Podcast: Exclusive Interview With Former American Airlines CEO Doug Parker

A conversation with former American Airlines CEO Doug Parker looking back at his long and game-changing industry career.

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Transcript

Karen Walker:

Hello everyone, and thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm ATW and Aviation Week Network Air Transport editor-in-chief Karen Walker. Welcome on board.

This week I'm absolutely delighted to be joined by a very special guest indeed. It is no exaggeration to say this person is an industry icon. And, we have also a special news announcement. So first, my guest is none other than Doug Parker, former CEO at American Airlines, U.S. Airways and America West. And the news today is that Doug is the recipient of the 2024 Air Transport World Lifetime Achievement Award. Doug, thank you so much for joining me today, and many congratulations on this award. It's so highly deserved.

Doug Parker:

Thanks, Karen. It's good to be here, and thank you very much for the honor. We all appreciate it, so thanks so much.

Karen Walker:

Doug retired as American Airlines CEO in 2022, and then stepped down from American's board in 2023. But as you'll hear soon, he and his wife Gwen are far from sitting still. Doug began what became a long and game-changing career in airline management when he joined American as a financial analyst in 1986 when the CEO there was none other than Bob Crandall. Doug then went to Northwest Airlines before joining Phoenix-based America West as CFO. He then became CEO at America West actually just days before the 9/11 attacks. Eventually, Doug gave us all the merger of America West with US Airways, and then of course the merger of American with US Airways, creating the world's biggest airline.

That's a very concise summary of Doug's career. I'm looking forward to having a bit of a conversation about that career and what you're doing now. Doug, can I just start off by saying you've led all these airlines through 9/11, the financial crisis, bankruptcies, two huge and complicated mergers, SARS, COVID. What on earth kept you motivated through all of that, and did you ever run out of stamina?

Doug Parker:

Yeah, well, thanks. The motivation was easy—it was the team. I learned shortly after 9/11 vividly how important it was that we keep the company running, or else we were going to have these hardworking people that work for us, who had nothing to do with it, that were going to be looking for work. And so it's incumbent upon management, it was incumbent upon us to make sure that we had a viable going concern for them. And all those things you talked about threatened viability of the industry of airlines.

The motivation was always: How do we get people to safe harbor? And that's what we were trying to do. That's why we did those mergers. We had airlines that were going to be strategically impaired versus what else was going on in the industry in each case. And so we looked for ways to get our team to safe harbor. So I'm happy we did it. There were a lot of speed bumps on the way, but that was the fun part. I'm not sure I want to say we're good at it, but we knew what we were doing and we were able to handle it because we'd been through so much. So when the last one came, COVID, the most severe of them all, we were prepared.

Karen Walker:

Yeah, that's interesting actually, that experience if you like. And in many cases through a lot of this, you were working actually with a core team that you've worked with for a long while through management as well. You became one of the big names, but you also worked with big names through all of this, Robert Isom, Scott Kirby, et cetera. It's interesting, you worked with some very big names when you first came into this industry. I just mentioned Bob Crandall, also Bill Franke. Who were the biggest influences on you in those early days?

Doug Parker:

They all were. You pick up things along the way from all sorts of people. The biggest influence though for me in the industry was somebody I never worked for or with, Herb Kelleher. I got to know Herb really well thankfully, thanks to him, through things like A4A and other industry initiatives. I'd just follow him around and try and soak up everything I could. He's everything everybody said he was and more. I think he's by far the most influential and best leader our industry's had in maybe all of us commerce from the time he was working. He transformed a business—he built a culture that is like none other. And so like I said, I followed him around and watched what I could and soaked up what I could.

What I found most fascinating about Herb that people talk about less than his other attributes is what an amazing listener he was. Whenever you were with Herb, if you're in a conversation, it was your conversation. It wasn't fake. This is what I learned. He was really learning from people. And the questions he asked, they were for a reason. That's how he learned. In particularly, he was talking to his own team members. That's how he learned what was going on in the airlines. That's a skill that I watched him, and I watched him enough that I realized how important it was. I'm not that great at it, but I got better at it because I saw how important it was to him.

