On May 28, American Airlines announced that Chief Commercial Officer Vasu Raja would be exited in June. His employment actually ended June 30.
Vasu Raja staked out bold positions. He felt too strongly that the airline’s schedule was its product – rather than its service and experience. He architected their Sun Belt focus and shift away from managed travel. And he elevated the centrality of the carrier’s loyalty program as part of its core business strategy and not just as a financial instrument.
It was mostly declining business travel market share that led to his dismissal, because perhaps otherwise the airline’s CEO would have worn the consequences. Now, in a Friday evening news dump from American in the form of an SEC filing, we know about his severance, which is approximately $1.43 million.
- He remains on payroll through January 31, 2025 collecting an additional $462,019.00
- Then he receives a payout of $968,750, plus $261 towards COBRA continuation health coverage
- Officer travel privileges (confirmed travel in any class of service including for spouse or companion and dependent children; Executive Platinum status with Admirals Club access) through January 31, then he receives “‘the 65-point plan space available travel’ privileges for Executive and Executive’s eligible family members pursuant to the terms and conditions set forth in the Company’s travel policy for officers, as may be amended from time to time.”
However American will not gross up the tax liability for this travel, and this travel is for personal and not business purposes.
- Career transition services from Lee Hecht Harrison.
- He’s subject to non-compete and non-solicitation rules through January 31, 2025.
Most readers will see $1.4 million in severance as extremely generous. Most of us expect just two weeks! But his compensation package last year was worth $12.2 million.
Raja’s earning ability remains strong. He could go lead an airline, consult in the industry, or work for suppliers. He likely has the freedom to pick and choose, should he wish to take his time. His severance is modest compared to his future remuneration potential.
In a sense, what’s interesting is that American Airlines doesn’t actually get very much here for their $1.4 million. I’d have probably preferred to use his lump sum $968,750 to partially fund a longer severance period during which he remained on payroll and remained subject to restrictions. In other words, “gardening leave” in order to buy a longer period for his unique knowledge of American Airlines plans and strategies to become stale. Whether or not Raja would have agreed, as American I’d have wanted to pay him more but also get more.
Nice they sprang for his COBRA. eyeroll
What? You think that’s too much? I would have paid twice that. The man that shot Business ExtrAA, killed AAirPass, gutted AAdvantage and led the charge to the bottom in terms of inflight service and anything Premium? I say “so long, fair well.” I wish we’d never known ‘ya. I don’t think he’s fit to run any consumer-facing business IMO, let alone an airline. Perhaps some ULCC somewhere that still has costs to cut, service to degrade or credit cards to hawk. We can only hope that AA’s Board finds someone to reverse all of his disastrously ill-conceived decisions. Then again, why would I think that?!
Good riddance! Now, onto the rest……
Golden parachutes off crappy decisions are horrible
No carrier excluded
“… will be exited”. Grammarians everywhere weep softly. Openings and areas are “exited”. People aren’t, unless the thing exiting is a waste product.
thank you, Richard. there was also some sexually-themed word usage that Gary, shall we say, screwed up, recently
And Gary clearly has no idea about leadership succession if he thinks it is a good idea to have someone that did as much damage as Raja stay on the premises in any form
AA did the right thing but he might not be near as successful in getting another act elsewhere.
“….unique knowledge of American Airlines plans and strategies”.
No doubt competitors are lining up to learn AA’s trade secrets!
What a loser this executive was, he runs Americans business strategy into the gutter, yet he’s compensated well for his failure. Hey Isom how about taken care of the flight attendants instead paying off your weak management team and yourself!
Just imagine Raja hanging out in the Admirals Club, flashing his CK card and flying what’s left of Flagship First for free, simply based on AA’s flight schedule alone (from PHL, presumably).
It’s going to take years to reverse the damage Raja did to AA with Isom’s approval. What a joke.
AA shouldn’t have any non-compete clause for Raja so he could go somewhere like DL and do the great things for them that he did AAL.
For anyone who believes Raja operated in a vaccuum making abitrary decisions and guiding multi-billion dollar marketplace maneuvers…I have some ocean-front property in Arizona for you.
