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American Airlines is trying to dig itself out of a hole, says its CEO Robert Isom.
As part of that action, the company fired chief commercial officer Vasu Raja this week. Bloomberg reports that the primary reason was a Bain report that confirmed what many in the industry had been whispering about: He had been alienating business-class travelers.
American had recently cut its profit expectations for this quarter, and the next day the company’s stock fell as much as 15% before ending the day down double digits (13%). When JetBlue Airways announced last week that it was deepening its collaboration with British Airways to cross-sell flights even though the latter carrier has a relationship with American, some speculated that American’s alienation of corporate customers had created space for the move to happen.
At a Bernstein conference Wednesday, Isom praised Raja: “I admire his creative thinking, his passion. He’s an innovator, a disruptor. He was a good friend. But sometimes we need to reset.” Isom also said some big changes were underway, including the way that frequent flyer miles are tallied.
“Taking a look at our revenue production, our expectation for domestic performance has worsened materially since we provided guidance in April for a few reasons,” Isom said. “First, we’re seeing softness in cost and bookings relative to our expectations. That we believe is in part due to the changes that we have made to our sales and distribution strategy.”
Isom said the company is evaluating its strategy holistically. “We spent a lot of time listening to our agencies and our corporate customers and we hear their feedback,” he said. “We’re taking some immediate actions to respond and adapt to this. And over the coming weeks, we’ll be working to ensure that we’re optimizing for our customers and American as we move forward.”