Tue, Dec 7, 2021 7:34 PM
By DAVID KOENIG, AP Airlines Writer
DALLAS (AP) — American Airlines CEO Doug Parker will retire in March and be replaced by its current president, Robert Isom, as the nation’s largest airline seeks to rebuild after massive losses caused by the pandemic.
Parker, 60, has been CEO at three different airlines since 2001, including the last eight years at Texas-based American.
Isom is a longtime Parker lieutenant who has been the heir apparent since becoming American’s president in 2016. He has overseen American’s operations, including sales and pricing, and its alliances with other airlines. Parker will remain chairman, American said Tuesday.
There will be no shortage of challenges for the 58-year-old Isom.
American posted a profit of $169 million in the third quarter, but only because the company received nearly $1 billion in federal pandemic relief to cover most of its payroll costs. American has lost nearly $10 billion since the start of 2020, and its debt ballooned to more than $36 billion as it borrowed to get through the worst of the pandemic.
Isom said his first priorities will be returning American to profitability without federal aid “as soon as possible” and running a reliable airline that passengers can count on.
American struggled through most of the summer with high numbers of canceled and delayed flights, then suffered another letdown in October. Some of the disruptions started with bad weather, but they spun out of control because of staffing shortages. American persuaded thousands of employees to leave last year, only to be caught short when air travel recovered faster than expected this summer.
American has been hiring pilots and other employees, and Isom said American’s improved showing over the Thanksgiving holiday and into early December shows that the airline is on the right path.
American faces other hurdles, including a Justice Department lawsuit that seeks to cancel an agreement to work with JetBlue Airways in setting schedules and service in the Northeast. Relations with unions, particularly that of the pilots, have worsened under the pressure of the airline’s operational shortcomings.
And of course, the pandemic is not over. New cases of COVID-19 are up sharply in the United States, and the omicron variant has led the U.S. and other countries to impose new travel restrictions.
“Any time there are new restrictions and difficulties imposed on travel, there is some impact,” Isom said in an interview, “but once we get a handle on this, there is so much pent-up demand that it comes back very, very quickly.”
Isom said conversations with corporate travel buyers leads him to believe business will improve “in the new year,” and international travel should “come back as we progress through summer.”
American joins a growing list of U.S. airlines that are under new leadership, or will be soon. Scott Kirby — widely seen as a successor to Parker until he was forced out as American’s president in 2016, clearing the way for Isom — became the CEO of United Airlines in May 2020. Southwest Airlines CEO Gary Kelly has said he will step down, with longtime executive Robert Jordan taking over next February. At Alaska Airlines, Brad Tilden was succeeded by Ben Minicucci in April.
Parker, who will step down as CEO on March 31, said he was prepared to leave a year ago until the pandemic devastated the airline business.
“We’re not in crisis mode anymore,” Parker said Tuesday. He said American is in good position to benefit as airlines recover from the pandemic, and this was the right time to make the long-planned transition to a new CEO.
Parker’s career spans the highs and lows of the airline industry. He started as a financial analyst and was tutored under Robert Crandall, American’s celebrated CEO during the 1990s, before jumping to Northwest Airlines. He became CEO of America West Airlines, a small carrier in Phoenix, just days before the Sept. 11, 2001, terror attacks.
In 2005, Parker engineered a merger with bankrupt US Airways and took on the larger airline’s name. He repeated the same strategy in December 2013 with American, which was just emerging from bankruptcy protection. Parker enlisted the support of American’s labor unions to dump the bigger airline’s management.
American earned more than $17 billion in Parker’s first six years in charge, as U.S. airlines went through an unprecedented period of profitability, helped by a stable economy, relatively cheap jet fuel and reduced competition. That run came to an end with the pandemic, and then Parker played a leading role in convincing Congress to approve $54 billion in federal funds to help airlines pay their workers.
“No other CEO worked as hard, spent as much time with Congress or the administration, or felt the urgency of keeping people connected to our jobs,” said Sara Nelson, president of the Association of Flight Attendants and an ally of Parker in the campaign.
Airlines and their unions say the money prevented thousands of layoffs. However, American and other airlines offered incentives that convinced thousands of workers to quit, leaving the airlines short-staffed when domestic leisure travel bounced back this summer.
American is led by a tight-knit group of executives, most of whom have been together with Parker since their America West days. It is unclear whether Isom will make big changes in American’s operation -- he didn’t name any when asked Tuesday, and he stressed that he was involved in “every strategic decision that’s been made in this company” over the last five years.
Helane Becker, longtime airline analyst for Cowen, said she doesn’t expect much new, but that Isom’s background in operations will lead him to focus on improving the airline’s on-time performance. She said the transition won’t change how investors view American.
Shares of American Airlines Group Inc. fell 4 cents to close at $17.89, in line with the performance of other U.S. airline stocks.
David Koenig can be reached at www.twitter.com/airlinewriter