Yesterday, American announced its new post-US Airways merger senior management team, and the result is pretty much as I had expected. Actually, scratch that. It’s as I had hoped it would be. Let me explain what I mean by that.
See, I figured that the new team would look a lot like US Airways today, but I wasn’t sure how many of the quality existing American folks could be convinced to stick around. With this announcement, we see that some of the best in American’s senior ranks have decided to stay. That says to me that they are buying into the merger plan and want to be a part of it, and that is a good sign.
Some of the early headlines screamed how there were 5 people from US Airways and 3 from American, so it was a more balanced approach. But all you need to do is look at the positions to see that’s not true. The top leadership positions are all filled by US Airways people. Here’s the org chart they posted in a company newsletter yesterday.
Looking at this chart, it looks a lot like America West back before it took over US Airways. You have Doug Parker at the top (which we already knew) and Scott Kirby as President. Robert Isom will run operations, Steve Johnson will be on top of corporate affairs, Derek Kerr will head finance, and Elise Eberwein will be in charge of the HR and communications groups. The team that made US Airways what it is today will continue to lead the new American.
What about on the American side? Well, Bev Goulet is going to be in charge of the integration, but that’s obviously not an ongoing position. I would assume she’ll stick around for a couple of years to facilitate the process and then retire. Then again, that company newsletter said Bev flew 50 flights between Dallas and New York last year alone as part of her restructuring role. How she isn’t sick of all this and dreaming of sitting on a beach with a fruity drink in hand is beyond me. That’s dedication to the cause.
The one American employee who will report to Doug Parker on a permanent basis is Maya Leibman as Chief Information Officer. Readers of the blog know that I’m a fan, so I’m really glad to see that she decided to join the new team. I think US Airways and American have somewhat different views on the role of IT, so it will be very interesting to see what this organization looks like a year down the line. I would like to think that it will be a good thing.
Lastly, we have the legendary Will Ris running government affairs. (He’ll report to Steve Johnson.) Will has been with American for over 15 years, and he knows his way around Washington extremely well. Will is a regular at the Phoenix Aviation Symposium, and he cracked everyone up this year. When Doug Parker snuck in the room before his panel, Will was on stage and immediately started commenting on how Doug Parker was the best looking CEO in the industry. He knows how to work a room, and he’s been a huge asset for American over the years. Great move getting him to join as well.
All of this means that very few US Airways folks are out at the top (though that’s probably not comforting to current US Airways CIO Brad Jensen). On the American side, however, it’s a major house-cleaning. Of course, Horton is out as soon as the next board meeting occurs. Chief Financial Officer Bella Goren is gone, as are Denise Lynn (SVP People), Gary Kennedy (SVP, General Counsel), Jim Ream (SVP Ops), and Virasb Vahidi (Chief Commercial Officer). We also know that longtime American exec and current president of American Eagle Dan Garton is losing his job.
While I would imagine that most of these people weren’t offered roles in the new airline, that’s not true for everyone. Jon Snook, VP of Customer Service for American was offered a job in the new organization and walked away. In the letter he wrote to his team, he said he had an offer “to take a different role,” but he didn’t want it.
So now the top management team is set, and it’s time to start rolling this down to lower levels. I’m particularly interested to see what they decide for Scott Kirby’s direct reports. US Airways doesn’t really do much marketing at all, and both airlines duke it out for least-liked sales organization. Those are roles that I’m particularly interested in seeing filled. It wouldn’t surprise me if we see people come in from the outside.
Once we get to middle management levels, I would assume we’ll start to see a lot more people coming from both airlines. The top leadership sets the tone, and people underneath will have the opportunity to follow, regardless of which side they’re on today. But at the top, the vision is clear, and it’s coming from Arizona.
I agree with what you said about Will Ris – great guy and good at what he does. However, you forget that he’s 65 years old, so whoever is the top govt affairs person at US doesn’t have long to wait before he/she takes over. I think it’s a way to make it look like they’re keeping another AA person when really his days are numbered.
Ted, You raise a valid point about Will Ris’ age. But I think his replacement will probably come from Texas, since the new company will be headquartered there and will mostly have to deal with the Texas Legislature, not Arizona’s.
Federal lobbying is by far the most important aspect followed by industry expertise. They will do some state stuff but that’s a drop in the bucket comparatively especially after site selection is done.
Bill from DC,
You’re quite correct, of course. But you still have to deal with various state legislatures and transportation departments as well as cities, towns, airport authorities, etc. Since the new American is headquartered in Texas, and has far more operating exposure there, it’s legislature and cities will have more impact than would Arizona’s. That’s all I was pointing out. A Texas savvy lobbyist will be better able to hit the ground running than would one from Arizona.
