AA got rid of 757/767 and 330’s during pandemic- all paid for. AA’s board of directors should have fired the lot.
Vasu Raja, arrogant and shortsighted? Color me surprised.
I’m with @mikey b: Very well said !!!
Airbus a350 over 787 anyday
787 = Boeing pile of bolts
AA will regret that they didn’t take the A350…the airline is the largest in the world but has a woefully bad long-haul fleet as compared to other airlines. The idea that they will be all 787 is laughable ….it has its place but is far too small. The larger A350’s offer an ideal replacement for the 777’s that are aging…as a customer on super long haul, I still would want a jumbo jet like an A380 or 747 if I was to buy a premium product. But AA just doesn’t compete in this market….I think because it doesn’t know how to. The airline got rid of perfectly good A330’s that could have bridged the gap in large volume domestic situations as well allow them to offer new or additional long-haul service. They would rather run three or four flights on smaller aircraft within several hours of each other than run a larger plane…
Is there any wonder why that clown got booted from AA?!?! That’s the kind of corporate arrogance and ignorance that reminds me of United circa-2000
@Joe C – spot on about late 90s UA hubris
Maybe it’s just me, but I don’t view Vasu’s remark as “telling off” Airbus or otherwise being offensive.
The context of it is he’s telling Airbus that AA doesn’t want its order. Airbus expresses shock at this because AA was getting them cheap. Vasu then gives the “You sell a great lawn mower, but I live in a penthouse” bit.
To me, it seems clear enough that Vasu is simply illustrating that Airbus was selling something that AA had no use for. Penthouses don’t have lawns to mow. It wasn’t intended to literally liken the A350 to a lawnmower, and it wasn’t intended to come off as snobby with the penthouse line. It was simply an illustrative point. It was quite blunt and could have been expressed in a more artful way, but this is what he went with.
Vasu acting like a complete idiot with its largest supplier with the full (expressed or implied) endorsement of Doug Parker and Isom; there is no end to the billions in losses due to the horrible business decisions they’ve made.
Beyond – ironically – Boeing, the next great business case in corporate arrogance and its risks is the decline of American Airlines.
Isom won’t be able to hind behind Vasu’s legacy of failure much longer.
You can’t make this stuff up.
Regarding the China anecdote:
“Airbus” is a remarkably stupid name. I thought so when i first heard it decades ago, and i still think so now
When I read things like this it makes me wish that Elliot Management would have gone after AA instead of WN. The level of incompetence at AA never ceases to amaze me.
@Dave Gregg – The ineptitude starts with the board. They’re the ones who have consistently backed an impressively incompetent management group.
The original US Airways deal for the a350 was so cheap because US Airways was to be the World Wide launch customer of the a350z A deal AA inherited and through sheer stupidity walked away from.
Rob,
the original A350 that USAirways ordered was essentially a derivative of the A330 which US operated. It was not the A350XWB that Airbus eventually built and is selling.
Airbus tried hard to hold onto the USAirways order even though the XWB is a much more capable and efficient airplane; no company wants to lose orders.
AA’s international system was already in decline by the time of the merger so it makes more sense for AA to focus solely on the 787 family (it still doesn’t have the 787-10 which is the large and most efficient member of the 787 family and ideal as a replacement for AA’s 777-200ER fleet) as well as the 777-300ERs which AA and UA both bought near the end of the production run so they will be around for a while.
AA has flown a few ultra long haul routes but it isn’t worth getting a new fleet type just for a handful of routes that AA could fly with other types.
UA, in contrast, hasn’t cancelled its A350 order but keeps pushing it back and flies many more ultra long haul routes as part of its presence over the Pacific.
It is precisely because DL is taking delivery of 13 new A350s this year and next and all of them are far more capable and efficient than any 787 that there is a very good chance that DL will soon be announcing in a couple of weeks a whole lot of new routes that will take advantage of the A350’s capabilities.
While Vasu’s comments might have been a shock to Airbus, AA made the right decision given where its international network is now.
UA, OTOH, probably has not given that it is apparently on the verge of buying a bunch of used widebodies.
and the name Airbus might be “strange” but they are delivering airplanes at a far better rate than Boeing whose name has been tattered over the past five years.
Not even close to the most brutal line by an airline exec killing a suppliers chances. The stories around Northwest’s Don Nyrop are legenday amoung the flight crews. It is rumoured ol’Nyrop told a GE Rep when they were pitching engines to Northwest “Whenever I want a light bulb, I’ll pick GE’s. For jet engines, I’ll stick with Pratt & Whitney!” Pretty much closed that effort.
Airbus knows how to cash a check. I am sure they got over it. Also funny calling AA the penthouse when IRL we know it is the Town Dump. They should have bought and then sold to third parties looking for the aircraft.
when I worked for West Coast airlines in the 60’s, we used the term “airbus” for our almost hourly service from Boeing field to Portland. Nobody ever thought they were going by bus.
Ooh that’s a zinger. Looking forward to using that line in the appropriate context
It seems like the Airbus executives were more visionary than Vasu.
A high-rise penthouse… with no elevator and furniture only suitable for very small children.
@DUNN
DL has chosen the 350. They dumped the very capable 777-200s and LRs, but it was a small fleet. Makes good business sense to get a bigger fleet of something else. DL is still flying 350s with different cabins from bankrupt airlines.
DL has old 330s and 767s they need to replace. DL is doing what AA has done, fleet simplification. Eventually they will end up with 330 neos and the 350.
AA says Boeing isn’t delivering the wide bodies, but has pushed back delivery dates, same as UA. Some at AA looked seriously at buying/ leasing 777Ws starting in 2021. Vasu put the kabash on that.
What Vasu should have done is taken the 350s for a song and sold them to DL for twice the price.
What @Pilot93434 said. “What Vasu should have done is taken the 350s for a song and sold them to DL for twice the price.” If an airline is contracted to take delivery of aircraft for a great price, do it and sell them for a profit, unless the contract forbids that. If the contract forbids that, create an internal division to take ownership of them and then sell that division to another airline or merge it with them. There are a lot of airlines that would like to get airplane sooner than later.
What seems strange here is, when AA says we don’t want those 350s we have on order at a great price, why wouldn’t Airbus just say OK and leave? I’m unqualified to lead a company, but I can assure you, if I did, nobody who dropped F bombs in a professional setting would work for me. I can swear with the best of them, but not where it doesn’t belong.
@Dave W.: “What seems strange here is, when AA says we don’t want those 350s we have on order at a great price, why wouldn’t Airbus just say OK and leave?”
My guess is that one of the largest airplane companies in the world using the 350s would end up in more sales to other airlines. Further it continues cracking the USA market. Probably an American Airlines A350 is the best of advertising. It says American on the side and probably say A350. The sale to American would have value more than the dollar figures on paper.
Fantastic, of course they kept and promoted all the crappy things they inherited from US Air and decided to forego an excellent product.
A cynic in my would say that FAs hated A350 since it does not give them dictatorial control over the window shades.
A rational person in me will point it to the legacy of Doug Parker and his team’s incredible and everlasting decade long incompetency.
Salespeople of expensive products are always into selling to whomever they can sell on terms acceptable to their bosses. So of course some employee telling off Airbus (or Boeing) wouldn’t really matter. Business is business, and hard feelings are worth less than hard money. Just like how I will keep flying Delta Air Lines when the price is right for me but avoid it when another airline provides me a better frequent flyer program-adjusted return on my money — it’s all about what is good for my bank, not about how nice or annoying a counterparty to the business relationship may be.
pilot
US had an A350 order before any other US airline; AA has ordered a combination of Airbus and Boeing aircraft for a long time.
DL was one of the airlines that had an exclusive contract w/ Boeing that the DOJ said was illegal as part of the Boeing/McDD merger.
NW had a 787 order; DL had not committed to a new generation widebody at the time of the NW merger. The NW 787s were seriously overweight and underperforming which is part of why DL rejected the 787 order and converted them to 737-900ERs.
