Doug Parker’s $54 Billion Heist: Ex-American Airlines CEO Takes Victory Lap After Destroying U.S.
Commercial Aviation Doug Parker is the retired Chairman and Chief Executive Officer of American Airlines, and the man most responsible for consolidation in the U.S. airline industry. He succeeded in his single-minded quest to lead the world’s largest airline, and he has government cronyism and taxpayers to thank.
Now he’s a board member at Qantas, and has a charitable foundation that supports minorities in aviation careers – especially pilots – though he shouts American Airlines interests from the rooftops even when they’re contrary to developing minority talent in aviation (by blocking non-traditional paths to becoming a pilot when it favors American Airlines competitive interests).He owned over 2 million shares of American Airlines stock when he stepped down. At Investor Day in 2017 his company stock was worth about $100 million. Today those same shares are worth around $20 million. Lucky for him, he sold millions of shares before the crash – with today’s share price hovering around the lowest level since bottoming during the pandemic, when credit default swaps suggested high likelihood of bankruptcy for the airline.
Last week, @flyingwithsara and I were asked to speak at the #jffhorizons summit in Washington D.C. It’s always a pleasure to share a stage with Sara and the topic they asked us to discuss — how we worked together to pull the US airline industry through the COVID crisis — is one we’ve covered many times. So it was easy duty.The story is that Sara Nelson, a labor leader, had the courage to reach out to industry executives with a plan that was good for the corporations but also good for her constituents. And we executives were willing to listen and to work together with labor. And all of us were willing to trust each other. The result was anincredible piece of bipartisan legislation that saved hundreds of thousands of jobs and kept the US commercial airline industry operating through a national crisis.
The lesson is we actually can get important, creative, bipartisan legislation passed in today’s polarized America. It won’t happen by continuouslywon’t happen by continuously asking our legislators to reach across the aisle — that is extraordinarily difficult for them to do on their own. But it can happen if concerned citizens on each side of an issue are willing to work together to develop constructive compromises.
It just takesleadership. Not by congressional leaders, but by all of us — people like Sara Nelson that are willing to work with the other side for the sake of a better future for all. I know it sounds crazy, but it works. I’ve seen it. And I’ve got the story to prove it:).For Parker and American, this was the heist of a lifetime. He spent all his time in D.C. lobbying and Nelson played a key role. Without Nelson’s cover with the narrative about workers, and bringing along Democratic leadership, it would never have worked. Together, they robbed the American people of $54 billion in direct cash, $25 billion in subsidized loans, plus money for airline contractors and tax subsidies as well.
And Parker’s American didn’t keep pilots current, so lacked the pilots to fly when rebuilding schedules to sell to passengers. That led to operational meltdowns.
American took about $10 billion in direct subsidies plus subsidized loans. It was the scam of the century, and now he’s taking victory laps. That’s shameful. But very on-brand.What turned Parker from an obscure and likely short-lived leader at American West, whom we might never have heard from again, into the man probably most responsible for the race to the bottom in U.S. commercial aviation was his persistence in obtaining government subsidies after 9/11.In his telling, he was relentless in securing government cash even in the face of formal rejection. That positioned him to ultimately take over twice-bankrupt US Airways which had sloughed off pension obligations on the federal government, and ultimately with the help of labor unions (whom he somehow convinced would be better off under his leadership, which turned out wrong) and the Pension Benefit Guaranty Corporation he took over American Airlines. And that’s how the big heist was set up.
Considering those $10 billion in direct cash from taxpayers during the pandemic, it’s striking that the company’s entire market cap is now about $7 billion. Parker avoided bankruptcy by pretending this was all about workers – the same story he told himself about why sought to merge with airline after airline (he says that was never about his own ego, even though a deal with United fell apart when it became clear he wouldn’t lead the combined entity).
It’s a key part of his legacy so he’s desperate to spin the story – as much as self-deprecating Halloween skits that are now getting United’s Scott Kirby in trouble.It’s a key part of his legacy so he’s desperate to spin the story – as much as self-deprecating Halloween skits that are now getting United’s Scott Kirby in trouble.
Never forget that the acolyte of Bill Franke (who turned Spirit Airlines into an ultra low-cost carrier, controls Frontier today, and gave us Wizz Air and Volaris) made U.S. aviation the consolidated lowest common denominator business that we now experience.
He’s the godfather of consolidation – fewer airlines, fewer choices – while cramming more people onto planes with less room. He led the race to the bottom – and when you stopped buying his tickets after 9/11 and the global pandemic, he made you pay for it anyway. Yet his strategic blunders, such as falling behind Delta and United in passenger experience and relinquishing slots and gates in New York to Delta, leave American Airlines struggling the way it is today.