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How Doug Parker Has Transformed American Airlines

The carrier's chairman and CEO is among EY's Entrepreneurs of the Year for 2015.

Before Doug Parker took the helm of what is now American Airlines Group in 2013, following its merger in bankruptcy with US Airways, the executive suite at American’s Fort Worth headquarters resembled a fortress.

The entrance had a big, heavy desk manned by a security guard. From there a long, winding hallway led to the chief executive’s office, where the CEO’s visitors had to get past not one, but two executive assistants.

Today, the desk at the suite entrance is gone, as is the security guard and one of the executive assistants. The hallway has been redone to create a much straighter path to Parker’s corner office doors, which, when a visitor arrives on a May afternoon, are wide open.

The change is emblematic of the cultural shift that Parker is trying to implement at the world’s biggest airline. The message to employees seems to be: “Got a question? Come on in and let’s talk.”

Parker’s open-door policy is no accident. One of Parker’s business heroes is Herb Kelleher, whose sometimes-zany approach to running an airline helped make Dallas-based Southwest Airlines so successful. “I’ve been lucky enough to become his friend over time,” Parker says. “Every time I get a chance to be with him, I watch and soak up as much as I can.”

One of Kelleher’s trademarks was open dialogue with Southwest employees. Parker is employing the same approach at the new American.

Whether it’s weekly staff meetings or get-togethers between executives and flight attendants, Parker and his team are using technology and face-to-face interactions to keep American’s 113,000 workers up to speed on what’s happening—and listening to them as well.

“It’s been a nice change,” Parker says. “We’re learning a lot from talking to our employees. They feel more engaged than they probably have been in the past.”

It’s not just employees who have good reason to feel better about American, but shareholders, too. After years of financial ups and downs, the carrier posted a profit in fiscal 2014 of nearly $4.2 billion (before one-time charges).

Indeed, the company now is one of the industry’s most profitable airlines, according to Bijan Vasigh, a Florida-based professor of air transportation finance in the College of Business at Embry-Riddle Aeronautical University. “I expect that to continue for the next couple of years,” he says.

Bringing Operations Into Focus

Although Parker made his name running America West Airlines and, later, US Airways, he cut his teeth at American. He held various financial management jobs between 1986 and 1991, when the legendary Robert Crandall ran the airline.

One of Crandall’s hallmarks was effective operations—the basic blocking and tackling airlines must do to get people and cargo from point A to point B on time.

So Parker was surprised when, in returning to American two years ago after a 22-year absence, he found a carrier whose operations he considered lacking. “Irrespective of how it happened, the airline did not have the focus on operational reliability that our customers and employees deserve,” Parker says.

All of which has led to big changes at American. Soon after he took over, Parker began overhauling flight schedules at hubs such as Dallas/Fort Worth International Airport so planes arrive and depart in certain time windows, rather than coming and going throughout the day.

This tactic, a Crandall-era hallmark, is good for passengers, because they spend less time waiting for connections. Plus, planes can carry more passengers, a positive for the airline.

Although this approach requires more staff during the busy periods, and thus is more expensive, the new American executive team has argued that the added revenue more than offsets the extra expense.

Not every change under Parker’s leadership will necessarily reflect how Crandall did things, but the two men share a common long-range goal for American, at least in the eyes of one observer.

Crandall “led a team that took a mid-pack airline and made it great, through growth and innovation,” says Rob Britton, an adjunct professor at the McDonough School of Business at Georgetown University and a former managing director at American. “Doug Parker and his leadership team are working hard to return the company to that stature.”

More Work to Do

To be sure, the process of creating the new American is far from finished.

For instance, later this year, American will seek to put the finishing touches on merging the two carriers’ reservations systems. This involves trying to get hundreds of computer systems to talk to each other and play nice, even though those computers often use different hardware and software. “It’s a monumental effort, but not one where you get a lot of glory,” Parker says. “It’s a complicated, high-risk, real challenge.”

He knows this first-hand. When the Parker-led America West merged with US Airways in 2005, “they had a very messy reservations cut-over,” says Seth Kaplan, managing partner at Airline Weekly, a Florida-based industry publication.

The flip side, Kaplan adds, is that Parker’s track record shows he and his team learned from experience. American is approaching this reservations merger “more incrementally,” rather than trying to unveil it in one fell swoop, he says.

“You can’t write the last chapter of this story yet,” Kaplan says. “But you have to say, so far, so good.”

Parker says the results American has seen to date in the process are encouraging.

“We’ve done a nice job,” he says. “But we have a lot of work to do.”

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