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[MUSIC] [APPLAUSE] >> Hi, Doug. >> Hi, Tracy.
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>> Thank you so much for coming today. >> Thanks for having me. This is wonderful.
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>> We're looking forward to the conversation. >> Happy to be here. This is really nice.
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Thank you all for being here. I appreciate it.
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>> I was hoping we could start when you were in our shoes, when you were just starting out on your career, your first job out of business school was as an analyst at American Airlines. >> Correct.
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>> You moved around between a couple of different airline companies after that but never left the industry.
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What drew you to that first job at American, and to the airline industry?
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>> Yeah, you're going to test my memory. It's a long time ago.
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>> [LAUGH] >> But no, a lot of people in our industry that you will find just grew up with jet fuel in their veins.
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Sit and watch airplanes take off when they were 12 years old, at the airport.
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I didn't do any of that stuff.
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I was not a huge commercial aviation enthusiast or anything like it. I was looking for a job.
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I'd gone straight through from undergrad to graduate school.
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My concentration was in finance.
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I wanted to go somewhere where finance was important.
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So I looked toward heavily capitalized industries. And airlines popped up.
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So, as in a number of others, it wasn't so much airlines, and I was fortunate enough that, at the time, American Airlines was trying to build a hub in Nashville, Tennessee, where I was getting my MBA, so they came to campus.
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I interviewed, and they invited me back to Dallas.
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I liked the people there.
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It really was as simple as that.
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I knew I wanted to go somewhere where what I was reasonably proficient at mattered. >> Yeah.
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>> So that was as targeted as I did though, and then it was just having done it, I loved it.
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It's a fantastic business, it's really dynamic.
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So that's kind of why I stayed in, it I think.
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But it wasn't anything more scientific than that. >> It makes sense.
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But you did stay in the industry.
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And many of us, many of our generation are job hoppers.
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A lot of us, our next jobs, we won't be there in more than a couple of years.
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What's your advice as someone who stayed in the same industry for so long to people who are thinking about jumping between companies and industries over the course of their careers?
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>> Again, see, all I know is what I did, so it's hard to suggest that that's the only way to do it, because it's not.
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But what happened with me, again, is I got into this business.
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I found I really enjoyed it.
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What I like about the airline business is that all the disciplines are really important.
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I said I wanted to go somewhere finance matter, but finance does matter, but it's a consumer product so marketing's incredibly important.
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There's no more complex operation in the world so logistics is incredibly important in value.
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The maintenance function is really a manufacturing function.
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So every discipline's really important.
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And how you make all those things come together is really important.
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So what I liked about it is the ability to gravitate to different Items, areas over time.
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But so much staying in the industry, I don't know.
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I know at time, I contemplated doing other things.
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It wasn't that I think no, I need to stay in this business for any reason.
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It's just the opportunities that came around continued to be in the same business.
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Now I don't think I could do anything else, this is all I've done, but I don't know.
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I will say that it's certainly nice when we bring in people from the outside because you bring in a fresh perspective.
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And people in our business tend to have hold on to some views of the past that maybe we don't want to hold on to anymore.
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So there's always some value in bringing people in from the outside, but there's also a tremendous amount of value of having people who have been in the business and know it and have seen the cycles and understand.
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So I think either way, we need some of each.
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But there certainly is, if we find someone who is just in for a couple years and out, it's not particularly helpful to us.
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Because it takes longer than that to really figure out what's going on.
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>> When you first arrived at this company that has so many different disciplines that are important.
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>> You hadn't been watching the planes take off when you were a kid, and there's a lot of value from the industry expertise.
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Just starting out, how did you make a name for yourself in a company like that?
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>> Yeah, you show up and do your job.
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And try and make sure that you're being responsive to what the organization's looking for.
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Again, I wasn't incredibly hard-driving cutthroat, I'm going to make sure that I get this job before someone else does.
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But I certainly cared about what I did, I took it seriously.
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And I worked really hard, I took pride in the work that I did and people noticed that.
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And so it wasn't so much that I was going to figure out how I got to this job by this time but rather I showed up and did the job that I was asked to do.
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I think I did it pretty well and people recognized that and they want you to do more things.
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And of course then what really matters is as you start moving up in an organization, the skills that might have been really helpful as an analyst, are not particularly the ones that are as important as a manager.
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So you gotta figure out how to adapt and do those things but anyway, I tried to do what I was asked to do.
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I took it really seriously.
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I worked pretty hard, because it mattered to me.
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But if you do that people will find you.
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>> Yeah, were there any key people or key events that helped you, especially when you were moving up into new positions where maybe you didn't have the skills yet?
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>> Yeah, well, what I remember from back then where my career really started to progress little faster is when I was promoted.
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I was a pretty good analyst, but there were definitely better analysts than me.
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Smarter, good at Lotus 123, or whatever the hell we used back then.
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>> [INAUDIBLE] >> Yeah, so anyway, they could build a spreadsheet faster.
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I was pretty good but definitely not the best.
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Where my career started progressing is when I was promoted to managing a small group of people.
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And I've always liked working in teams.
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Played team sports growing up.
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I was comfortable in that environment, and I quickly realized that if I can just get these five people who are smarter than me to work together, we can do a lot more than the six of us can independently.
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And I did find that I think I did that role better than certainly my peers at the time.
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Our team was able to produce more.
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I tried to make sure they all got credits, so then people wanted to be on my team, and as a result, that's when things started taking off for me a little more.
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>> Interesting, a lot of these dynamics are the dynamics of a more traditional, complex company that's been around for a while and has its hierarchies.
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A lot of us are looking at jobs in Silicon Valley, where we move fast and break things, which isn't necessarily how I would describe American Airlines.
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>> [LAUGH] >> So give us the other perspective.
