Chief Commercial Officer Vasu Raju to Leave AA

[Kev3188]

Recently, AA issued a cryptic memo stating Raja was taking a leave from the airline. This press release now states that his leave is permanent.

All innuendo and WAGS on my part, but perhaps this is evidence that AA's network strategy and/or shift in how they handle sales aren't working the way they'd hoped? It's no secret that Raja cast a long shadow at AA, so his leaving is a big deal. I'm curious what you all might think?

 

[eolesen]

AA appeAArs to be in a bit of a tAAilspin lately.

They've AAlienated the lAArgest globAAl corporAAte AAgencies, they're under investigation for deceptive pricing, and now AA is sAAying their 2nd quAArter revenue will be 6% lower thAAn expected:

American Airlines cuts outlook, says chief commercial officer is leaving

American said it expects unit revenues to fall as much as 6% in the second quarter from a year earlier.

www.cnbc.com

American Airlines said it expects unit revenues to fall as much as 6% in the second quarter from a year earlier, down from a previous forecast of a decline of no more than 3%. The carrier also trimmed its adjusted earnings estimate for the period to a projected range of $1 to $1.15 a share, down from a prior range of $1.15 to $1.45 a share.

The airline has trailed rivals Delta and United Airlines in recent months in financial performance. United Airlines later on Tuesday reiterated its expectation to earn an adjusted $3.75 to $4.25 per share in the second quarter.

Executives from both carriers will present at a Bernstein conference Wednesday morning. American Airlines CEO Robert Isom plans to discuss the carrier's plan to modify its ticket distribution strategy in favor of driving bookings to its own platforms instead of third-party channels and agencies.

 

[Kev3188]

AA appeAArs to be in a bit of a tAAilspin lately.

I AAgree. And a bit of an identity crisis to boot. A lot of what they are doing seems to conflict (eg, chasing capacity in one market, doubling down on high CASM planes in others). I also wonder how long it'll be before we see sAAles positions return.

 

[eolesen]

Well, he was definitely fired.

And I don't think the carnAAge is over.

Question is how much of that long shadow is next. I've heard some say it might lead to Isom's downfall as well. He signed off on Raju's plans, and so did every other VP and MD who didn't raise a cautionary flag.

If DL and UA were smart, they snapped up the sales folks who were unceremoniously dumped by AA. So chances are good they're not coming back, and I suspect their new employers were smart enough to get noncompetes in place. Unlike AA.

 

[WeAAsles]

Mark Stansbury, Lockheed Martin senior manager of global travel

I am proud to say that Lockheed Martin was a leader in opposition to American's strategy. We immediately moved significant share off AA.

AA was told by myself and by many of my peers that its strategy was flawed from day 1. Vasu was the architect, but Robert Isom agreed to it and fully supported it despite being told by industry leaders it was going to fail.

Vasu and his disciples insisted that our corporate travelers were AA's customers. Myself and many of my peers begged to differ with Vasu. Managed corporate travel programs manage their respective traveler groups, not the airlines. AA needs to realize that the corporate travel programs are their customers, not our travelers. Cater to the managed travel program's needs, don't try and fracture our programs by trying to push travelers into booking direct.

This was what Vasu naively thought would happen, but well managed corporate travel programs don't have leakage, and to the disappointment of AA, can move significant market share to airlines that never lost their appreciation for the consistency delivered by managed travel programs.

We continued flying through 9/11, we continued to fly through Covid, but as soon as there was a post-Covid bump in leisure travel, AA kicks long-standing corporate relationships to the curb. AA was told that Vasu's narrative of business travel will not recover and the ridiculous creation of "bleisure" were nonsense, and that based on decades of cyclical travel patterns, corporate travel would return and the leisure bubble would burst. American and Robert Isom refused to listen and arrogantly pushed ahead.

I know that Lockheed Martin aggressively made changes after AA announced its new strategy, I want to thank my peers that did the same and showed the suppliers of travel the power of well-run travel programs.

https://www.travelweekly.com/Travel-News/Corporate-Travel/Corporate-travel-pros-react-AA-distribution-about-face?utm_source=dlvr.it&utm_medium=facebook&utm_campaign=FBStories&fbclid=IwZXh0bgNhZW0CMTEAAR26cir-NyHNMypZDjT0y4xwGIjtKoTF7we7j7z_lLHMV_6NGVikXoLvsjU_aem_ATxfAB3nzOsgt8MIkuuNENHe9z46v_Dv-faORke2cVc0yf_fPfiUACWbhWmSoWucOywpJ7tgdfcbd3lLBFLUyRCW

 

[eolesen]

It's going to take more than firing Raju to get customers back, and global travel managers can have long memories. The type of relationships a sales team builds with a client takes years to cultivate.

Ten years ago, it was clear the Tempe leadership kicking out the established AA folks wasn't going to end well. Cheapening the product wasn't good enough, they had to destroy the corporate customer base just as Covid recovery was underway. Firing Kirby in favor of Isom looks worse and worse every year.

