American Airlines CEO
Doug Parker was born in 1962 and spent the majority of his upbringing bouncing around from town to town in America’s midwest – seven moves over the course of seven years at one point. His father started off as a meat cutter in an Indianapolis grocery store and, throughout his career, took on a number of different managerial jobs within the Kroger supermarket chain. Some of the cities the Parker family made a brief appearance in during these days include Kalamazoo, Mich.; Cincinnati; Charleston, W.Va.; and, finally Farmington, Mich., where Doug graduated from high school.
“You will find, a lot of people in our industry just grew up with jet fuel in their veins. They’d sit and watch the airplanes take off at an airport all day,” Parker discloses in a speaking engagement for Stanford’s Graduate School of Business. “I didn’t do any of that stuff. I was not a huge commercial aviation enthusiast or anything like it.”
The truth is, he was more interested in collecting numbers. On Sunday mornings, he’d read through baseball box scores and look for leaders in batting averages. He liked to calculate slugging percentage. According to the East Valley Tribune, his favorite Major League Baseball team was the Cincinnati Reds and his player, Pete Rose.
It wasn’t out of the ordinary for Doug to tag along on one of his father’s frequent business trips, due to his role as a division president, Kroger often tasked the elder Parker with checking in on stores across the region. This quality time afforded the younger an opportunity to learn firsthand from a man who had worked his way up from a meat counter to the corporate office.
“I learned two things from watching my dad,” he says. “First, when you work for a company, you should make sure you give them a good day’s work. Second, you should always listen to and respect the employees who are interacting with customers.”
Making a name for himself as a high school football player, Doug Parker managed to get onto the team at Michigan’s Albion College. He played tight end for the Briton’s until suffering a career-ending knee injury his sophomore year.
“People were telling me, ‘you should really get into computers,'” he remembers, but it was a microeconomics course, of all topics, that stirred his interest. “However my mind worked, I had never seen the world described that way. It seemed to explain everything to me – supply and demand curves, how prices are set, and things like that. A little bit of math, but really about how our economy works. I remember sitting in class thinking, ‘wow, this is really neat.'”
Psychology 101 also caught Parker’s attention, and unbeknownst to many, he actually minored in the subject. “I was drawn to Albion for sports, but it was the liberal arts education that made all the difference,” he proclaims in a school profile.
Despite experiencing a lot of moving around during his childhood, he had no problems making friends in his new, considerably long-term, home of four years. “One thing that has made Doug very successful is his basic friendliness and positive attitude. He just comes across as a regular guy,” reveals fellow Sigma Nu, Mark Riashi. While another fraternity brother, Jeff DeLosh, explains, “it didn’t seem to matter if it was an upperclassman, lowerclassman, member of a different fraternity, or whomever, Doug was able to create a rapport and relationship that was genuine and lasting.”
Parker graduated from Albion College in 1984 with a degree in economics, however, unsure about what he wanted to do professionally, he chose to enroll in the MBA program at Vanderbilt University.
The Owen Graduate School of Business allowed his fascination with numbers to let loose and flourish. Approaching the end of his formal education, Doug Parker had narrowed down his job prospects to industries that were heavily capitalized.
In addition, he came to the conclusion that finance had to be crucial to the company’s operations, that way the work he was reasonably proficient at would matter. American Airlines was in the process of creating a “hub” out of Nashville’s airport and happened to be recruiting on Vanderbilt’s campus that final year.
“After my first interview, I flew to Dallas to interview with the whole team. As soon as it was over, I knew it was where I wanted to work,” he remembers. “I knew finance would be important there. I didn’t want to work at a company that was driven more by, say, its marketing department.”
Graduation day in 86′ was eventful for a number of reasons, because aside from receiving an MBA, he also wound up on the wrong end of a joke plotted out by his closest friends. Sharing a two-bedroom apartment with another classmate, companion, and soon to be graduate named David, Parker was grateful to discover that his caring roommate had taken the time to fill out both of their cap & gown paperwork while on campus. Caught up amidst the chaos of his final semester, he appreciated the favor.
“I was even more thankful a couple of weeks later when David reported he’d picked up my cap and gown when he picked up his and that it was hanging in my closet,” he recounts during a Vanderbilt commencement address. “But my sense of gratitude took a major turn on the morning of commencement day. I woke up, David had already left the apartment with his parents, I got myself ready, pulled my gown out of the closet, threw it on, and my first thought was, ‘this thing’s a lot shorter than the ones we had in undergrad.'”
