Robert Isom Loves Excuses
I guess he wants to keep his job.
Dear readers,
If Scott Kirby’s mantra is “no excuses, sir,” Robert Isom’s must be “any excuse will do.” But like any experienced teacher, parent, or industry observer I see right through it — and I bet you do, too.
The excuse offered last week — for the airline’s dismal guidance for the third quarter (a loss between 10 and 70 cents per diluted share) and a possible loss on the year,1 depending on fuel prices and demand — was that if only the second quarter earnings call had been held three weeks earlier, they would have had better news to share.
If only!
You could hear variations on this theme at least three times and from at least two executives (presumably with serious faces). CFO Devin May told analysts that as recently as July 2, American would have shared that it could make as much as $1.5 billion in pre-tax profit this year.
And here’s Isom: “If we reported earnings just a few weeks ago, our forecast for the remainder of the year would have been potentially to produce results ... four times better than last year,” Isom said.
As you can probably tell, I don’t think highly of this argument and I can’t see why you would either. I know Isom wants to keep his job, but good CEOs don’t cherry-pick data from the few days when President Trump seemed to tire of the conflict with Iran and Iran loosened its grip on the Strait of Hormuz. Good leaders discuss the situation as it is — not how it was a few weeks ago, or how they hoped it would be.
It’s too bad, because I thought Isom’s crummy excuse overshadowed an otherwise reasonable earnings call effort (at least considering the poor guidance). Isom mostly stuck to his talking points, with fewer cliché-riddled answers than usual. He even shared a four-point plan that he said would close the margin gap between American, United, Delta, and the newly resurgent Southwest. All three competitors reported that they’ll be firmly profitable in the third quarter and for the year.
Was something missing from American’s plan?
Yes. I’ll get to that in a moment. First, the good news.