As CEO, Doug Parker’s 20-year tenure spanned from crisis to crisis
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Doug Parker became CEO of America West Airlines on Sept. 1, 2001.
Ten days later, the airline industry would be rocked to its core as terrorists attacked the U.S., using commercial aircraft as their weapon of choice.
Doug was in charge.
In March 2020, the world plunged into lockdown as a new coronavirus sickened many and sent air travel to a screeching halt.
Doug, now CEO of American Airlines, was in charge.
Now, 20 years, three airline brands and two mergers later, the Doug Parker era is coming to an end. He announced on Tuesday that he’ll retire on March 31, with American’s president, Robert Isom, taking the helm.
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Parker has had the longest tenure of any major airline CEO in the deregulation era, which began in 1978. It surpasses his most notable predecessor, the legendary American CEO Robert Crandall, who served as CEO for 13 years, between 1985 and 1998.
The first airline Parker helmed, America West, was considered a darling of deregulation. In an era of constant startups, overcapacity and low yields, the Phoenix-based airline survived — which is the correct term, because it did operate under Chapter 11 bankruptcy in the 1990s — and became his base for two more mergers. Parker first joined that airline as its CFO in 1995, after it exited bankruptcy.
When he took over as CEO, he was thrown into the deep end.
Prior to 9/11, America West had just sealed the deal on large financing round, led by GE Capital and Airbus. But overnight, the money was gone. The two companies had pulled out of the package, with the terrorist attack being a “material change in events” that legally gave them an exit.
“Our ability to obtain additional financing is nonexistent right now,” Parker told the House Transportation Committee eight days after the attack.
Three days later, President George W. Bush signed legislation to create the Air Transportation Stabilization Board. By the end of 2001, America West was the first airline to receive an ATSB loan guarantee: $380 million.
America West would live to see another day — and from a position of relative strength, as competitors struggled. Between 2002 and 2004, United, Delta and Northwest each filed for Chapter 11 bankruptcy. US Airways filed twice.
That set the stage for Parker and America West to come to the rescue of US Airways, announcing a $1.5 billion merger in 2005 that kept the US Airways name intact but installed Parker and most of his management team at US Airways. Airbus, which pulled out of that funding package right after 9/11, was back, with a $250 million loan to help finance the transaction, in exchange for an A350 order. (Years later, American canceled that order and ordered 47 additional 787s from Boeing instead.)
It was years after Parker completed another merger — this time taking over American Airlines and forming the world’s largest airline — that the airline industry faced its worst crisis yet.
The COVID-19 pandemic brought air travel to a near screeching halt — one day in April 2020 saw just 87,500 people go through Transportation Security Administration checkpoints. American was burning about $70 million a day in the second quarter of 2020, the first full quarter affected by the pandemic. By comparison, Parker told Congress in 2001 that America West (albeit much smaller than 2020’s American) was burning around $5 million per day in the wake of the Sept. 11 attacks.
Yet like America West, American survived.
Parker, along with other airline CEOs, was instrumental in lobbying Congress to pass the CARES Act, which covered airline payrolls in their entirety in exchange for stock warrants issued to the U.S. Treasury. In the end, there were three rounds of the CARES Act Payroll Support Program (PSP), which wrapped up at the end of September 2021.
When PSP funding lapsed in the fall of 2020, American, like other airlines such as United, temporarily furloughed flight attendants and some other staff. Parker and his team were unable to reach a deal with its pilot union, the Allied Pilots Association, and as a result, its junior pilots were also furloughed, which was a unique problem to American. Other airlines, including United, Delta and JetBlue, reached no-furlough deals with their pilots, which put pilots at reduced hours but kept them employed, on benefits and, in some cases, trained.
Since the lows of 2020, American under Parker has faced a roller coaster of a recovery: summer travel surges, new COVID variants (and travel restrictions), operational meltdowns, 787 delivery delays and strong operational performance during the Thanksgiving travel period — to name just a few of the ups and downs. While American faces a higher debt load than its peers going into the future, Isom, Parker’s successor, will likely follow the same strategy: survival, and readiness to weather the next storm.
Featured photo by Andrew Harrer/Bloomberg via Getty Images.
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