The gown barely reached his knees, the sleeves ended at his elbows, and, worst of all, the cap barely fit over his fist, let alone his head. “They got me,” he admits. “I had no time. I had nothing I could do but cut the seam out of the back of my hat so it could balance on top of my head and then get down to our ceremony where all of my friends were waiting in great anticipation.”
While delivering remarks at the Owen Graduate School of Business commencement nearly three decades later, dressed in full graduation attire, he gestured to his family and cheerfully exclaimed, “look mom, I got one that fits!”
Doug Parker Career
Doug Parker spent the first five years of his professional career within the finance department of American Airlines. “I was a pretty good analyst, but there were definitely better analysts than me,” he recalls. “Where my career started progressing is when I was promoted to managing a small group of people. I quickly realized that if I could get these five people, who are smarter than me, to work together, then we can do a lot more than the six of us can independently.”
It’s also important to note that, although he knew he wasn’t the fastest at building a spreadsheet, the young financier certainly cared about what he did, took pride in the work he produced, and his superiors noticed it. “I wasn’t incredibly driving, cutthroat, [or thinking] ‘I’m gonna get this job before somebody else does’,” he adds.
As a matter of fact, even after his many accomplishments, Doug has this enduring reputation in the airline industry of being unburdened by ego. The man is constantly “concerned” about all the attention he’ll occasionally receive at the expense of his employees, whom he believes deserve all the credit.
Scott Kirby, former America West Executive Vice President, once described Parker as a “very calm, nice, easygoing person who would rather go to a ballgame and eat a hot dog and have a beer than get dressed up and go to a formal occasion.”
Considering his upward trajectory at a massive corporation known for producing some of the best and brightest executives in aerospace, Parker’s American Airlines colleagues found it astonishing when he abandoned ship in 1991 to join ranks with smaller Northwest Airlines. Although his decision was contrary to popular belief, he thought he could have more of a meaningful impact on the latter.
“I’ve found over time in business that the risk-reward concepts we learn about in college – that higher risks mean higher rewards,” he explains. “But it’s really hard to do in practice because people don’t like to fail. It results in people being more risk-averse than they should be for the benefit of their organization.”
At Northwest, he was tasked to assemble a team that would systematically figure out where the airline was making and losing money. Airlines had become notorious for being extraordinarily complex operations that yielded little profits at the end of the day.
“From the time I started in ’86, people have been talking about how our business isn’t like any other and that it can’t make money,” he says. “They’re right about it not being like other businesses, but the part about not making money never made any sense to me.”
“Tracking profits flight-by-flight in such detail was a big job and was a first for Northwest,” said Jon Austin, who worked as a spokesman for the airline during the 90s. “[Executives] threw him [Doug Parker] into some of their more challenging issues. It was a real loss when he jumped to America West.”
America West Airlines
Doug Parker assumed the role of CFO at America West Airlines in 1995 and, because then-CEO Bill Franke wanted to mold him into the company’s next chief executive, he was moved around between the finance, sales, and operations divisions. Within five years he became the airline’s president and on September 1st, 2001, its chairman, president and CEO.
“We wouldn’t call Bill Franke, ‘Bill,'” said Bill Lehman, the America West pilots union vice president. “He always insisted on ‘Mr. Franke.'” When Parker arrived and employees began addressing him as Mr. Parker, “He said, ‘No, we are all in this together. You can call me Doug.'”
Parker tends to describe the start of his tenure as “a good 10 days.” The eleventh day, however, brought with it the horrifying 9/11 terror attacks on New York City’s world trade center. After checking on his own crew and airplanes to make sure all of them were safe, as they thankfully were, he was thereafter at the mercy of stricter government-enforced procedures and a greater society now more skeptical than ever in the safety of air travel.
For every weekday over the course of the next three months, Doug Parker, along with other America West executives, lived out of suitcases in Washington D.C. hotel rooms while trying to convince congress they needed bailout aid. “The rest of the industry believed if you just let America West go away, that’ll help everybody else, so don’t give them a loan,” said Bernie Han, America West’s chief financial officer. “We could have gone on to get different jobs. But 12,000 other people’s jobs were on the line.”
Two months in, the Department of the Treasury sent them a fax on a Friday at 5:00 pm (so their employees could immediately leave afterward) saying “we’ve reviewed your file and must inform you that we can not approve your application at this time.” The company was going to have to close down permanently and liquidate.
