American Airlines hasn’t been perfect, but it’s charted a path different from United and even Delta through the pandemic. They’ve generally honored refunds for cancelled flights, rather than choosing to illegally conserve cash the way United and others have attempted to do, and they’re plotting a course to avoid employee furloughs.
United Airlines already has 30% force reduction targets and plans to notify employees in July that their services are no longer required come October. American has told employees they’re trying to manage through this with voluntary early retirements and leaves and hiring freezes. United’s sole objective is to conserve cash.
I’m not sure that Doug Parker is going to get credit for being better, and he needs to for the gambit to pay off. He’s managed to avoid his board ousting him numerous times despite alienating employees, shareholders, customers, and partner airlines.
Now he’s charting a different path than United which appears to be privileging shareholders (though the two stocks are roughly down the same amount in percentage terms since the start of the pandemic, though American’s off a much lower base).
To be sure American has reduced employee hours and made a negative change to AAdvantage but not nearly to the extent that United has gone after both employees and customers. They do seem to be doing something differently, they just need to tell that story and do it in a way that constituencies can rally behind.
What American needs isn’t just to save employee jobs and not to alienate customers, they need to capture employee and customer loyalty for the moves. If they succeed they need employees to appreciate that folks at other airlines are losing their jobs but they are not, and they need customers to appreciate that they aren’t seeing the loyalty program being gutted before their very eyes.
Employees need to be loyal and inspired and feel they’re on a shared mission, and turn that shared mission into a strong operation that is focused on the customer. Customers need to value the way they are being treated, by management now and by employees later.
Doug Parker needs to make the case that what he’s doing is different – and puts himself at personal risk for the long-term health of the company and its people.
Parker needs to make the case that:
- How the company treats employees and customers is the future of the airline
- That he’s putting his own job at risk charting this course while other airlines lay off staff and steal from customers – he is risking the wrath of investors, and the board, by maintaining higher cash burn than competitors.
- That if the airline makes it through they’re going to have a lot of debt and a deep hole to climb out from
- American Airlines will be the underdog and needs to pull together
- That means everyone takes great care of customers and puts customers at the center of everything they do, to win the business that will prove this was the right thing to do
American hasn’t had a mission or a purpose to offer employees bigger than themselves. Just saving jobs will quickly be forgotten, and doing right by customers will quickly be forgotten, without a narrative for the airline that brings everyone together.
There’s no better opportunity to do this than now, with the airline in bits and pieces charting its own course. They can bring the story together, lay it out as a mission, and make clear that the CEO is leading from in front with his own job on the line to do things differently. With this core purpose to rally around, and a CEO who leads, if the strategy ends up succeeding they’ll have a company culture that sets the airline apart and gives them an opportunity to really succeed and earn a revenue premium in the future.