EVERYTHING at USAAir runs through Isom, the C suite and the board. It is the ENTIRE management team that has crashed stock and stolen consumer confidence. But they have experience in that realm with US scare/Useless air.
I love how my Timothy corrects everyone. He wasn’t very popular in school, but look where he’s at now!!!
DEI, didn’t earn it and couldn’t do the job.
I think you’re being far too kind. @fatetta has the right of things.
ISSOM SPENT MILLION$ ON A USELESS FOOL!
PAY YOUR FLIGJT ATTENDANT’S WHO MADE LAGACY AA #1 UNTIL BAD MANAGEMENT ARRIVED!
BOARD OF DIRECTORS NEEDS TO GET THERE SHIT TOGETHER!
Vasu was and is an epic phallic deity in the world of his own mind. Hopefully Mr, Bastardian brings him on bird to elevate their premium product, much to Tim Dunn’s ulcerative colitis. In the meantime, I would love to run across him in the admirals club and let him know ever so subtly that he is number one in many of our books. Hope he enjoys his EP perks across the sunbelt and reaps what he has sewn. A$$hole..
Because all other competitors are just dying to get inside info on what makes AA so great. I can’t eyeroll enough.
I think they got the wrong guy. The downfall of American Airlines stated with the arrival of the USAIR guys, First with Parker and now continues with Robert Isom. AA should fire Isom and so it can get back to the great airline it was before the clowns from USAIR arrived.
A golden exit, this is a real problem we’re having in the American system of crony capitalism.. In the mean time AA flight attendants have working without a contract since 2019. How pathetic. If Robert Crandall were still CEO , VASU would have been gone a long long time ago ! There’s a lot of work to be done. I sincerely hope Isom understands the severe backlash with the travel agency and corporate community . If he doesn’t he needs to step down .
Ahhhh America.
Where there is no money for frontline workers living on food stamps, but a failure of an executive gets millions.
Shareholders hold the key to AA’s success and failures. Each one has had an opportunity to vote then Parker, and now Isom, and any other officers, off the board. The AA board members certainly aren’t going to jeopardize their lucrative positions by rocking the boat. Oversight seems to be non existent. It is time for Isom and Seymour to depart. Their ineffective leadership(less) has lead AA down a steady path of decline. It is truly amazing that Isom was awarded Airline CEO of the Year. That one still leaves me scratching my head.
Doesn’t deserve a dime.
Destroy one airline, onto the next…
Not really much of a package as you point out.
Reality is the strategy probably would have been perfect 10 or 15 years ago. Now there’s so much wealth being generated – and with first class pricing changing – 700 bucks one way for up front is no big deal.
Reality is also that nobody operates in a vacuum. The strategy was signed off from the top. The equipment retirements were signed off from the top. That was the true mistake. If they had the birds you could change strategy easily enough although not without cost. Those 75’s and a330s would be in the air 20 hours a day right now
Two thoughts…$261 for COBRA doesn’t go far; 7 months (6/30-2024 – 1/31/2025) of non-compete doesn’t seem very long…
@Jason Brandt Lewis – I would guess it’s one month for employee-only portion, and there because they do this as a matter of course not because it was a material part of the severance package
Absolutely ridiculous these golden parachutes. They should be illegal. In the meantime you have flight attendants who haven’t had a raise in 5 years! Shame on you AA. And mechanics are next!!!
Travelling by Greyhound bus would be a step up from service on an American flight.
Tony you’re right on the money, when USAIR clowns, assholes, incompetent management took over a one’s great airline, they destroyed it and like Jose E Chompre commented, if Robert Crandall were still the CEO of AA Vasu would’ve been gone a long long long time ago. It really saddened me to see AA destroyed by these A$$OLES.
Let’s blame the real clown. Vasu didn’t do anything without Isom’s approval. Get rid of HIM. Of course I’m sure his golden parachute is more obscene and he’ll throw his middle finger up at all the employees, retirees and customers on his way out, but perhaps then AA can get someone competent in charge. Isom is an abomination.
Not sure why he needs EP status when he can receive unlimited space available travel. Now he’ll know what it’s like to be on the Priority List and watch his chances of an upgrade disappear. Destroyed AA.
@Buzz – Executive Platinum is a benefit enjoyed by all AA VPs
AA bankruptcy coming soon