What Will American Airlines Become When This Is All Over? CEO Says They’re Re-Building From Scratch

American Airlines CEO Doug Parker, speaking to a group of employees last week in a recording reviewed b View From The Wing, described the pandemic and crisis in travel as having a “silving lining” which is the ability to re-imagine the world’s largest airline from scratch.

There are three areas he mentions doing things differently going forward: more efficient management structures, cutting routes that aren’t going to be profitable, and using technology more for customer interactions.

What we definitely are starting to think about, is what do we do now to make sure when we come back it doesn’t just come back the same?

As horrific as this is there’s one single lining. We get the chance now to pretty much start the biggest airline in the world from scratch. We’ve taken it down to where we were only flying 10% of our schedule a couple of months ago. So now we get to add back and we get to add back only those things that make sense, and as we do that you can make sure you’re learning.

That’s kind of a schedule piece, but that’s true of everything in the airline. We’re going through and taking out 30% of the management team. We’re not just taking 30% of every group, we’re going through and thinking about which of these groups can we consolidate, where do we find ways to make sure we’re working smarter and faster?

And that type of attitude rings through to everything, technology in particular. A good thing about so little traffic is we can do more things for the traffic that’s there, and we can use these as tests for technology and figure out ways to have a more personal customer experience for example. Anyway, all those things. …That’s the next level we need to get to, I know we will.

We need to use this to where when we are back to 100% of flying we’re not doing the exact same stuff. We’re doing it smarter. We’re doing it better, providing better customer service. We’re flying even to more, the flying is more generated around profitable flying instead of just flying that has always been in the system.

A crisis is an opportunity to rethink the business. In normal times there are plenty of good reasons not to take chances, and too many entrenched interests standing in the way. Those are largely swept away. And the old arguments favoring the status quo hold little weight when the status quo is no longer an option.

Parker is right that the pandemic and rebuilding the airline’s routes and traffic from almost zero is an opportunity to re-think the business. Unfortunately he does not articulate here a creative new vision for how American Airlines might do that.

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. As long as those horrible (and so NOT an) “Oasis” cabins remain, NOTHING meaningful for passengers has changed.

    Everything else mentioned is no different than past efforts to cut costs and further degrade the airline so it can prioritize future availability of cash to resume funding obscenely generous stock buybacks – assuming the airline isn’t bankrupted if/when it can’t keep up with interest payments for those sky high 11.25% junk bonds first, that is.

    If this airline’s board was really interested in “trying new ideas out” during a time of crisis, it would actually bring in a NEW CEO instead of hoping the one that destroyed the airline has the “vision” and imagination to fix what he (and the board) long ago broke.

  2. AA also needs to rebuild its executive management team from scratch. They need fresh ideas.

  3. To start with Americans hostility and greed must go to rebuild severed relationships
    I felt like they were doing me a favor to buy and redeem awards at outrageous prices
    The culture must become friendly and can do Southwest & Alaska style
    The program was the glue that had myself and others able to look away at some of the downsides
    I know I left and many others despite 20 years of loyalty.
    Parker’s wrecking ball hit every area of operations.The list is so long of issues at American I didn’t bother to complain I voted with my wallet elsewhere and never looked back
    His leadership or lack of it is so far gone I see zero hope with his continuing
    That’s what can happen when you take customers for granted and treat them poorly
    They decide to go elsewhere.I feel sorry for the employees/front lines too
    They do have some good folks that work @ American who deserve better
    However the lack of caring and empowerment to help customers generally has poisoned the company to the point where I am concerned if friends or family consider flying them

  4. It is time for the board of directors to wake up and fire Parker so American can return to the great airline it once was before Parkers arrival from USAIR.

  5. Get rid of f^*king Parker and the entire USAir management team that destroyed AA. Customers don’t want him nor do any of the employees I used to talk with.

  6. With AAL stock trading about $13.5 Parker & Co are now trying to reinvent and “re-build from scratch”. It looks like another PR stunt mainly to get some traction with the Wall Street. Does this mean the full admission of the failure over the last 6 years? The problem is that the current management run out of all the tricks they had at America West already some time ago.

  7. Fire the Board too for keeping this destructive Executive Team in place for so long.

    With a billion warning lights going off (especially the one labeled “share price”), what clues HAVEN’T been considered by this incompetent Board?

    There should’ve been a revolt long ago.

  8. It’s disingenuous to blame AA management for what happened because of Coronavirus. Before the global shutdown of Air Travel, AA was a profitable airline that was trying to get out of the stranglehold unions have placed on the airlines. If you want to blame management for not cutting unprofitable routes and not taking a firmer hand with unions, then that is valid. If you want to criticize management for not generating shareholder returns, that is fine. But that has nothing to do with coronavirus. Airlines across the globe are in the same boat and require government assistance. Unions continue to hold airlines up for excessive compensation and egregious benefits (except BA as the BA proposed wages are too low given the work).

  9. As noted in comments above, any “reinventing” that does not start with an entire “house cleaning” of Parker and that mineable bunch of losers he infected American with , will be nothing but a smokescreen and just expedite them to bankruptcy yet again. . In order to accomplish this, the entire BOD needs to be sent packing also as they have sat on their collective hands and let what was left of the “real AA” unravel!.
    As to the note “defending” the Parker regime, is apologetics from someone who is poorly informed.

  10. Gary writes, “Parker is right that the pandemic and rebuilding the airline’s routes and traffic from almost zero is an opportunity to re-think the business. Unfortunately he does not articulate here a creative new vision for how American Airlines might do that.”

    All the more reason for the American Airlines Board of Directors to fire Parker and bring in a new CEO from outside the company.

  11. They need to take a close look at raising bag, seat and change fees. That’s what the customer is hungering for.

  12. No kidding Howard. Get rid of the lame board at the same time. There is no talent there unless you can count. Anyone can look to improve the bottom line but cut bavcke, layoffs and no cares to customer experience or employee satisfaction. They to instil confidence, have a great marketing and stop acting like greedy pigs and filling the aircraft like we are transporting cattle.

  13. Doug Parker is an incompetent con man. The absolute fiasco of contract negotiations is a prime example. The employees gave massive pay and benefit concessions in 2003 only to see the savings squandered away bin stock buybacks, ridiculous pay for board members and construction of a headquarters that cost 1.5 billion. Enough is enough! Send the whole lot of them packing. Record profits for years and nothing in the bank says it all.

  14. It is disappointing that this airline continues to focus and brag on being the largest airline despite also being one of the worst. This US airways management have destroyed anything good of AA and made it into a large low budget airline.

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