I quit flying AA right after the bankruptcy, and aside from feeling a bit guilty given friendships from my time there as an employee, I didn't regret it afterward. UA and DL treated me like a guest instead of an obligation, and I didn't look back after flying on a few Star Alliance partners.

If things haven't changed much as far as the hard product goes, it's going to take more than cheap tickets to get those who left to even consider coming back.

 

[WeAAsles]

American Airlines isn’t going anywhere so of course eventually they will turn things around. The question is how long will that take? UAL under Smisek wasn’t doing so hot and then they brought in Oscar Munoz and things started to turn around. Absolutely looking as if the AA BOD made a huge mistake not figuring out how to keep Kirby.

Reading more and more about Vasu is telling me things now that I didn’t know. The guy sounded pretty arrogant. As an employee I just am not getting the warm fuzzies over Isom either. I never said or thought that about Parker. I don’t know if Isom should be dumped just yet but he doesn’t seem to be instilling any confidence in anyone. Employees, Customers or Wall Street.

 

[Art at ISP]

IMHO, the damage is already done. It will take years to recover.

As long as AA was being managed by US/HP management, there was a disdain and dislike for the corporate flyers. Dougie was always more interested in the leisure crowd, he must have thought that they'd be hoodwinked into spending more. As I always said, a loyal customer is much cheaper to retain than to acquire.....I go back to the beginning of the Dougie era when he took over US Airways and had limited success in pointing some salient points to his team, but at the end, they never got the theme of Gordon Bethune's book From Worst to First:
1. Make your employees happy (to Dougie and his team employees always seemed to be the enemy).
2. Happy employees make happy customers (we were definitely the enemy--they were (and are) stepping over dollars to pick up pennies..
3 Get the first two right and your investors will automatically be happy...... (Investors always came first--it DOES NOT WORK that way).

I remember in 2007 after US had the IT meltdown walking close to $10M in revenue away from US to CO inside of a week. I had had enough of the lies and empty promises made by corporate consumer affairs (long after Deborah Thompson left). I heard they did notice, but didn't care.

At the end of the day, good riddance Vasu--go ruin Spirit or Frontier, they are more your speed.

My BEST to you all.

 

[Art at ISP]

Rakesh just joined the board of directors at WN!!! Go figure. Now he can ruin that airline too........

 

[CorvetteMan]

Rakesh just joined the board of directors at WN!!! Go figure. Now he can ruin that airline too........

Rakesh didn’t ruin US or any other airline.

The man was brilliant especially at 9/11 he came to CLT and had a private meeting with all of us in union leadership, all the unions.

The man built up UA before the ESOP. And was responsible for US’ Foreign growth.

I’ve had personal dealings with him and he was nothing but above board and treated us fairly

 

[Art at ISP]

Maybe he was personable, but he caused the problem with the business program at AA, and made customer unfriendly decisions that drove F/F's away. He may have been a friendly face, but at the end of the day it's about keeping employees happy by empowering them to take care of customers, which will in turn make customers happy and therefore make the investors happy--it does not work the other way around.

 

[WeAAsles]

Maybe he was personable, but he caused the problem with the business program at AA, and made customer unfriendly decisions that drove F/F's away. He may have been a friendly face, but at the end of the day it's about keeping employees happy by empowering them to take care of customers, which will in turn make customers happy and therefore make the investors happy--it does not work the other way around.

You’re getting two totally different individuals confused.

Vasu Raja
Rakeesh Gangwal

 

[eolesen]

Oh, you know it goes with some -- all Indian names sound alike....

The more I've seen of Rakesh outside Wolf's shadow, the more I regret some of how I characterized him over 20+ years ago. Gangwal took heat for stuff that Wolf was ultimately pushing.

He's proven to be very successful with IndiGo. It's not out of the question that he's being brought in as the spare CEO in case things get ugly with the investment house making waves.

 

[Art at ISP]

My apologies, I did get the two confused. My comments were directed at Vasu, not Rakesh. Senior moment…..again sorry.

 

[CremaDiLimone]

good riddance...now, if the company would only shrink their unhealthy RJ flying (no freight/no mail, no premium seating = crappy revenues and a problem when oil is high) and cut out the sickness of the contract company that needs to get bribed to work on occasion ('premium pay' days at 1 1/2 hourly rate), despite being contracted to work at normal wages.

united works their RJs in their hubs. united now has 'united ground express' to do work that was once contracted out. delta has 'in-sourced' work that was contracted out, wheel-chair pushing/cabin cleaning. i listened to an airline analyst ask bastian during an earnings call about this - analyst led with "won't this add to your labor costs..."?

bastian quickly replied they love it and delta feels they have more control over these tricky operations.

aa loves contract work. connecting passengers in wheelchairs on the jetbridges still waiting for wheelchair pushers from a contract company to show up. these pax connecting intl to aa domestic. miss domestic flights..aa pays in more ways than one.

the tend is in-source. aa is always zigging when the winners are zagging.