Karen Walker:

Yeah, Herb was truly, truly one of a kind, truly special. For Herb, as you say, transformed the business by just saying, "this is a people business," and he meant it from the heart.

Given the scale and complexity of the American-U.S. Airways merger in particular, there were a lot of big mergers that had happened and some were quite bumpy. At least from the outside, that transition seemed to go incredibly smoothly—given, like I said, the scale and complexity. Did you always feel like it was going to work? What were the main challenges?

Doug Parker:

Yeah, well, we knew that the merger itself would work. The networks went together really well. We'd build an airline that could do what I said, give safe harbor to our team, be able to get our customers where they wanted to be, to get the scale we need, the hub and spoke structure we needed. So strategically it fit together exceptionally well. Actually, getting it done, the implementation of integration is not something any of us would say, "oh, this will go just fine." It is incredibly complex. It takes several years. So that's the cost of doing it—the integration.

But we've done one before at American-U.S. Airways with, as you noted, a similar team. We picked up a lot of great people from American, as well. We worked quite hard at it, and we were fortunate that everything went well. But there was some fortune in there. Sometimes, try as you may, it's just you're never quite certain when you flip the switch onto the integration of things like a reservation system that everything's really going to work. In our case, it did, thanks to some really hard work from some great people. But yeah, we were never certain it was going to be perfect.

Karen Walker:

I remember when you just said about that reservation system switch. And there was a little bit like, I mean, the scale of this. It just seemed like clockwork. After the merger, did you have to think differently about your leadership role? When you find yourself the CEO of the world's biggest airline, did that make you think differently?

Doug Parker:

Not really. Again, less so industry-wise and where we were in the industry. I've been in the industry long enough. I knew everybody and it wasn't like I needed to somehow get myself grounded. But certainly running that airline was different than running U.S. Airways. It wasn't just the technical integration we talked about, but cultural integration was enormous. We were coming into an American Airlines which had enormous assets and great history of leadership, but had a culture that was still contentious with their employees, and one that we were trying really hard to address. So that's where I spent most of my time—just working to do what we could to change that culture. And look, it was ingrained. Again, no one's fault. You mentioned Bob Crandall. Bob would be the first to tell you he fought labor unions tooth and nail the whole time he was there, and that was in the culture.

What we had to convince a lot of the leadership was, look, that's all well and good, but don't worry about labor unions. There's like six people in the company that needed to deal with labor negotiations. This is our team, these are employees; go treat them the way you'd like to be treated. Anyway, as simple as that sounds, it took some work to get fully through the culture. Which I think, again, that work will continue to go on. Robert's doing a great job with it at American. We made huge strides.

But that's what I remember spending most of my time on was trying to get that culture to shift. And again, and I don't just mean with the rank and file employees; it was in the line management, it was in how the company ran, and it wasn't particularly healthy.

Karen Walker:

So as you say, that's going back to the people, so that people connection. And as you say, seeing the team as the people, and that makes a huge difference once that works, that motivation works.

Can we talk a little bit about some of the broader roles that you had across the industry, and particularly you on the Governors Board of IATA, and very involved with A4A. Obviously it's fairly standard that at your level when you're the CEO, particularly a huge airline like that, that's part of what you do, but it's a lot to be doing on top of a huge day job. How important do you see those sorts of association roles?

Doug Parker:

Oh, they're incredibly important. And you're right, I spent a good bit of my time on it. Fortunately, I had an amazing team that we keep talking about with people like Robert and Elise, Steve Johnson and Maya Leibman, Derek Kerr who ran the airline, could run the airline. But those roles were really important.

I mean, the fact of the matter is, in our business, we could work really, really hard at American to try and figure out ways to move the margin of our profit margins, for example, one half of 1%. That's a huge move on a $40 billion company. But if we could get the industry well and lift all ships, that had much more value for our team and our shareholders.

So yeah, those industry roles were exceptionally important. Most importantly for American was the A4A work really because federal legislation and federal regulations, U.S. federal regulations influenced us more than [international matters], but the outer work was exceptionally important as well.