Carrying with him the bad news on his flight home from D.C. to Phoenix, a stewardess asked him how the process was going, “I tell her, ‘well, gee it doesn’t look too good right now. Umm, we’re fighting through it but I just don’t feel good about it.'” She asked him, “well what’s that gonna mean?” Parker then explained to her how if they don’t get the government aid, the airline was pretty much finished.
She then looked him square in the face and said, “you can’t do that. I’ve been doing this job for ten years, I’m a single mom, I’ve got my life arranged around this flight attendant job, I can’t do anything else, I’m really good at this, and you just can’t let that happen.” Taken away by her heartfelt conviction, Parker pulled the letter he had received from the United States treasury out once again and zeroed in on the words, “at this time.”
Just a few days later his team arrived in D.C. with a new application. The Los Angeles Times documents that America West Airlines won approval on December 29, 2001, for $380 million in loan guarantees, becoming the first U.S. carrier to get federal loan support after Sept. 11, but under stringent conditions that included giving the government the right to buy one-third of its common stock.
Now that the company was momentarily injected with financial life support, Doug Parker got to work on getting his balance sheet back to a healthy state. As the Pittsburgh Post-Gazette records, he restructured the airline’s pricing, making fares cheaper and easier to understand. He started charging for meals in coach. He improved relations with the airline’s labor unions, repairing the damage done under his predecessor, Franke. He also cut costs, closing an underperforming hub in Columbus, Ohio.
“Because he had no choice, [Doug Parker] moved more quickly into the seasoned CEO role. We gained 10 years of experience over the course of a few months,” remarks Kirby. In 2005, America West announced a loss of $89 million over the year prior, surprisingly, considering the industry as a whole took a $5 billion hit, the news came across as promising. Even still, something about his company needed to change in order to achieve long term stability.
“A number of cataclysmic issues have affected our industry—not just 9/11, but fuel prices rising rapidly in 2008 and then the Great Recession,” Parker reasons. “The fact that we couldn’t handle all these issues was a symptom of a larger problem. Ours was a fragile business to begin with.”
For years, Parker preached that the airlines needed consolidation; in other words, it was in their best interest to merge with one another in order to eliminate excess seats, therefore shrinking supply, and improving revenues for all. By 2005, America West had established itself as the nation’s seventh-largest airline and was on the hunt for a partner, for the last year or so, they were looking at ATA Airways but that situation wasn’t good enough.
The country’s eighth-largest airline, however, had recently filed for bankruptcy protection in September of 2004 – enter, US Airways. To be perfectly honest, this pair was a match made in heaven, America West operated primarily on the west coast while US Airways was on the east, so there’d be minimal overlap in routes.
Combined, the companies would bring in $10 billion in annual revenue, operate a fleet of 361 planes, manage over 44,000 employees, and be considered America’s fifth-largest airline and one of the biggest low-fare carriers. Long story short, Doug and his team got the deal done. In the aftermath of it all, when asked by media analysts what the most trying part of the process was, following a string of sleepless nights, he told them, “not spending any time with family. I missed a lot of Little League baseball games and birthday parties and wedding anniversaries.”
His answers aren’t complicated, well thought out ivy league monologues, they’re straight from the gut, straight forward, and easy for the common person to understand – talk about effective communication. As the New York Times first reported, in compliance with the merger, both companies would conduct business under the US Airways name, base their operations at America West’s headquarters in Tempe, Arizona, and planned to coordinate their schedules and eventually merge their frequent flier programs so that members of their plans could retain their miles.
Oh, and Doug Parker was appointed the chief executive of US Airways, America’s newly formed, fifth-largest airline.
“Hostile” Takeover of Delta
Delta Air Lines found itself in hot water in 2007, they were 15 months into their Chapter 11 bankruptcy case, creditors had been getting uneasy, and smelling blood in the water, 45-year-old Parker, acting as CEO of US Airways, just submitted a $10 billion bid to merge the two companies. The trouble with combining these two airlines was a significant amount of overlap existed in their routes, meaning, jobs would be lost, especially on the Delta side of the deal.
Factions went to battle within Delta’s executive boardroom, some believed the merger could make them more financially prosperous while others saw it as an unconditional surrender that left their beloved hourly workforce out to dry. Publicly, employee groups voiced vehement opposition through rallies and by wearing “Keep Delta My Delta” buttons. According to Aviation Pros, the airline also enlisted political allies who raised questions about whether a merger would survive scrutiny by federal regulators. Both tactics were designed to plant doubts in creditors’ minds.
