Is Doug Parker the Best Choice to Operate the US/AA Merger?

The US/AA merger has been inevitable, just as selecting US Air CEO Doug Parker to lead it. A bit surprising to me, there is some uproar on the internet boards about this.

I understand some of the negative feelings about Parker but when looking for the best person to consolidate two major airlines, who would be better? Parker offers a wealth of knowledge and more than two decades of carrier experience. He brings more airline time to the table than Richard Anderson did at Delta, and far more experience than Jeff Smisek did with United. Also noteworthy, Anderson came from Northwest and Smisek came from Continental where Parker presents a much needed financial background with both AA and US.

Parker has turned US Air into a reliably profitable airline, an accomplishment only Delta has also achieved among the legacies. On the other hand, US has not fared well in customer service surveys. This is something that definitely falls at Parker’s feet.

That leads into some of his noteworthy mistakes. Hindsight makes it easy to see that Parker’s running America West was anything but profitable. The financial bleeding was massive but also consider that he took over the airline just before 9/11, followed by one of the worst slumps in airline traffic history. Nevertheless, he led the merger with US Air four years later. Mistakes for sure in that deal, especially dealing with labor contracts, but he should have learned a lot about taking over a larger competitor.

Well, maybe not. The following year, Parker attempted a hostile takeover of Delta. Many have labeled this costly failed merger attempt as cocky arrogance. They may be correct but fast forward more than six years and now you have a CEO that has both successful and unsuccessful merger experience. Okay, arguably more unsuccessful but Parker appears now to have learned at least a few things from his prior mistakes.

Parker’s task to merge US and AA is Herculean but he is off to a good start. The other relatively recent mergers have proven that combining two distinct cultures into one has been riddled with obstacles. Parker took on this task early, seeking and winning conditional approval from the AA unions. Also learning from the UA/DL mistakes, he has already said that instead of trying to take the best features from each carrier, the AA IT system will be adopted, perhaps with some tweaking. This lowers the transition curve by at least a year.

Someone suggested that Parker would turn the merged airline into an LCC. There is absolutely nothing to suggest this will ever happen. The new American will be the largest operating carrier in the US and continue to be a member of OneWorld. It will no more become an LCC than United or Delta.

Another believes that Parker will gut the frequent flier program. Well, this is partly correct. It won’t be ‘gutted’ but it will certainly change, and not in a direction that will please many frequent flier members. However, this is true of all the legacies. The focus today is on consistent profitability and that is somewhat at odds with offering benefits to frequent fliers. Really, anyone leading this merger will need to do the same thing.

I don’t fly US or AA so I have nothing invested here personally. Perhaps someone could explain why Parker is not the most logical choice to lead this merger or the best person for the job. Am I missing something?

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Comments

  1. He’s going to do fine, I think. Will it be different? Yes, but the whole industry is evolving. This will make a few people mad, but airlines are businesses, and it’s nice to begin to see them run as such.

  2. Interesting choice, downhillcrasher. Not sure DOT has a voice in selecting the CEO but Lorenzo would meet very stiff resistance from the unions anyway, probably enough to be a dealbreaker.

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