But just really, I spent more of my time with A4A for the reasons I stated. And yeah, it was critical. And it certainly all became critical when COVID hit. But yeah, I like those roles. I'd been in the industry a long time. It is still amazing to me to see the value of some experience in those meetings. When COVID hit, I was the only one that was at least on A4A board for both 9/11 and for COVID. There were people who had been in the industry like Gary Kelly, of course, but I was the only one who had been in that room in both cases. And thankfully people like Gary and I were, because again, the other CEOs were fantastic, but that experience matters and it helped. And I think they'd agree that having people like Gary and I there helped.

So only me saying, yeah, that's a really important role, and sometimes we forget how important it is and you can get lost in trying to make sure you're taking care of your company. But making sure the industry is healthy generally is a lot better for all airlines than each of us trying to figure out how to drive another half percent of margin out of our own.

Karen Walker:

Yeah, I've always thought that Nick Calio does a fantastic leadership job at A4A on the regulatory legal side, a fantastic industry. And as you say, I know you were one of the key people in terms of being able to get that support from Congress.

Doug Parker:

It's the only thing we can work on together. I mean, we're allowed, of course, to work for legislation, and we spend all of our other time fighting each other. So it's not easy. I mean, you have to figure out a way to pull everybody together. Again, we all get along fine, but we really do spend our time trying to beat each other up. And there can be mistrust. There can be, "Oh, they're asking for this, but they're really trying to do it for their own airline's benefit." You just got to work really hard to make sure everybody's talking to each other all the time and be recognized.

Things like COVID do it. I mean, that brings everybody together, of course. But even then as we worked through it legislation was, there were all sorts of give and takes about what might be the best way to write legislation, because we all come from different perspectives. We got that done, by the way, by working with labor. That wouldn't have happened without the airlines working with labor unions. That's not something a lot of airlines are used to or were comfortable with. We had to make sure we got everybody comfortable with that. So it took some time. If you think there's mistrust between individual airlines, the mistrust between some airlines and labor is much bigger.

Anyway, it worked out exceptionally well. We saved an industry that would've been in serious trouble without that work. And we did it because everyone worked together, every airline as well as labor unions. People got past fighting each other and pulled together because we could and we got it done.

Karen Walker:

I remember very much, that term unity, if you like, that went across the union too. It was awful times and an awful thing that people were having to deal with, but it was actually a nice thing to see. I remember there was a meeting that you had, had to be held outside. It was up on Capitol Hill on the behind. That's right. And you guys, all the CEOs were there, A4A, and all the labor union leaders were there as well as the regulatory people. It was good to see in bad circumstances.

It's interesting though, what we still see however right now is there's still a lot of bad headlines. Sort of, "Oh, the airlines are this, the airlines are bad. They treat [people] awful." Do you actually think lawmakers, particularly in the U.S., do they actually understand just how hard it is to run an airline and that you want to actually serve your customers?

Doug Parker:

That's a good question. The answer is yes, I think they do. When you talk to them one on one they understand. We're not in the business of trying to do anything but make our customers happy, and it's complicated. But they also have jobs to do. They represent their constituents. And in some sense, it's sometimes populist to go beat on airlines, and it can help because what we do is hard. It's not easy to make sure you're moving millions of passengers every day and getting there on time, flying through weather, and making sure everyone's safe. There are going to be some things that go wrong.

But again, I think they know all that. Nonetheless, there's still huge pressure all the time for legislation. And one of the things again that we airlines need to make sure we fight off, John McCain told me a long time ago a quote that I always remember that I like to tell people all the time. I can't remember exactly, but anyways, a circumstance where he said, "Look, if you guys don't fix this, we will, and we're not very good at it." So at least John knew that they weren't good at, but he also knew that if we couldn't get to the point that our customers felt like we were doing something, that Congress had no choice and they would have to do something. And when they have to do something, it's suboptimal.

So anyway, I use that line often with my colleagues at A4A because we would find ourselves in circumstances where it was again, like, "Well, maybe it'll pass." It's like, "This isn't going to pass. We have to go figure out how to address this. We have to proactively figure out what we're going to do, or else they're going to do something. And they're not good at it. It'll be worse." So we got to bite the bullet and make sure we're doing what's right, but we're not going to ignore this.

Karen Walker:

You are still involved. You keep connections in the industry. I believe you're on the Qantas board, is that correct?

