AA CEO Loses Stock Price Bet, Finishing $10 Billion Shy of Goal
In September 2017, American Airlines CEO Doug Parker took to the stage of the airline's "Media and Investor Day" (the first in more than five years) to announce a bet he'd made with a UBS stock analyst back in October 2016: Before the analyst turned 60 years old in November 2018, American Airlines' stock (ticker: AAL) would hit $60 per share. The wager: a bottle of wine.
Parker meticulously reviewed a graph of the stock's peaks and valleys between the origin of the bet and that day's value of the stock, around $48 per share. While the share price was lagging behind the straight-line growth needed to hit the goal, Parker made it clear that he intended to win the bet.
This isn't where the positive statements ended. The CEO went on to explain how American Airlines would never lose money again, citing that executive bonuses were based on the airline making $5 billion in pre-tax profits per year.
When I spoke with Parker shortly after this presentation, he was still glowing with optimism — even though I'd just put him in a tough spot with a question about seat pitch during the Q&A session.
That confidence seemed justified in the months following the event. By mid-January 2018, the bet was looking to be a sure win for the CEO. On January 12, the stock hit $58.47 — needing to climb just another 2.6% to hit the $60 mark. In late January, AA would post a 2017 pre-tax profit of $3.8 billion excluding special items — short of the $5 billion goal but still one of most profitable years in the combined airline's history.
Since then, profits, shareholder confidence and stock price have all been downhill for the world's largest airline:
On the last day of trading before the analyst's birthday on November 25, American Airlines stock closed at just $37.95 per share. That $22.05 shortfall multiplied by the 460 million outstanding shares of American Airlines meant that the market capitalization (company value) of the airline was $10 billion less than what Parker had confidently predicted.
In the two weeks since, American Airlines' stock price has continued to slide. This Friday, the American Airlines stock shed more than 9% of its value to close at $33.57 per share. While many airline stocks have taken a hit in recently, AA's share price has significantly lagged its peers since both the bet in October 2016 and Media Day in September 2017:
| Change in stock price since... | The Bet (10/27/2016) | Media Day (9/28/2017) |
|---|---|---|
American (AAL) | -16% | -29% |
Southwest (LUV) | 31% | -9% |
Delta (DAL) | 36% | 16% |
United (UAL) | 60% | 44% |
Admitting defeat, the CEO is willing to pay up. In a statement to Bloomberg, an American Airlines spokesperson said Parker and the analyst plan to meet for dinner, with the CEO paying for the drinks.
However, what's unclear is what's next for American Airlines and for Parker. Along with shareholder value, the boastful predictions from the CEO have also disappeared. Will shareholders continue to allow Parker to pursue the vision he confidently presented a year ago? Or, will shareholders look for a different captain for the helm of the world's largest airline?
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees