American Airlines names Robert Isom to replace retiring CEO Doug Parker

American Airlines Group Inc. named President Robert Isom to replace Doug Parker as chief executive officer early next year, a sign of stability after the Covid-19 pandemic ignited a chaotic period for the industry. 
 

Parker, who has led the airline since 2013, will step down as CEO on March 31 but stay on as chairman, according to a statement Tuesday.

Isom, 58, has been the heir apparent since he was appointed president in mid-2016 and his selection signals that a steady hand is intended for the airline’s first leadership transition in eight years. He and Parker have worked together for more than two decades, joining American after engineering the $11 billion merger that combined the carrier with US Airways Group.

As CEO, Isom faces several immediate challenges beyond the pandemic, including attempting to reduce the airline’s $36.1 billion in long-term debt, the most among major U.S. carriers, and contending with pilots and flight attendants over scheduling problems. American also is facing off with the Justice Department over the carrier’s planned Northeast Alliance with JetBlue Airways Corp.

American, like airlines worldwide, was shaken by pandemic-related lockdowns in 2020 and more recently has struggled with staffing issues and passenger behavior as business picked up. The airline said in October that it expects costs to continue to pinch profit as revenue remains below pre-pandemic levels. 

“We are well-positioned to take full advantage of our industry’s recovery, and now is the right time for a handoff we have planned and prepared for,” Parker said in Tuesday’s statement. “I feel extremely fortunate to hand the reins to this clear and capable leader.”

The CEO transition “likely would have happened sooner” were it not for the coronavirus crisis, Parker said in a letter to employees. “While we still have work to do, the recovery from the pandemic is underway and now is the right time to make the transition.”

American rose 1.34% to $18.17 at 9:40 a.m. in New York, climbing with airline shares and the broader market as concerns over the coronavirus omicron variant receded. American’s stock had advanced 14% this year through Monday, the strongest performance in the S&P 500 Airlines Index.

“American Airlines’ succession announcement appears to be orderly and well-telegraphed,” Stephen Trent, an analyst at Citigroup Inc., said in a note to investors. “With both individuals joining the board, this could help ensure open communication and an alignment of strategic interests.”

Parker, 60, is the longest-serving CEO among major U.S. carriers on an ongoing basis, starting at America West Holdings Corp. in 2001 then US Airways. He started his airline career at American under under Bob Crandall, who led the company in the 1980s and 1990s.

Parker has led consolidation in the industry starting in 2005, when America West merged with US Airways. He failed in three attempts at major deals before securing the combination that created the world’s biggest airline in 2013.

Isom was chief operating officer at US Airways when he joined American. He worked at GMAC, Northwest Airlines and America West earlier in his career.

--With assistance from Mary Schlangenstein and Siddharth Philip.