Take it from me... it's hard to be a CEO. I was one and I saw it from a very different perspective than I did when I wasn't a CEO. So... poor Doug Parker! The chairman and CEO of American Airlines took quite the pay-cut last year; all he made was a measly $10.66 million. Yesterday, he sat down with Kara Swisher for a New York Times interview. He should consider himself lucky to get anywhere near $10 million or even $1 million in annual salary. This guy is an idiot, a crook and a disgrace to his company. If I owned any shares in AA, I'd sell them immediately. Had the federal government not decided to use $54 billion of our tax dollars to bail out the airline industry, Parker might be selling American Airlines memorabilia door to door now.
This quarter American was back to profitability-- $19 million in profit... although that includes $1.4 billion in taxpayer assistance. So, really, Parker lost $1.1 billion. Parker called that "a lot of momentum," who noted that they lost $3 billion in the first quarter. "There’s enormous pent-up demand for travel. People are flying. And as they return to the skies, we’re ready. And those losses will turn to profits before too long. I’m certain of that. And so actually, we’re really excited about what lies ahead." A lot to be excited about when your salary is $10.66 million in a bad year! Listen to his bullshit-- lies he should go to prison for spreading: "[B]ecause of the way the air flows within an airliner, something we have all learned and educated customers on through this pandemic, with a mask on sitting next to someone on an airplane, Delta variant or not, you’re safer than you are in a grocery store or in a restaurant, because of the way the air flows. So I guess it may have some impact on demand for our product, but it won’t dramatically change what we do."
Swisher: Back in March, American was part of a group of airlines that were pushing the White House to lift international travel restrictions. Right now, there are restrictions on travelers from China, the European area, the U.K., Ireland, and others for entering the U.S. The White House recently said they intend to keep those restrictions in place for now. Was that a disappointment? Talk a little bit about what airlines need from the White House and the government on this issue.
Liar: Well, it’s a disappointment, yes. Because again, as I said, there’s huge pent-up demand. That’s what we just continue to hear from our particularly business customers is, when we start flying internationally? It’s important for business, and important for international commerce. The folly of the situation right now is those restrictions were put in place back in March of 2020 when the President of the United States at that time deciding on national TV and announced that we’re going to be tough on this virus, we’re not going to let it come to the United States. We’re going to do that by not letting people from Europe come to the United States.
But we had a consultant come in, she’s from Munich. She, in order to get to the United States, flew to Cancun for two weeks, and then she was allowed to enter. She was a lot safer in Munich than she was in Cancun. But that’s what we’re doing.
So that’s been our point to the administration is let’s do this. Let’s go back to science. Let’s start opening countries that have high vaccination rates and low Covid rates. All that makes sense as I say it. The problem-- and we get it-- is those are relaxations of the status quo, which sends the wrong signal. And right now, I don’t think the administration, C.D.C., Jeff Zients, who I think is brilliant...
I just don’t think they want to do anything that sends a signal that things are-- that might look like it’s getting better. By the way, we could do that and not send that signal, but I agree. It’s a complex message. So we’re fine with it. We’ll wait it out.
...Swisher: Would American Airlines consider requiring proof of requirement of vaccination on its own if the White House doesn’t? Broadway just did. Broadway just said you can’t come to see a play if you’re unvaccinated.
Liar: For our customers?
Swisher: Yeah
Liar: Yeah. No, no, even if we decided that was something we wanted to do, that would be incredibly cumbersome to do inside the United States. You can do this on international flights. There’s a lot of time between when the aircraft lands and when it takes off. We have to check passports and things as well. It wouldn’t be physically possible to do without enormous delays in the airline system.
But just on top of it, again, in a world where we still have whatever it is, 40% of the United States not vaccinated for reasons only they can explain, requiring vaccinations to travel and not requiring vaccinations to do anything else around the country isn’t something we’re looking to do.
Swisher: All right. Well, increasingly, there’s more. The Washington Post just required it, the vaccinated workforce. Google did. Are you thinking about that?
Liar: What we’re doing there, and what we’ve been doing from the start, is putting great incentives in for our employees to be vaccinated. Anyone who is vaccinated by August 31 at American Airlines gets one day of extra vacation in 2022. They get a $50 gift card. And that, we think, is the right way to motivate people to get vaccinated, and we’re pushing that really hard.
So that’s how we intend to do this. We certainly encourage it everywhere we can, encourage it for our customers and our employees, but we’re not putting mandates in place.
...We haven’t restored alcohol to the American Airlines flights for this reason [unruly behavior]. We have it tied to September 13, when the federal mask mandate is scheduled to expire. And that’s why we say we’ll return alcohol, because we don’t think we need that added to the environment. The FAA has been very supportive and aggressive. Steve Dickson has been out there very publicly letting it be known that they’re going to make sure that people are fined to the extent they can.
And we’ve certainly let our team know we have their backs. The customer isn’t always right. If anyone does something like this on an American Airlines airplane, they’re not going to fly American Airlines again. But despite all those deterrents to this type of behavior, they still continue. And we’ve got to get it fixed.