DL started shopping for new generation widebodies after the NW merger and wanted Airbus to build the A330NEO; DL is reportedly getting them at less than $100 million per copy. DL said it was willing to consider the 787 but getting MRO rights for every Rolls Royce engine (including the RR engines on the 787) in addition to getting Airbus to build the A330NEO were big reasons why DL chose the A350.
Airbus has enhanced the A350 considerably since the time DL ordered – which was part of why DL got rid of the 777-200LR, an airplane neither AA or UA ordered. DL is just now getting aircraft that can do anything from a range perspective that the 777LR did and the newest A350s in DL’s fairly light configuration are even capable of flying full from JNB where previous A350s struggled.
So, no, DL would not have taken A350s from AA just because AA might have gotten a great deal; DL got A350s and A330NEOs because Airbus AND Rolls made a great deal w/ DL that was better than what AA had (remember AA had the Rolls Royce contract before DL).
Dave W,
obviously Vasu was who he was long before Isom showed up. Maybe that didn’t help Vasu’s case when his failed strategies began to be seen for what they were.
and let’s not forget that Vasu is trying to keep his name in the forefront in order to get another job somewhere.
GU,
you as a consumer are free to do whatever gets the best economics for you. There is nothing wrong w/ that strategy. You should simply recognize that economic relationships have two sides and DL has figured out how to create the best economic arrangement FOR ITSELF AND CONSUMERS right now – as witnessed by the highest revenue contribution of Amex to DL compared to any other airline/card program
Vasu made a lot of money each year working for American Airlines including over $8 million as salary and bonus for 2023. However, I would not trust him to invest my retirement funds wisely if he went into that business. Kind of like the government, I don’t trust it to make wise decisions with my tax money.
So some at Airbus were offended by an AA VP’s comment.. Fine, but the reaction by the SNOWFLAKE Airbus “fan people” community who are almost beside themselves is really more sad than humorous is all i got to say. Come on people, put on your big boy panties. The success of a strong Aviation Industry and Western Culture is not built by men who can’t handle creatively direct words in regards to a product failing to meet the needs of a customer. Patroni…roll them snow plows.
Klima,
it is hardly about anyone at Airbus being offended by AA’s comment.
It is about the language that Vasu was willing to use in the workplace including with suppliers.
AA was the only big 3 US airline that had orders for Airbus widebodies at the time; I don’t think UA ever flew an Airbus widebody and DL briefly flew the A310, including some new build models, as part of the Pan Am acquisition but rejected them based on performance. DL looked at the 330-200 as a domestic replacement for the L1011s but chose the 767-400 and then converted those to international configuration.
Point is that Airbus was trying to keep widebodies at one of the big 3 so of course they were trying to sell the A350 whether in the original or XWB version.
And it was probably AA’s decision to reject the A350 that made it easier for DL to get a very good deal from Airbus and Rolls Royce on the 330NEO and the 350XWB.
AA made the right decision given its international system is barely profitable. The real question is whether UA has shot itself in the foot by pushing back taking the A350 and having to put up w/ delays from Boeing and still not have planes as capable as the A350 as Delta puts its A350s on longer routes and uses those more efficiently – esp. the 350-1000 – than UA can do with anything in its fleet.
An “air bus” was a buzzword used in the 70’s for a 300-seat, widebody, mid-range airliner. It would bring the economics of the largest long-haul plane (747) to trunk routes. It along with deregulation, it would democratize air travel.
The DC-10, L-1011, and A300 are air buses, as well as the latecomer 767.
Airbus Industrie delivered what it said on the tin.
Gary, come on.
That China anecdote was never meant to be taken seriously. Why do you keep repeating it as if it were fact?
As a foreigner in China you do not get into a meeting at that level without a thorough check.
Leahy “explained the structure of Airbus” and somehow things like, I don’t know… “wing assembly” went unnoticed?
If it even happened it was a lighthearted comment.
A350s suffer from a lot of maintenance downtime.