It was American’s turn to make big changes to senior leadership last week as it prepares for a smaller future. The airline has cut back on the number of VP/SVP positions, and it has reorganized things in a way that makes more sense. This change is what should have been done back in October when American made only some minor tweaks in response to criticism of senior management.
There are changes throughout the organization, but I’m focusing on President Robert Isom’s team since that’s where the impact was last October. But first, I will say a couple things about the rest of the organization.
Doug’s Direct Reports
The general goal this time around was to prepare an organization to be 30 percent smaller than it has been. Under CEO Doug Parker, his four direct reports outside of Robert appear to have all participated in this exercise. In CFO Derek Kerr’s group, Devon May joins the team as SVP of Finance and American Eagle after being bounced around in the last move. Devon having more power is a good thing. Meanwhile, two VPs — Greg Schwendinger and Peter Warlick — are leaving. And though it’s not mentioned anywhere in the communications, it looks like SVP Finance & Corporate Development Kenji Hashimoto is gone as well since his name is mentioned nowhere and his role has been divvied up.
Under CIO Maya Leibman’s group, one VP, Steven Graves, will depart. Meanwhile, in EVP Stephen Johnson’s corporate affairs group, both SVP Los Angeles Suzanne Boda and Mike Minerva, VP of Government and Airport Affairs, are leaving. Lastly, under EVP Elise Eberwein’s people group, the SVP of People, Patrick O’Keefe, is out.
All of these people are said to be leaving on their own, but I think we all know what that means. In some cases, it may be getting rid of people who underperform. In other cases, it might be the departure of good people in roles that just don’t have a place. That’s what I think is happening to someone like Suzanne Boda, which makes it bittersweet.
Robert’s Direct Reports
The changes in Robert Isom’s organization are bigger than in the others, so this deserves more scrutiny. Before last October, Robert had five direct reports. Today, only one of those people (David Seymour) still reports to him. Last October, the more minor changes resulted in this organizational structure:
At the time, I said this:
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.
Here is the new structure which was just announced:
Well lookie there. Robert now only has three direct reports, and they are all Chiefs. Good.
David Seymour finally gets the COO title to match the job he’s been doing for some time now. Jill Surdek and her Flight Service team move under him. VPs John Beavers and Dec Lee are leaving under him, and there is a great deal of shuffling further down in the group as well.
Meanwhile, Vasu Raja builds his empire to now include loyalty and revenue management. Both previous leaders of those groups (VP Bridget Blaise-Shamai over loyalty and SVP Don Casey over revenue management) are leaving the company, as will VP Chris DeGroot. Vasu is now the Chief Revenue Officer, so it’s his job to now point the entire team toward fixing its revenue deficit.
Lastly, the SVP Customer Experience job is gone, and Kurt Stache is leaving. In his place, Alison Taylor — who was the SVP Global Sales and Distribution — now rises to become the Chief Customer Officer. VPs Alice Curry and John Gustafson are leaving as well.
We can talk about how this is a better structure than the last, but isn’t it all shuffling deck chairs? That all depends on the Chiefs. For the operation, it’s good to have someone actually serving in the COO role since there hasn’t been one since Robert Isom was elevated to President. This is probably the area where I’d expect to see the least change since David was already leading the organization before this.
You now have Network, Revenue, Loyalty, and Alliances all under one leader. That’s a leader who happens to be bold and aggressive. Is that good? I guess we’ll judge from the results, but at least we know there are likely to be changes. In this case, change is good.
Lastly, there’s marketing, reservations, customer experience, and sales all now united under a single leader. To me, this is the biggest wildcard since the group has now been sliced and diced twice in just over six months. Will this be the winning formula? I’ve always believed sales needed a bigger seat at the table, and it now has one. But the leader of sales now being over other groups is a big step. I will reserved judgment for now.
Overall, do I like the new structure? Yes I do. This looks like the kind of structure I talked about back in October when the response was underwhelming. But a structure is only one piece. The other piece is having the right people to do the job. For Vasu, David, and Alison, it’s their time to shine.