American Airlines demolishes old headquarters buildings
American Airlines president Scott Kirby is leaving the Fort Worth-based carrier to become president of United Airlines.
Kirby, 49, will be replaced by American’s chief operating officer Robert Isom, 52. Both men joined American when it merged with US Airways after the airline exited bankruptcy protection.
“Robert’s promotion and Scott’s departure are the result of our board of directors’ succession planning efforts,” American’s CEO Doug Parker said in a letter sent to employees on Monday. “We have an exceptional leadership team at American — so exceptional that other organizations have been aggressively attempting to recruit from our ranks.”
Kirby will join United immediately, and will be responsible for operations, marketing, sales, alliances, network planning and revenue management.
“Scott’s appointment, along with other recent leadership announcements, is the culmination of the formation of my senior leadership team,” said Oscar Munoz, CEO at United Continental Holdings, in a statement. “This is just the latest step in our mission to be an agile and innovative industry leader.”
We are seeing a great team break up.
Henry Harteveldt, analyst with Atmosphere Research
As part of Kirby’s separation from American, he will receive a $3.85 million cash payment and 258,958 restricted stock units, valued at $9.36 million, will vest immediately. Kirby did not have a non-compete clause as he was not under contract at American.
“The loss of Mr. Kirby at American is disappointing but understandable since CEO Doug Parker is not likely to leave anytime soon,” said Vicki Bryan, a senior high-yield bond analyst at Gimme Credit.
Parker and Kirby have worked together for over 20 years, since both men joined America West Airlines in 1995. Kirby worked on the 2005 merger of America West and US Airways and on the financial deal to merge with American Airlines when it was in bankruptcy.
“We are seeing a great team break up,” said Henry Harteveldt, an analyst with Atmosphere Research. “It’s sad to see this happen, but Scott’s got a huge business challenge ahead of him.”
By joining United, Kirby could become the eventual successor to Munoz, who had a heart transplant earlier this year. United has struggled operationally following its merger with Continental Airlines in 2010 and recently fended off shareholder activists who wanted to add more directors with airline industry experience.
“I am honored to be joining United at this important and exciting time and to have the opportunity to help accelerate the momentum the airline has achieved over the past year,” Kirby said in a statement.
Although Kirby was Parker’s second-in-command at American, industry analysts said it appears the company’s board decided that Isom would be a better successor to Parker, if and when the 54-year-old CEO decides to step down.
“Today’s announcement reflects the board’s commitment to ensure American has the most talented team in the business, and continues to be led by an exemplary individual who embodies the leadership qualities necessary to lead a large, complex service organization,” said American director John Cahill.
Isom, who began his airline career at Northwest Airlines in 1991 and joined US Airways as chief operating officer in 2007, will continue to oversee American’s operations although he will no longer hold the title of chief operating officer. Isom has focused on improving American’s on-time performance since the merger and oversaw the construction of the carrier’s new integrated operations center that opened last year.
However, the carrier has had operational difficulties with only 75 percent of its flights arriving on time in June, partly due to severe weather. In July, Isom sent an email to employees announcing new initiatives that included “speed up flight plans.” The pilots union criticized that idea, saying that management was manipulating flight plans and “pilot pushing” to keep flights on time.
Airline industry consultant Mike Boyd said that it’s rare for an executive move like this to positively affect both companies. He added that he is impressed with Isom’s philosophy of wanting all of his airline’s flights to arrive on time.
“He is the only executive at an airline to say, ‘we want to shoot for 100 percent on time’ and there is no excuse for errors,” Boyd said. “American is going to get a strong president with Isom and United gets a very strong president with Kirby, so everybody benefits.”