Doug Parker:

I am.

Karen Walker:

Do you enjoy that? I think Tony Tyler's on that board, isn't he?

Doug Parker:

He is. Tony and I, we're the only non-Australians and the only airline executives.

Karen Walker:

So you're doing that. And then also with Gwen, your wife, you've started this nonprofit called Breaking Down Barriers, which is fascinating project. Can you just tell me a little bit about that and why that's important to you?

Doug Parker:

Sure. The title's Breaking Down Barriers. The barrier we're trying to break down is the barrier that makes it hard for some of the best people in the United States to become airline pilots. So as we all know, there's a great need for airline pilots around the world, but certainly the United States. The airlines are going to find those pilots, that I know. There's lots of good work going underway by every airline to make sure.

But what I noticed was, you couldn't help but notice, as we worked through how we were going to find those pilots, that everyone didn't have the same opportunity, primarily because of the expense. With the 1,500-hr. rule, or any rule, but certainly with that many hours, it can be up to $100,000 for an individual to get that much training. It's well worth it because you're paid much more than that pretty quickly, but you got to have it. There aren't a lot of loans available. If there are loans available, you got to qualify for the loan.

The other large barrier is awareness. There are individuals that just have no idea that this exists, that they can do this, that the opportunity exists. Because it never has, and because no one's told them they can.

So we've put together this nonprofit, Breaking Down Barriers, to provide both those things. We're trying to build awareness within lower-income communities starting here in Dallas. And as we find individuals that think they might want to do this, we're going to provide the funding for them, the entire amount of the funding, to get them to where they become airline pilots.

Anyway, I'm excited about it. It's work that shouldn't have to be done, but of course it does. What I know is as long as the barriers like that exist, we don't have the best of the best. There are incredibly high-potential people that don't have the opportunity to go do these jobs because of the fact that the barriers are in their way. So we'll take the barriers down hopefully. We're starting here in Dallas, but I expect it'll get bigger over time.

Karen Walker:

Fantastic. So it seems to me like one of those great win-win situations of where you are opening up opportunities for people who probably hadn't even thought that that was a career track that they could get into and that would be a very exciting one. But you're also, from the industry perspective, dealing with, as you say, there's a pilot shortage out there, and so it's also a win for the industry. So fantastic.

Can I just ask you, what part of your work have you most enjoyed? What's the key things that really hit home for you like, "I love this job"?

Doug Parker:

My goodness. Well, yeah. I mean, it really is the people. It's not just a statement. Every interaction I can think about that I enjoyed was working with the people in the industry. I'll try and make this quick. I referenced it earlier. The best way I can sum up my career is this. Right after 9/11, I'd gotten to be CEO of America West at a relatively young age; I think it was 39 years old. We were fighting for a government loan that if we didn't get we were going to liquidate. I'm sitting, flying back from D.C. I've been told that we're not going to get the loan by the U.S. government. I'm sitting there thinking, "Woe is me. What am I going to do? I'm 39 years old. I've been CEO for two months and this company's going to liquidate. Where am I going to find a job? Woe, woe, woe."

Anyway, I get up and talk to the flight attendant, which I need to do. I can't tell her, "Hey, I know," but this is kind of front-page news at the time in Phoenix, and certainly with the America West team. She asked me how it's going. I said, "Well, it's not going that well." She says, "What's going to happen?" I said, "Well, if they don't give us a loan, we're going to liquidate." And she looks at me and says, "You can't do that." I said, "Well, I don't want to do it." But she's like, "No, you don't understand. I'm a single mom. I'm good at this job. This is what I do. My lifestyle's around it. I've been doing it for 15 years. No other airline's hiring." And that's when it hit me. It's like, this is my responsibility. I'm going to be fine. I was going to be fine. I don't know where I would've ended up, but I would've been totally fine. This woman wasn't going to be.

That was a Friday night. I called the team that night. We got together Saturday morning. We went back to the government. They sent us a note that said, "We're not going to approve your loan at this time," which is just lawyer language for, "We're not going to approve your loan." But we showed up with a new application on Monday morning. And they said, "Didn't you get our notice?" I said, "Yeah, I got it. But it said, 'Not at this time.'" I said, "Now it's Monday. Here's a new application. We're not going home."

