Doug Parker, king of airline industry consolidation, steps down after Covid crisis ends
Doug Parker always had the languid gaze, the slow train, the “aw shucks” demeanor, which made it seem like everything came easily to him and that he would get through at his own pace.
What he has accomplished, more than anyone, is the consolidation of the American airline industry in the twelve years since the terrorist attacks of September 11th. Meanwhile, no one has done more than Parker and his management team to create today’s industry, with three airlines in the global network replacing six.
It is not unreasonable to characterize Parker as the key architect in airline consolidation at the 21st century, although its largest merger – American with US Airways – came after unsuccessful efforts to merge US Airways with Delta and United.
Today, Parker announced his retirement as CEO of American, the world’s largest airline. The number of people surprised is zero. Parker was CEO of an airline for 20 difficult years. In an interview with CNBC, he said, “This is something that we have been looking at for some time.” The pandemic has delayed his retirement, he said, but now he’s leaving with demand returning.
In other words, Parker is retiring after successfully going through a second crisis. During the two, many experts and investors predicted the demise of the airline industry. But very noticeably, when the pandemic arrived, the four major airlines – American, Delta, Southwest and United – were all run by people who had run airlines after the terrorist attacks. No one panicked. All four seemed to know what to do. They all anticipated the eventual return of travel, including business travel, despite contrary forecasts from overworked investors and tech advocates who were so certain that Zoom would replace business travel. You have to laugh.
Today, travel is returning, albeit at an uncertain pace. In response, in June, Southwest CEO Gary Kelly announced he would be retiring in February. Parker announced on Tuesday that he will be retiring in March. The two men will remain chairmen. In Parker’s case, he appointed his successor, Robert Isom, in 2016. Isom is another known and experienced airline leader. He is adept at managing operations; now his strategic vision and leadership will be put to the test.
Parker’s story is one of 35 years in the airline industry. Parker received an MBA from Vanderbilt in 1986 and went to work as a financial analyst at American Airlines. In 1991 he went to the Northwest. In 1995, he traveled to America West, where he became CEO, just before the September 11 attacks.
On September 22, 2001, Parker failed to secure America West’s bailout money from the new Air Transport Stabilization Board. âIt was a bad day,â he recalls in a 2013 interview. âI’m 39 years old. I have been CEO for a month. Now I will liquidate. It’s not going to look good on the resume.
On the flight back to Phoenix, a depressed Parker went to the back kitchen and spoke with a flight attendant, a single mom, who asked him how it went. âI couldn’t lie to him,â he said. âI told her, ‘They don’t want to do this’â¦ She just looked at me. She said, ‘You can’t do that. I have been practicing this profession for 15 years. That’s what I do. I set up my daycare around her. I can’t do anything else.
âI realized it’s not about me,â Parker said. âThe job of management is to serve the people who do what they do. In October, America West secured a federal grant of $ 60 million and in December a loan guarantee of $ 380 million, allowing it to survive and its management team to begin a quest for merger.
They pursued a merger with American Trans Air in 2004, but failed. Then they turned their attention to the bankruptcy of US Airways. The following year, US Airways emerged from Chapter Seven with Parker as CEO. The reorganization involved cutting costs and recruiting a dynamic young management team that included Parker, Scott Kirby and Derek Kerr. In the first earnings report for January 2006, the figure that emerged was the 28% increase in revenue per available seat mile. He said maybe these people know what they’re doing.
But the quest for fusion had just begun. In 2006, the team sued Delta Air Lines for bankruptcy, embarrassingly failing and making it seem like it wasn’t ready for prime time. But the team learned they needed the support of the employees. They failed in a subsequent merger with United: The CEO of United capitalized on their attempt to merge with Continental, resulting in both a hub in Newark and an inadequate management team. Thus, in 2013, in collaboration with the unions of American Airlines, the America West team implemented a merger with American.
It was not easy for American. In the 21st century, Delta has become widely regarded as America’s best airline. United – now run by Kirby – has become the airline of the moment, capitalizing on the strategic mistakes of previous executives and reinvigorating the brand image.
In some ways, the American appears to be lagging behind its competition. However, it has newer aircraft, while its competitors have yet to modernize their fleets. In addition, American has aggressively expanded its partnerships on the east and west coasts, hopefully surpassing a construction where its California hub was in Phoenix and its New York hub in Philadelphia.
As for Parker, he kept trying to work with the job, not always successfully, although the effort was there. One of the first public statements about her retirement came from Sara Nelson, president of the Association of Flight Attendants.
“Doug Parker has played a disproportionate role in shaping the airline industry in a post 9/11 world, only bringing airlines out of bankruptcy rather than entering it,” Nelson said Tuesday. When it came time to negotiate with Congress for an industry bailout during the pandemic, a joint effort led by unions and airlines, “No other CEO has worked so hard, spent so much time with the Congress or the administration neither felt the urgency to keep people connected to our jobs, âNelson said.
Parker wasn’t the greatest airline CEO of all time. He wasn’t even the greatest American CEO: it was Bob Crandall. But when it comes to industry consolidation, as US Airways’ Ed Colodny was accomplished, Parker worked on a bigger stage and has never been equaled.