How does Parker still have a job?

Old Jul 7, 19, 6:14 pm
  #16  
 
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Having just done an ICT-FLL roundtrip, I can't figure out whom AA is being run for. Seems like a giant mess.
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Old Jul 7, 19, 6:24 pm
  #17  
 
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Originally Posted by mikesyr18 View Post
I hope that's sarcasm.
No, it's C. Wright Mills.

https://en.wikipedia.org/wiki/The_Power_Elite
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Old Jul 7, 19, 7:30 pm
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Originally Posted by Antarius View Post
Don't want to make this a thread about why AA is bad but how it continues to be so without changes.

AA is underperforming in the following ways
1. Operationally
2. Financially
3. Stockholder value wise
4. Employee and customer satisfaction

Why are the shareholders still ok with what is going on? Would like to discuss why the shareholders haven't pushed for changes yet and if there is something holding them back.
Didn't he shepard the merger with US Airways that made AAL the largest airline in the world?
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Old Jul 7, 19, 7:44 pm
  #19  
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Originally Posted by carlosnunez.dfw View Post
Didn't he shepard the merger with US Airways that made AAL the largest airline in the world?
He did. That doesn't mean he is doing a good job managing it now.

Parker clearly isn't an idiot. That doesn't mean that his skillset has translated well to managing the largest airline in the world.
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Old Jul 7, 19, 7:50 pm
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Originally Posted by Antarius View Post
He did. That doesn't mean he is doing a good job managing it now.

Parker clearly isn't an idiot. That doesn't mean that his skillset has translated well to managing the largest airline in the world.
Yup. And an airline that was objectively more premium than LCC.
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Old Jul 7, 19, 8:23 pm
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I'm reminded of Tim Armstrong, the former CEO of AT&T, who was rewarded by the board with a big bonus for his brilliant strategic move to buy NCR, and was then rewarded by the board with a big bonus for his brilliant strategic move to sell NCR.

The reality of senior executives is severalfold. First, if the board fires the CEO, it means they made a mistake in hiring him in the first place. Second, the CEO has a huge staff available to prepare presentations for the board about how wonderful everything is. Third, some of the board members are senior executives of other companies, who think "There but for the grace of a few activist investors go I." Fourth - yes, the responsibility of the CEO IS to maximize profits. If this means good, mediocre, or bad, relationships with employees/customers/vendors, so be it.

Dougie's job is to maximize profits, and sometimes that means doing things that make pax (like us) unhappy.

Look at what it takes to get a CEO fired. John Stumpf and Timothy Sloan (Wells Fargo) had to literally pick their customers' pockets. Jeff Imelt had to take the 200-watt lightbulb that was the GE that Jack Welch built and turn it into a nightlight. Roger Ailes not only looked the other way while Bill O'Reilly et. al. chased skirts but did it himself. I won't even mention Travis Kalanick of Uber, because his misbehavior makes Ailes' look like hiding copies of Playboy under the mattress.
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Old Jul 7, 19, 8:34 pm
  #22  
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Originally Posted by redtop43 View Post
I'm reminded of Tim Armstrong, the former CEO of AT&T, who was rewarded by the board with a big bonus for his brilliant strategic move to buy NCR, and was then rewarded by the board with a big bonus for his brilliant strategic move to sell NCR.

The reality of senior executives is severalfold. First, if the board fires the CEO, it means they made a mistake in hiring him in the first place. Second, the CEO has a huge staff available to prepare presentations for the board about how wonderful everything is. Third, some of the board members are senior executives of other companies, who think "There but for the grace of a few activist investors go I." Fourth - yes, the responsibility of the CEO IS to maximize profits. If this means good, mediocre, or bad, relationships with employees/customers/vendors, so be it.

Dougie's job is to maximize profits, and sometimes that means doing things that make pax (like us) unhappy.