And from that point on, all these mergers you talked about, all the work that I did was honestly to get people to safe harbor. America West wasn't going to make it on its own even after we got the loan, so we had to get scale. So we merged with U.S. Airways. U.S. Airways wasn't going to be able to compete with the new Delta without a merger with American, so we got it done.

But all of it was done for that reason, and that I'm incredibly proud of. We did what we set out to do. Through some real crises, we got some people that we started with at America West around 9/11 and got them to where if they want to have a job, the company's going to be there for them. And they're still there. So that's what makes me happy.

Karen Walker:

That's a great story. I think, again, you think of everything where you work, everything's so big. Everything is so big. The crises are big, the fleets are big, everything. But it does all come down eventually to the individuals, doesn't it? And what that individual is dealing with, and therefore their motivation.

Doug Parker:

Yeah. And again, the irony I guess of that is up until that conversation, I'd gotten to where I was by thinking about my career. I'm not ashamed of that, but I wanted the next job, the next job. I tried to do my job well so I got promoted. From that point on I never took a headhunter call. But once that happened and I started working harder for others than for myself, my career took off. That's how I got to be CEO of U.S. Airways. That's how I got to be CEO of American. Not because I wanted those jobs, because I wanted our company, I wanted to get our people into safe harbor. And by doing so, we fought for things, the results in the bigger airlines.

But anyway, so I think the lesson to me in all that is if you can find something that what you're working for is bigger than yourself, that's a real gift, and you should use it. And in most time, you're going to find out that's going to do more for your career than trying to take care of yourself through your career.

Karen Walker:

Absolutely. That's a very good thought. That motivation is a huge blessing when it's also your career. If you're also getting paid for it, but you're just really motivated for it, that's a wonderful thing. This industry, as you know more than anybody, never is without its challenges and issues. And again, you are more than aware of sustainability now, how huge that is for aviation and how complicated that is to work, the supply chain issues. When you just look now at what all those other airline CEOs around the world are having to deal with, could you just give me a few thoughts on what's the biggest challenges and what is the future for the air transport industry?

Doug Parker:

Yeah, and I mean, you've hit on two of them of course. Sustainability in particular is going to be a big challenge for everyone, but it's an industry issue. I don't think any individual airline can figure this out for themselves. And if they do, everyone will quickly copy. Some will be there a little faster than others. But my point is this: We as an industry need to figure it out. This is not one of these things we need to compete upon. This is something we need to work together on and we can, because in most cases it means lobbying governments. This is not going to get done without government assistance. Sustainable aviation fuel is not economic without subsidy yet, as solar wasn't, as wind wasn't. So we need governments to step up and subsidize, certainly in the initial phases, an industry for sustainable aviation fuel. And when they do that at scale, that's how this will be addressed. So anyway, that's what needs to happen is the industry needs to pull together and work hard and work hard with governments around the globe to get this done. That's what I believe.

There are certainly other issues. That, I think, is the largest one staring at everyone now. It's still a ways off, but it's coming up fast, and everyone's working really hard on it. Otherwise, I think the industry feels to me like it's in pretty good shape. Certainly around the globe there's still more that could be done in terms of strategic consolidation, maybe. But the fact is that if you're an airline that made it through COVID, you probably got a pretty good model. So the models in place now tend to be models that can make it through good and bad times.

Karen Walker:

Excellent. Doug, you've been very generous with your time. It's always great to see you. And so again, my sincere congratulations on this award. I'm very much looking forward to presenting you that trophy in Dubai. And of course, seeing both you and Gwen will be fantastic. So thank you very much indeed.

We will be announcing the full list of our ATW 2024 award winners later this month. You can find more details on this year's event, which will be on May 31st in Dubai, at ATW-awards.aviationweek.com. It is going to be a very special event indeed, because it's the 50th anniversary of the awards. This just isn't any old year for you to be receiving this. We're going to be doing some special things.

Thank you again to Doug. Thank you to our producer, Cory Hitt. And of course, a huge thank you to our listeners. Remember to follow us on Apple Podcasts or wherever you like to listen. And so until next week, this is Karen Walker, disembarking from Window Seat.