Who Will Succeed Robert Isom and When?
I asked around at the IATA General Meeting. Here are seven possible future CEOs of American Airlines.
Dear readers,
Between sessions at last week’s IATA General Meeting, in the lobby of the Grand Hyatt in Rio, almost all the attendees were asking me (and others, too) the same two questions:
Will Robert Isom survive the year at American? And when he goes — whether soon or in the future — who will replace him?
I learned more about the who than the when1. The executives I spoke to said the list of candidates is an open secret, at least among the most plugged-in insiders. They said American’s board is likely aware of all of these candidates, if only because members have a duty to plan ahead, whether or not they expect a quick regime change.
I'll share that list with you today, but first I want to touch on the two most common theories about when Isom might go.
The first theory is that Isom will be gone by the end of the year. Many insiders say Isom has failed and probably won’t materially improve American’s profitability any time soon, despite copying Delta and United in a late shift to premium. This group believes that the new passenger experience improvements that Isom recently approved — Starlink internet, the Bollinger champagne and Lavazza coffee — were eleventh-hour attempts to save his job, but they won’t work.
The second theory is more complicated. Here’s the gist: at any company, insiders have healthy egos; they want to remain in control, and they fear reputational damage. To protect themselves, they may prefer not to admit mistakes. Sometimes this makes them fallible, irrational, and incapable of seeing the bigger picture.
Isom has been the board’s guy for a long time. By my count, four board members (of today's 12) remain from 2016, when the board asked Scott Kirby to leave. It's old news, but it’s been clear that Kirby — not Isom — should have been the heir-apparent to Doug Parker. In addition, nine independent directors remain from 2023, the peak of American's post-pandemic self-imposed strategy blunders. Either implicitly or explicitly, the board must have endorsed those moves.
In this theory, insiders wonder whether board members want to give Isom more time to succeed in order to protect their legacies, and perhaps their board positions. As you may recall, some of United's board members (outside of Oscar Munoz) did not fare well after they fired Jeff Smisek in 2015, because at least two major investors started asking questions about the board’s ability. In a Reuters story that year headlined "United Airlines faces board fight over poor performance," the news outlet quoted a research firm expert: "This situation is really all about shaking up what Altimeter/PAR thinks is an entrenched and ineffective board."
Ok, enough theories. Here’s the list.
These four are top candidates. One may not be able to take the job.
Doug Parker
Don't act so surprised.