Sorry for the delayed post, but this news was under embargo until now, and I thought it worth waiting instead of posting next week. Rumors about changes in American’s management have reached a fever pitch recently, and now a change is officially being made. The problem is… it’s more of a rearranging of the deck chairs than a fundamental change. I don’t expect this is going to be received positively.
Many have fixated on CEO Doug Parker needing to go, but I take a broader view. As I said last week:
I would be very surprised if we don’t see management changes at or near the top soon thanks to this turn of events. In fact, I’d say some kind of shake-up is necessary here. The board can’t be happy, and Wall Street is going to keep ramping up pressure. We already know employees aren’t happy. The only way to get things moving in the right direction is to make big changes, and they need to happen very soon.
People like to make Doug out to be the source of all problems, but I find that view lazy and over-simplified. This isn’t to defend management on the whole. I see an airline that is stagnating and in need of change. It needs new blood to shake things up. That can be at the CEO level, but it doesn’t have to be, especially since there isn’t anyone obvious to step into those shoes at the moment.
When an American spokesperson contacted me to talk about big changes, I got excited that we’d see something that was, well, big. That excitement faded fairly quickly once I learned the details.
Instead of a management-driven focus on effecting big change, this actually appears to be a reactive change based on a retirement. Kerry Philipovitch, SVP of Customer Experience, has decided to leave. And as I understand it, Kerry is actually retiring from the airline to go do something different and not “going to spend time with her family,” if you know what I mean.
What they’re doing in this reorg is effectively taking Kerry’s team and splitting them up under two different areas. There are other moving pieces, so let me explain.
Here’s is how the structure is today. Note that this isn’t the entire company’s structure but rather just the roles that are being impacted by the change:
And now here is the new order of things:
As you can see, there is a consolidation of operational functions under David Seymour, now called SVP of Operations. He’ll get airport operations and cargo added to his empire when Jim Butler begins reporting to him instead of Kerry. Devon May will be another new direct report when he stops reporting to President Robert Isom. He moves from network strategy to take over American Eagle and ops planning, and will move it under David’s organization.
In other words, David Seymour gets closer to being a Chief Operating Officer, but he still isn’t one for some unknown reason. American hasn’t had a dedicated COO since Robert became President.
With Devon moving over to ops, Vasu Raja steps up into Devon’s shoes and becomes an SVP reporting directly to Robert. Joe Mohan, VP of Alliances and Partnerships, will report to Vasu.
The rest of Kerry’s team handles less ops-focused roles and they will move over to report to Kurt Stache. Kurt has been the SVP of Marketing, Loyalty, and Sales, but he’ll now take on Kerry’s title as the SVP of Customer Experience. He keeps Alice Curry and Jill Surdek (who is being promoted to SVP) from Kerry’s old team. Oddly, Julie Rath who has “customer experience” in her title doesn’t report to him.
Despite the title change, Kurt will keep his marketing and loyalty teams under him, but he loses sales. Allison Taylor, SVP of Global Sales, will now strangely report to Don Casey, SVP of Revenue Management. There is often quite the butting of heads between revenue management and sales, so this could be problematic.
What This Means
There is a lot of shifting around to “better align” and all that. This may very well be a better structure than what was there before. In fact, I’d assume that it is. But there are real problems here. First and foremost, there is no new blood.
Oh sure, seeing Vasu’s rise to report directly to Robert is a very welcome move. If you’ve seen interviews with Vasu, you know he doesn’t pull punches and doesn’t even know the meaning of “corporate speak.” He can add some energy and direction that has been sorely lacking at higher levels. But his fiefdom is still fairly narrow, and without some new people from the outside at or near the top, it’s going to be very hard to turn this ship.
While the structure itself may make more sense, this really shines a spotlight on how near-the-top-heavy the company is. You have a silly number of SVPs here, some of whom report to other SVPs. David Seymour is the SVP of Integrated Ops. He has Devon May, SVP of American Eagle and Ops Planning along with Jim Butler SVP Airport Ops and Cargo reporting to him. You also have SVP Jill Surdek reporting to SVP Kurt Stache and SVP Allison Taylor reporting to SVP Don Casey. At the same time, you have a vacuum at the very top. There is still no Chief Operating Officer and no Chief Marketing Officer or Chief Commercial Officer. This is very confusing.
In a normal world, this kind of reshuffling probably wouldn’t get much attention at all. But we are in a world where nearly everyone is looking for and expecting big change at American. This kind of shift makes it look like American feels fully confident that it has all the right people, just not in the right places. I think many people outside the company would disagree with that assessment.
While it’s possible more change is coming, this does make it seem like bigger change has been — at the very least — deferred. If true, that is a head-scratcher.