Sky Talk

Q&A with American CEO Doug Parker

Once the cake was cut and photos were taken of American Airlines’ newly framed single operating certificate, chief executive Doug Parker talked with the media about the latest milestone in the carrier’s merger with US Airways.

Q: It’s been a busy few weeks at American with the combination of frequent flier programs and now receiving a single operating certificate. What’s next at American?

Parker: Combining frequent flier programs, retiring Dividend Miles, putting in AAdvantage. That was a big new step for our customers. The next big thing our customers will see will be doing the single reservation system by year end which the single operating certificate allows us to make happen. So that’s the next big one. And much like this one it is a big project with a lot of work underway. We are confident that we will have that done by year end which at that point for our customers for the most part it will look like one airline. We will still have some work to do behind the scenes, like integrating workforces.

Q: It’s been quiet in Washington D.C. related to Open Skies. Do you feel like you’re getting any support for your argument that the Persian Gulf carriers are receiving unfair subsidies and that Open Skies should be revisited?

P: I think it’s been quiet because the government sent us a list of questions that they had, which we are diligently preparing a response to. Our response I think will be extremely compelling but those are important so we need to get it done and we will do so in the next week or two. We will give them a fulsome response at which we expect this to pick up steam again because we will have responded to all of their questions in a way which I believe will compel them to act and to ask for consultations...This is a public policy issue. We have presented evidence that we believe shows that our government should engage in consultations with the governments of the U.A.E. and Qatar.

Q: When do you think American and US Airways will be completely integrated?

P: It’s really hard to define. I define it like this. Once we get to a single reservation system, for our customers, it will look and feel like one combined airline. The route network will be combined, you won’t need to worry about which reservation system your reservation is in, which website you went to, which carrier you’re flying on. It will be one carrier. We can do that now because we have a single operating certificate. We’ll move to one code once we get a single reservation system. So for all things that our customers care about, they will then have the AAdvantage program combined already and we will have everything you do to purchase a ticket, will be American Airlines and for those reasons it will feel like one airline. Behind the scenes, kind of inside baseball stuff, we will not be integrated. Because of things like flight operating system, we won’t be able to combine our crews just yet even if we have full seniority lists yet or integrated contracts. So we will be talking internally and we will track if this was a US Airways aircraft or an American aircraft but our customers won’t see that and I don’t know when that ends quite frankly. It is still some time after that. The real milestone for us is getting to where our customers view American as one airline and that should happen by the end of this year.

Q: American rebanked its hubs at Dallas/Fort Worth and Chicago two weeks ago. How is the rebanked schedule performing?

P: It’s going really well. Another project that we’re really proud of how the team responded. What we had to do was take these very large operations at some major airports and put in place a peak schedule where every peak was higher than the schedule flown the day before. That requires a lot more people, a lot more equipment, a lot of planning and management and it was a one day cutover. One day we were flying a flat schedule and the next day we were flying a peaked schedule. So there was some anxiety around here the days we did that but it’s now been a week and a half and it’s going very very well. It’s hard to say that has improved performance but I can tell you our performance is better than it was before. Weather has been better and other things have been better. We certainly haven’t seen any deterioration.

Q: Are there any developments on a possible headquarters move?

P: Nothing new....we are in this lovely headquarters that works really well. we find rooms like this to have press briefings. It is a completely adequate and functioning headquarters. We have a lot of things on our plate that are well ahead of a new headquarters like single operating certificate and integrating reservation systems. All those projects are way on the list ahead of what would be a major project, moving to a new headquarters. We are happy where we are. There may come a day we decide we want to move in the future but that day hasn’t come yet.

Q: Southwest Airlines added more routes to Dallas Love Field today. Will that continue to hurt American and its fares on those routes?

P: It’s not so much the fares as just more seats in the exact same markets we already flew. There’s that. You add more seats in the markets then were there before will have an impact on profitability in the market. That’s been the case. That will be the case in the new markets they add but our company is still performing exceptionally well. We expect a record year in 2015 to beat our record in 2014 so it has had an impact but it’s competition. We’ll compete with anybody and we all knew they would be adding routes like this so we’re not surprised and we’re prepared.