Ted – I would argue that it doesn’t matter how old Will is but rather how old his friends are! I remember that America West had a govt affairs guy CA Howlett long ago. He was a Reagan Administration guy and had plenty of influence. But then everyone started to retire and he didn’t have nearly the influence he used to have. So his usefulness dropped quickly. If Will continues to cultivate new relationships in the younger generations of politicians, then he can go for ages. If not, then he’ll probably go on his way down the line.
Will Ris is the best but talk is the heir apparent is AA’s Dale Morris…
No way will Dale Morris jump from a Managing Director to a Sr. VP. As soon as the bankruptcy and the merger completes and AA has no further use for Wil, he will be forced to retire.
Any word on who is going to run the new loyalty program? I guess they don’t consider that a senior leadership position?
I thought Maya Leibman was in charge of AAdvantage. Well if they’re promoting her to CIO then someone below her will be running it.
Seems to be a decent lineup. Commenters on other sites mentioned they wanted Denise Lynn and Virasb Vahidi to stay on.
Maya Leibman was already promoted to AMR’s CIO. Suzanne L. Rubin currently runs AAdvantage: http://www.aa.com/i18n/amrcorp/corporateInformation/bios/rubin.jsp
U.S. Air has passengers who are loyal to U.S. Air? Now that is news!
Oliver – I would assume that the AAdvantage role would end up being one of Scott Kirby’s direct reports, and I really hope that Suzanne Rubin keeps that job. But we’ll find that out when Scott announces his team sometime before closing.
Sanjeev – Maya took a temporary move over to AAdvantage but she was an IT person before, and as Nick noted, she got promoted back into that role.
As for Virasb, I know travelers love him because he really put a lot into the product. My concern is that he did so regardless of financial sensibility. In a way, he’s the anti-Kirby. Kirby is a revenue guy, a numbers guy. Virasb is all about the experience regardless of the numbers. Virasb is also a true Horton guy, having gone over to AT&T with him and then came back after Horton returned. I can’t imagine a scenario where he stuck around, and because of his baggage, that’s probably a good thing. But Kirby does need a strong product guy who can play off Kirby to come up with a good middle ground. I hope we see that.
I don’t know much about Denise Lynn, but Elise is such an integral part of the current US team that I couldn’t imagine her being displaced.
Overall, I’m happy with this outcome.
At both America West and the “new” US Airways, this management team has taken what they had to work with and made the most of it.
I have little doubt they’ll do the same thing with the new American Airlines. They’ll enhance the strengths (and there are plenty of those) and correct the weaknesses. They’ll stick to basics. And to me, basics are where it’s at.
Should be interesting how the AA workers take this, even if they don’t care for their current AA leaders, there is still that feeling of “they are taking over” so it may not go over well at least at first.
And what exactly is Vice President of People? Workers aren’t happy, passengers aren’t happy so this position hasn’t been doing a good job it would seem.
Although I agree with the “taking over” feeling keep in mind that the employees and the unions were in high favor of a merger on both sides.
Don, don’t believe what you’ve read in the blogosphere, the non-union employees at AA were definitely not in favor of this, and from what I’m hearing, the rank and file union members weren’t / aren’t as enthusiastic as we’ve been led to believe. This merger was engineered by Parker et al and the union leaders, period.
If the employees are not happy with their union they need to vote them out.. US Airways’s pilots showed how that can be done.
Nick, seriously? You’re going to point to the union clusterf**k at US Airways as an example of how rank and file members can respond if they don’t like their leadership? Thank you for reinforcing my point.
Yup, it is a clusterf**k, but the union members control their leadership not the other way around. There are less drastic measures union members can take than what the US Airways Pilots did overthrowing their current leadership, but the union members employ the union leadership, not the other way around.
Nick, I think you’re a little naive regarding union politics, how easy it is to change union management, and exactly who runs things in unions. If you don’t believe me, do a little research regarding what’s going on with SWA’s union right now; and that’s at a supposedly stable, well-run airline with good labor relations.
Absolutely untrue, Realist that AA employees didn’t want US Airways to come in. We orchestrated the ouster of our lousy management. A lot were just afraid to speak up in case they didn’t end up taking us over.
David SF – If the American folks are nervous, I would hope that they find their nerves calmed once lower levels are announced. The problem is rarely in the middle levels but rather at the top. You get the right leadership, and those in the middle have the opportunity to do their jobs well.