We’ve taken a couple more steps of late. We’ve changed our announcement to be more forceful and more certain. And to note, by the way, it’s also a federal offense to have your own alcohol on board, which we’re seeing more and more of.
... Swisher: Since the beginning of June, American Airlines has canceled around 3% of the flights because of pilot and staff shortages. You were the only major commercial carrier that furloughed pilots, about 1600 of them. How do you think about that now?
Liar: Yeah. Yeah, we did we did have some growth issues in June, as you note. The issue there is we grew the airline 45% in three months, and maybe we should have grown 43%. Because yeah, we did get ourselves to where we had this situation with our pilots, for example, where we just didn’t have them out of training as quickly as we thought they would be. And they weren’t available to fly, a very, very small percentage of them, but it doesn’t take many. As soon as we saw it, we did the right thing, which was which was pre-cancel flights out a month in advance, and then take care of all the customers, rather than having them show up to the airport and have that happen.
Swisher: So the industry’s $54 billion bailout was supposed to help prevent some headache with hiring and ramping up and keeping jobs in place. The idea was that the airlines would be ready to hit the ground running when travel came back. You played a very prominent role in lobbying Congress for aid. This money could have gone to restaurants, small businesses, hotels-- I’ve interviewed a lot of people who said that. Plenty of sectors are just as impacted but didn’t receive nearly as much money. So I want you to sort of make the pitch on why airlines should have gotten this special treatment.
Liar: Yeah. I’m happy to. And in short, what I’ll tell you is had we not gotten it, you wouldn’t see anything close to the level of flying we have today. So anyway, the story goes like this, demand for air travel, of course, dropped to virtually nothing. And what we lobbied for successfully was to not just give us money, not do like the traditional, kind of like the bank bailout. What we came up with was a plan that said, give us money to pay our people. It’s a jobs program as much as it was money for the companies
That $54 billion was given to airlines in exchange for not doing any furloughs, not involuntarily separating anyone from the company. And by doing so, it kept an infrastructure in place that would have absolutely gone away. Had we not done this, first off, had it just been loans to the industry, the right thing to do for a company and for its shareholders-- when you have the kind of capital intensiveness we have and you have your revenues at 10% of what they used to be-- the right thing to do is simply shut your company down. Put all the airplanes on the ground, furlough everyone, get out of every possible expense you can.
There would have been no airline industry for, I don’t know how long. Because now you have to make the decision as, well, when is demand strong enough that it actually makes sense to start all of that back up?
Swisher: Well, now, you’ve been around 30 years. There have been airline bankruptcies, and airlines keep flying. And let me read-- you’ve read this, I’m sure, Andrew Ross Sorkin wrote, “We socialize the airline industry’s losses and largely privatized the gains. The bad news is it’s also likely the taxpayers massively overpaid the original grant of $25 billion in April meant that each of the 75,000 jobs saved cost the equivalent of more than 300,000. With the additional round of bailout money, the price has grown.”
How do you answer that? Because in that case, shareholders benefit more than anybody, and definitely not the American taxpayer.
Liar: Yeah, no, he’s not correct... He absolutely isn’t, and I had this conversation with Andrew as well. Again, this was about keeping infrastructure in place for what is happening today. It paid airlines to pay employees that we didn’t have work for. The right business decision, absent some sort of incentive not to, was to furlough all those people, as painful as it was.
Swisher: You did furlough pilots though, is that correct?
Liar: Well, only because it expired in October, you may remember that, whatever we called CARES 2. But right prior to the election, we couldn’t get it extended. So it was not until December after the election was it extended again. So in that period, we and other airlines did a number of furloughs, yeah, which was painful. But we got them all back in December, and everybody’s back now.
So look, I think it’s a fantastic policy. I think other industries probably should have been availed of it. I mean, really, the government is better off than they would have been had they not given the industry this money. The reason it’s 70% in grants and 30% in loans is because of some analysis the Treasury Department did that said, well, if we give you this first $25 billion, here’s how much we will save in unemployment insurance, here’s how much we’ll save in you having them on your benefits instead of us having them on our benefits, and here’s how much the US government will save in moving goods and services around, that we won’t be able to have because you won’t be here, and we’ll be using military aircraft for that. That was the 70% of $25 billion. So obviously, there’s a lot more benefit than that.
Meanwhile, this morning, United announced it will require U.S.-based employees to be vaccinated against the coronavirus, the first domestic airline to make being vaccinated a condition of employment and drawing quote a distinction with American. This will impact something like 67,000 people. The Washington Post reported that "United’s mandate, however, makes it an outlier among U.S. carriers, which have largely relied on incentives, such as extra vacation days or gift cards, to encourage employees to get inoculated. Delta Air Lines announced a vaccine mandate in May that applies only to new employees... Under United’s program, employees will be required to show proof of vaccination five weeks after the Food and Drug Administration announces full approval for a coronavirus vaccine, or five weeks after Sept. 20, whichever is first. Based on that timeline, the latest possible deadline for meeting the requirement would be Oct. 25, the airline said... Employees who show proof of vaccination by Sept. 20 will receive an additional day of pay."