Look at what it takes to get a CEO fired. John Stumpf and Timothy Sloan (Wells Fargo) had to literally pick their customers' pockets. Jeff Imelt had to take the 200-watt lightbulb that was the GE that Jack Welch built and turn it into a nightlight. Roger Ailes not only looked the other way while Bill O'Reilly et. al. chased skirts but did it himself. I won't even mention Travis Kalanick of Uber, because his misbehavior makes Ailes' look like hiding copies of Playboy under the mattress.
Your bolded point is spot on - the issue is that Parker is not delivering shareholder value. The stock is down despite the sector posting large gains. If they were making money, then this thread would be noise around the edges. The question more is why are stockholders not looking to oust Parker and the board. You are correct that barring shady Smisek level stuff, the board will not act on their own.
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Old Jul 8, 19, 3:54 am
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Originally Posted by MSPeconomist View Post
Also, shareholders should care only about current and future market valuation (stock price), not customer satisfaction, operations, employee engagement, etc. except to the extent that these factors influence stock price.
While you may thing that shareholders shouldn't be concerned with those things, that's not a universal opinion. Plenty of shareholders both large and small engage in socially responsible investing.
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Old Jul 8, 19, 5:43 am
  #24  
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Ultimately AA is not delivering the kind of operating profits (or EBITA) that it should. It's key metrics are also running behind competitors. At this point Parker's tenure looks awfully unsafe. He has a very limited time to improve the airline's core operating performance. I would think a summer of operational problems, and therefore added costs could be the death knell for him.
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Old Jul 8, 19, 6:40 am
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Parker holds both CEO and Chairman positions, which makes replacing a CEO a bit more difficult.
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Old Jul 8, 19, 6:46 am
  #26  
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Originally Posted by lobo411 View Post
Because shareholders don't matter. Corporations are run by and for management.
What a bizarre assertion.

Originally Posted by newyorkgeorge View Post
At this point Parker's tenure looks awfully unsafe. He has a very limited time to improve the airline's core operating performance. I would think a summer of operational problems, and therefore added costs could be the death knell for him.
United was a train wreck under Smisek for years, 2010-2015 (remember: "This airline is all Jeff'd up?"), but he was only ousted when his role in the Port Authority corruption scandal came to light. Sleepy captive BODs are slow to act even when the KPIs are terrible.

Parker has presided over HP d/b/a US+AA for only five years. He is not the only guy in this industry better at founding things and making deals than running things (cf. Neeleman). But while AA is a train wreck to rival UA in the first half of this decade, that does not lead automatically to a leadership change.
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Old Jul 8, 19, 6:59 am
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I'm not defending AA, but if not incompetence, what then keeps you flying AA?
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Old Jul 8, 19, 7:22 am
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Originally Posted by SouthernCross View Post
Parker holds both CEO and Chairman positions, which makes replacing a CEO a bit more difficult.
A bad decision by any company. Shareholders can always flip the staff that consist of the board of directors, though.
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Old Jul 8, 19, 7:47 am
  #29  
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The real problem for Parker will be when large institutional investors start calling for the CEO's head. At that point the BOD will be forced to act. So far at least publicly there's been no demand for his ouster.

As far as why many here continue to fly AA? If you live in a hub and have time sensitive travel do you want to be constantly connecting? So for example where I live MIA. Unless you're flying to a DL or one of the few nonstops to non DL hubs there's a connection at ATL. United is very weak at MIA and has no Southeastern hub. So would I and others like me always want to add on 2-4 hours per flight of connection time?
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Old Jul 8, 19, 8:22 am
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I am not defending AA here, but I will say in the last 5 or so years, the hard product on much of the wide body fleet has vastly improved. Remember NGBC? Also, my wife and I have gladly welcomed the upgrades to ACs at some of the big hubs, and certainly the introduction of the Flagship Lounges and Flagship checkin. AA's five star service is a nice touch (although I think if you're flying int'l biz - maybe on select routes - not just F, this should be included.) I don't disagree that we have had more recent troubling experiences with delays and a glimpse in certain unfortunate circumstances at what can only be called depressing, if not toxic morale at the airline. We welcomed the AA app capabilities during IRROPs recently and were impressed at how quickly one can rebook themselves.

That said, I will say flying AA is not the same as it was even 2 years ago with regard to the "soft" product. In some instances, we're paying double for the same route in/on the same product in 2018/19 compared to fares in 2016, only to have had virtually nothing changed for the better and a degradation of on-board service (and really service across the entire customer experience chain from booking to collecting our bags). Unfortunately, this has not been route specific, rather across all routes for us. We recently had a flight where we pre-ordered our meal, only to find the flight was given only cookies and soft drinks on a 3+ hour domestic flight that was delayed due to over-fueling during a mealtime. Whether this was catering's fault or something else, FA's were nowhere to be found after that first round of cookies and soft drinks until doors opened at the gates after landing. There was no turbulence or bad weather of any kind.

We fly mostly international J and F, but when we step into the domestic experience, it's now more-often-than-not not an airline we are proud to be elites of.

Last edited by meunger11; Jul 8, 19 at 8:27 am
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