Steve Johnson will be on top of corporate affairs, making it a unique way to reach the mile high club. LOL
Wow, this is such great news. Even though I’ve been retired for a while now, this is a dream come true to someone who could not be happier than to see AA management cleaned up. Hooray to my old group from HP! You Done Good! Congratulations on some really wise management decisions.
These big airline mergers have been a pain for customers and airline operations. Let’s hope that Air West in taking over US Airways gave them the experience to make this transition smoother.
I am still disappointed that it was not a merger of Alaska with US Airways. It would have been a natural from Hawaii to Europe.
I completely disagree with your statement, “we see that some of the best in American?s senior ranks have decided to stay. That says to me that they are buying into the merger plan and want to be a part of it, and that is a good sign.”
The best are not sticking around. The position offered to J.Snook was a downgraded position. No one from mid mgt down can say much about Bev Goulet as she does not associate with lower level employees. Maya Liebman has turned her back on many of the long time employees who are trying to get better paying positions with other companies, especially Sabre. She is blocking managers who don’t want to stay at the new American from interviewing and making more money.
AA mgt has been told no one is guaranteed a job after the merger, while US Airways mgt team has been led to believe they all will have a job. This is not a merger, it is a hostile takeover.
Last I checked most employees are employees at will. If Maya Liebman is blocking folks they can always take sick days (for interviews) then quit.
Nick, you would think it is that easy but it is not. AA added a paragraph in their vendor contract that requires Sabre to get permission to interview in AA employee. This agreement applies to ALL employees even the ones that leave the company for 12 months after their departure. According to Legal, this agreement does not violate the right to work clause since it is an agreement between two corporations. It is totally unfair but it appears the AA employees who want to leave haven’t recourse.
Interesting that AA and Sabre have added that contract as Apple, Oracle, Google, etc got into a lot of trouble with just doing that with a gentleman’s agreement. It’d seem that it’d be a rudimentary matter to have a restraining order implemented preventing them from exercising that clause.
Keep in mind your example is regarding Non-Compete Contracts not vendor contracts. AA has more or less said to Sabre, if you want our business we want the ability to prevent AA employees from going to Sabre. It is not considered noncompete situation as it was in the companies you mentioned since they are competitors of each other. If there is a law firm out there willing to challenge it, I am sure a significant number of AA employees would welcome the support.
I’m quite sure that this newly melded team will do well. I don’t envy the task assigned to Bev Goulet and her IT partner (whose name escapes me), but the two of them, together, face the largest of the immediate integration tasks. Let’s hope that they can avoid most of the problems experienced during other, recent mergers. When their work is finished, Bev’s ‘fruity drink’ should be a double!
The less “old” AA the better..I am happy to see the opertunity to possibly respect management once more and work for the winning team.-Go Doug!
“With this announcement, we see that some of the best in American?s senior ranks have decided to stay. That says to me that they are buying into the merger plan and want to be a part of it, and that is a good sign.”
Nice spin Brett. So from AA you have a professional lobbyist (i.e., glorified prostitute) who isn’t even based in Dallas and has no influence over how the airline is run pre or post merger, another manager (Goulet) who’ll be gone soon after the merger, and Maya. So there’s effectively one former AA Sr. manager on the leadership team. I heard Parker offered AA Sr. managers more positions but they declined, and that was the reason Parker had to delay the leadership team announcements for almost a month because he was trying to give the appearance of a blended leadership team. Clearly this team misses that mark.
Many mid-level managers at AA with whom I’ve spoken view this as a hostile takeover and from what I hear, US Airways managers are doing and saying nothing in joint meetings to assuage their feelings. Your assertion that AA mid-level managers didn’t like AA’s leadership team and that they’ll somehow welcome Parker’s gang and flourish under his leadership is pure propaganda. AA management may come around and view this merger as a good thing but they are a long way from that point now and there are significant hurdles to overcome.
Having said all that, I share your happiness regarding the make-up of the leadership team but for a different reason. The fact that the team is all US Airways means Parker can’t blame former AA managers if the merger doesn’t go well and performance doesn’t meet his lofty projections; he owns it completely.
And from what I hear, integration efforts are already starting to fray because, despite Parker’s public promises of “adopt and go”, US Airways managers are insisting on full-scale gap analyses and lobbying hard for their systems and processes. Perhaps they didn’t learn as much as they claim from the AW/US merger debacle.
Furthermore, as you alluded to with your comments about VV, there’s a fear that the frugal (that’s actually a nicer word than I’ve been hearing) Mr. Kirby is going to run the new AA as an LCC which may not impress their customers and certainly won’t please BA, Cathay and other oneworld partners who have been pressing AA for years to improve their product so it meets their standard. We’ll see how it all plays out but one thing is for sure after this announcement; Parker has no one to blame (or credit) but himself.
