What’s next for American after CEO Doug Parker announces his retirement?
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Editor’s note: A version of this story first appeared in TPG’s biweekly Aviation newsletter. Sign up here to make sure you’ll always be the first to see our exclusive content.
The world’s biggest airline will soon have a new leader at the helm.
That news came Tuesday, when American Airlines CEO Doug Parker said he’d retire in March. Taking his place will be Robert Isom, currently the carrier’s president.
Neither move was surprise, but it’s part of a broader leadership change now underway for the U.S. airline industry. Southwest CEO Gary Kelly will step down in February while Alaska Airlines’ Brad Tilden did so earlier this year. With that, there’ll be new CEOs running three of the nation’s five biggest carriers by the time summer arrives.
For now, though, Parker’s retirement and Isom’s impending promotion to CEO is the big story. The executives did a whirlwind round of media interviews after their Tuesday announcement. I got 8 1/2 minutes with the pair Tuesday. It was a “buckle your seat belt, prepare for takeoff” lighting round that touched both on Parker’s legacy and the future of the world’s largest airline.
From 9/11 to COVID-19: As CEO, Doug Parker’s 20-year tenure spanned from crisis to crisis
For Parker, he is exiting the industry literally yards from where he started his career in the 1980s. He was part of a crew of young financial analysts, fresh out of school and ready to conquer the world.
“I joined American Airlines in 1986 – at a time when we all knew we were working at the best airline in the world,” Parker said to TPG during the interview.
Over the years, Parker would hold other airline jobs, eventually becoming CEO of America West days before the Sept. 11, 2001, terrorist attacks.
But his legacy might ultimately be as the catalyst who reshaped – and brought stability – to the post-deregulation airline industry.
Parker was the CEO who kicked off the industry’s modern cycle of merger mania back in 2005, when his America West Airlines acquired then-bankrupt US Airways – ultimately taking on the latter’s name.
Other merger dominoes began to fall shortly after. First Delta and Northwest merged, then United and Continental and – finally – Southwest acquired AirTran.
But it would be Parker who – seven years after he started the modern merger rush – would end it with the most ambitious deal yet. His smaller US Airways would take over a bigger-but-bankrupt American Airlines, adopting the American name and Texas headquarters – though what emerged was still very much a US Airways-led company.
Now, that’s where Parker will exit the industry – on that same plot of land in Texas. Except this time, he’s in a modern glass complex and at the helm of the world’s largest airline. Yes, American still has issues, but Parker says he is “leaving it, feeling in a really good place.”
Pushed further, when asked if there’s one thing as CEO that he never got to accomplish, Parker just replied: “I feel pretty good.”
But not so good that he’s yet mapping out where he plans to use his free flight benefits.
I’ve still got 4 1/2 months as CEO here and I haven’t thought about where next,” Parker said. But his guiding principle will be “someplace I haven’t been before.”
Looking ahead, the transition to Isom will not be a radical shift for American. He’s been president since 2016 and has been a top leader, with Parker, since the US Airways days in 2007.
A CEO’s prerogative: American’s Doug Parker on how he feels about flying his own airline
Isom notes that “I’ve had a chance to learn from Doug” and says that he’s “committed to running a company with a sense of purpose.”
“Doug’s been a great teacher, mentor and friend,” he added.
Don’t expect a major shift in strategy, but Isom will bring his own style. “I am probably much more of a morning person than Doug,” he jokes.
Job No. 1 for Isom will be to ensure that the airline is ready for the wave of travelers he expects to soon be flying.
“We worked so hard to make it through the pandemic and do more than survive,” he said. “We have positioned American to thrive once demand returns.”
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That includes modernizing the fleet, making the jets uniform, optimizing the network and leveraging the partnerships with Alaska Airlines and JetBlue.
“In 2022, it is really about running an on-time airline,” he said.
We wouldn’t be TPG without ending the call talking about the value of the AAdvantage frequent flyer program.
Isom didn’t go into details about it beyond saying “it’s incredibly important” and pointing to how American used to program during the pandemic to help it refinance its debt.
Probably not the message die-hard flyers want to hear, but the silver lining is that at least he sees value in the program.
Featured photo by Andrew Harrer/Bloomberg via Getty Images.
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