When the smoke settled, Delta found a way to secure the funding it needed without having to make the deal and what had been dubbed a “hostile takeover” was over. “This is a proud day for the thousands of Delta people, customers, communities, civic leaders and others who stood up for our standalone plan and said, emphatically, ‘Keep Delta My Delta,'” said Gerald Grinstein, CEO of Delta, in a statement.
“Our proposal would have provided substantially more value to Delta’s unsecured creditors than the Delta stand-alone plan,” emplored Parker. “We would have created a better and more financially stable airline that offered more choice to consumers and increased job security to its employees. Our merger would have been able to be consummated in a reasonable time-frame and we would have been able to obtain all requisite regulatory approvals.”
American Airlines Chief Executive
Although they came up short with Delta, the folks at US Airways still had their minds set on consolidation. United Airlines entertained the idea of merging with them in 2008 amidst rapidly rising fuel prices but ultimately declined. Rumors of talks between the companies arose again in 2010, however, both parties walked away empty-handed, unable to hash out a deal. In May of 2010, United merged with Continental, after which, the chief executive of Continental described US Airways as “the ugly girl” at the dance.
Petty comments aside, US Airways landed the biggest fish of them all when it was announced in 2013 that they’d be merging with American Airlines in an $11 billion deal to create the world’s largest airline. CNN Business laid out that the new company, which would move forward using the American Airlines name, would beef up American’s network, particularly along the East Coast, where US Airways was a major player with its Washington-New York Shuttle and hubs in Philadelphia and Charlotte.
The deal was the latest in a series of moves that combined what were 10 major airlines in 2001 into four mega-carriers. When merged, US Airways-American joined United Continental, Delta Air Lines, and Southwest Airlines as the industry’s dominant players in the United States. Together, they accounted for 83% of U.S. airline passengers from the year before. Critics of these consolidations contend that they hurt the consumer in the end, leaving them with fewer seats available to fly in, therefore, enabling airlines to increase prices; in other words, higher demand meets less supply.
Doug Parker shares a most pivotal moment that turned the tide in their favor during the US Airways – American Airlines consolidation talks:
As simple and straightforward as relationships matter may seem to you, there’s still a perception that some successful business leaders need to be cutthroat and heartless, that the way to get ahead is to look after yourself, and if necessary, you should cut down others to benefit yourself. The reality is, that type of behavior doesn’t work in business. It may work for some people for a while but eventually, they will be pulled down and pulled down hard by the weight of unhealthy relationships.
There was a big meeting we had early on with a union that represented American’s rank employees and mechanics – now these are tough, straight-talking people who, as a rule, don’t trust management and management types in suits in particular. We somehow needed to convince them that we were trustworthy and we needed to do it pretty quickly.
As luck would have it, one of our US Airways executives in the room had previously worked at American and he had worked with one of the union officials many years before. That union official asked our executive how he liked working at US Airways. Our executive told him he loved it, his actual words were, “I’m in the right church.”
That was all we needed. In one of the most important meetings in a multi-billion dollar transaction loaded with high-paid consultants, lawyers, and legal documents, the key to our success was a long-standing personal relationship – one man having a trusted friend tell him he was in the right church was far more important to our success than anything else that happened that day.
Prosperity Under Doug Parker
Following the merger, Doug Parker was appointed CEO of American Airlines. Over the course of the next five years, American added hundreds of new planes to its fleet, becoming the youngest among major airlines, and as the Dallas Morning News reports, billions of dollars were spent on renovating lounges and upgrading onboard products from food to Wi-Fi.
After a decade of concessions to help the airline stay afloat, employees saw their pay increase an average of 44 percent amid renewed job security. The company, including its regional subsidiaries, has added nearly 17,000 employees since the end of 2013. They also reinstituted profit-sharing, albeit at lower levels than competitors, gave out $1,000 bonuses following the 2017′ federal tax cut, and handed out two round-trip tickets to every employee.
Air Transport World crowned American Airlines “Airline of the Year” in 2017 and praised the organization for conducting a “practically flawless” integration.
“It sounds like we’re extremely optimistic because we are, but please don’t mistake confidence for indifference,” Parker told analysts during a 2018 press conference, while also addressing concerns that their balance sheet wasn’t as strong as Delta’s. “We know we have the right plan in place and the right people to deliver it. We look forward to proving that over time.”
In early 2020, the COVID-19 pandemic sent the entire industry reeling. See the September 2020 interview below to learn more about how Doug Parker is handling the upcoming economic fallout.