Realist, the bottom line is if you want to say it that way: AA lost.
Unlike Delta, United, Northwest, and the post-first bankruptcy US Airways, they managed to manage their company into bankruptcy, and when they got it there they failed to convince their creditors that they could run the company profitability.
US Airways is attempting to be gracious and knows that there are lots of good things at AA, but both US Airways shareholders and management and AA’s creditors know that AA’s senior management was part of the problem.
That being said, doing a good gap analysis is a good measure to prevent a mess of a merger.
“AA Lost” LOL, you should have been upfront and identified yourself as a US Airways manager. Thanks for the clarification.
As far as US Airways “attempting to be gracious”; do you have any firsthand knowledge of this or are you basing your opinion on what you read in the MSM and blogosphere? Are you suggesting Parker should have appointed more AA managers to the Leadership Team to be “gracious”? Really? That sounds like a really dumb idea to me.
To be sure a good gap analysis is necessary for any successful integration project but I guess you stopped reading at that point and missed (or ignored) the more important point.
So you’re either a fan of Parker, Cranky (or both) or hate AA. I get it. I’m trying to give a different perspective based on conversations with real people. If you have similarly sourced information to contribute, then please do so, otherwise spare me from the regurgitated tripe. We know what transpired.
I don’t work for US Airways. I have never worked for an airline, I just follow them from the sidelines as an enthusiast.
I’m a fan of companies that treat their employees as well as they can and make a reasonable profit. I live in Seattle and we have a local coffee chain called Tullys. Its been around for twenty years and has never made an operating profit. (I has had two profitable quarters, both were the result of one time events.) Tully’s IMHO shouldn’t be in business anymore, although a new owner and management team are going to try again.
I had great respect for AA’s front line employees and management team during the 1970s, 1980s, 1990s, and during the early 2000s. Management failed to deal with the changing marketplace and economics and insisted on pushing forward with their same old strategy with a slightly new name.
US Air(ways) had the same problem and the team from AWA including Parker came in and made many changes for the better. The airline is actually modestly profitable, operationally it has improved heads over tails, it no longer has gangs wagging management’s tail at Philadelphia, and they’ve made hard choices. Has the team from AWA including Parker screwed up? Sure, but they’ve run their business much better than the team from AA did during the same period.
So yeah, I guess you’re right, I hate the old AA management because they failed to adapt to current realities.
I agree with everything you wrote except you’ve missed one very important point. The “changing marketplace” occurred because all of AA’s major competitors went through bankruptcy while Arpey had a “moral conviction” against it. The biggest mistake was made by the same BOD who approved this merger (and selected Parker to run the company) when they allowed Arpey to piss away 5-6 years while his competitors took advantage of now lower labor costs and more flexible workforce to become profitable, while Arpey weakened AA to the point it was taken over.
Arpey was the problem and I share your contempt for him, but it seems disingenuous for you to blame all AA Sr. Management (while giving the BOD a pass). Horton wasn’t even at AA during most of that time.
You are right. AA LOST. And so did AA Customers. Devoted AA customers will soon feel the effects of flying with a carrier whose new way to conduct business is delivering the least amount of amenities at the very cheapest price.
The AA unions who forced this merger are in for a big surprise when they see Parker’s true colors; especially when AA Employee travel program is abolished and US Airways travel program is implemented.
All the AWA folk running the show, that is a good thing. Best thing that ever happened when AWA bought out US was to get rid of all the dead weight folks over there. The Usairways legacy is none, just a hopscotch from AWA to American.
Indeed, it may be that the greatest challenge facing the new American’s US Airways-dominated leadership team post-merger is successfully reconciling this team’s predilection for stringent cost containment with the reality of expenditure exigencies in building a world-class airline. Additionally, the newly negotiated pay rates for key front line personnel may negatively affect the bottom line, at least initially.
Does anyone want to comment on how either management team is going to take on the poor customer service issues that you repeatedly see on Facebook? AA at least makes an attempt to resolve issues on social media where as US Airways doesn’t seem to do anything?
I am sorry AA has to merge with the less than stellar US Airways Executives
I have a question regarding AA. Is this organization thought to be a centralized organization? Since it has a long-chain of command and having almost more than 10,000 employees especially after the merger! Bottom line is, how can such a large organization keep track and control??
Lula – It is a centralized organization from what I know. I’m not quite sure how to answer this one any better for you, I’m afraid.