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What can we learn at this point in our careers from an established company that we couldn't learn at a start up?
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>> Yeah, well that's a hard question for me to answer you.
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Again, back when I came out, there wasn't an internet and there weren't people, the best and brightest didn't go work at start ups.
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They went and worked at established firms. So it's what I knew.
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But look, the basic principles.
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I'm certain, are the same.
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That is leadership skills.
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Getting people to work as a unit.
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Communicating with people in a way that they understand what the mission of the organization is.
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In a way that they feel motivated to produce.
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That's how you're successful in a large organization.
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I can't imagine that's not how you're successful in a smaller organization.
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And look, the large organization stuff may sound old and stodgy.
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I think the reason our team has done as well as we have, given the cards we were handed anyway, is because I think we think much more like a startup, that startup mentality.
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We took risk others wouldn't take.
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We didn't things people thought were crazy.
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And there's so much value to be created if you're willing to do that in large organizations.
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Because the organization doesn't, it will reward behavior, but it doesn't encourage the behavior.
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If, anyway, any of you, if asked look, this is, I'll give you a roll a dice, if it comes up six, I'll give you a $50, but it comes didn't come as six. You gotta pay me five.
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Well, I gotta well, of course.
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You give me ten to one odds in something that's one in six.
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If you mention that to your boss in a large organization, I got this idea, the boss will say wait a second, you're telling me five out of six times. It's not going to work.
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I'm going to look bad five out of six times. We're not doing that.
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So, those of us who are willing to say, what are you talking about? I don't care.
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It's a great bet, we're going to do that.
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Do extremely well because the risk reward relationship works of course like it does everywhere else.
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And you're in an environment where risk is less encouraged.
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So the reward is much higher than it would be if everyone was taking the same level of risk.
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Or had the same attitude.
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So look, again I only know what I've been through.
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But I don't feel like it's been boring and stodgy.
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It's been incredibly dynamic and exciting.
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And the fun part is taking these risks and seeing, and when other's don't.
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And having some things that others would look at and think of God, that didn't work for you, which we say it's exactly the way.
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I would never, I would do the exact same thing. >> Yeah.
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>> Because it was the right decision.
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Just because it came up too, doesn't mean it was the wrong decision to take that back.
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It was the right decision.
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So, and as long as you keep doing those things, particularly in an organization where you're not competing with a lot of people doing the same thing, you can do really well.
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>> And is this perspective you've developed about being willing to take the risk, has this developed and changed over your career? >> I don't think so. >> All right. >> Yeah, I don't know.
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I used to like going to Vegas a lot when I was younger.
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>> [LAUGH] >> So, and, look, I've, I'm a big proponent of risk taking, and always have been.
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So, and like I say, it's helped me a lot, and things like just in the introduction of my career.
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When I left, this is inside airline stuff, so sorry.
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But you know, back when I left American Airlines in, whatever that was, 1991.
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American Airlines, that was the place to be.
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We hired 40 amazing year.
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We were the best and the brightest.
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No one went to work for Northwest Airlines, for God sakes, from American, but I did. >> Yeah.
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>> Because I could do a lot more at Northwest than I could at American.
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So anyway, I would encourage people to go take risks.
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That's what I've been doing for a long time. >> Good. Since the Vegas days. >> Exactly.
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>> But combined with your risk taking style.
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There's also a lot out there who say you have a leadership style that's very humble.
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Very confident but very humble.
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And the airline industry has a lot of folks with some pretty big egos.
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>> They've got confidence.
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>> Yes, yes everyone's got the confidence, but the humility I think is the distinctive feature.
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What are the trade offs between the two different styles when you're running such a complex organization?
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So many different people to communicate with as you expressed before?
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>> Okay, well thanks for the characterization.
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>> [LAUGH] >> I appreciate that. I hope it's true.
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What I know is that, this is huge team sport and there's no individual that makes a difference and the way it makes a difference is if you get the whole team pulling together and working together.
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So I'm stunned sometimes to see how some individuals try and position themselves because I can't imagine what it's like to work for that person.
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When you're he one doing all the work and they're taking all the credit. >> Yeah.
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>> So I try not to do that.
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It's hard by the way because people want to do that.
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Media only wants to talk to me and everyone wants to try and simplify it into you made this decision, you made this decision.
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And I didn't make those decisions.
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Somebody else made those decisions. I was just, I said okay.
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So at any rate, I don't think it's a conscious attempt to try and be different than anybody. It's just who we are.
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And what we've learned long ago is that if we all work together as a team and stick together as a team, we can do really great things.
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But if any one of us tries to make it about us, then it starts to fall apart. So that's worked for us.
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Other ways work for other people.
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That's just what works for us. >> Yeah.
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Building on that, the airline industry is one that invokes a lot of negative sentiment among customers sometimes. >> Really?
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>> The Wall Street Journal, I've heard it mentioned.
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The Wall Street Journal recently published a report showing that American Airlines was ranked last in sort of overall ranking of US airlines for 2015.
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>> I didn't read that one.
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>> [LAUGH] I'll send it to you. >> Sure it's wrong. >> Probably. Probably. Just a slip up. >> Okay.
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>> Maybe I was looking at it upside down. But.
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>> [LAUGH] >> [LAUGH] [APPLAUSE] [COUGH] Well what I want to know is in a team sport and you're the team captain and there's result like this, how do you lead the team?
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>> Well you understand the results and make sure, look I did read the article and you didn't read it upside down.
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But look, we are in the middle of integration during the time that was measured.
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So things like what they measured are important.
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But some of the things they measured are really hard to do, when you are running two separate airline, like baggage connections. >> Yeah.
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>> When we've got people connecting from US Airways to American Airlines, it's harder.
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All that, we are well aware of that.
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That's the problem with integration we are that stuffs fixed.
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We won't be last next year.
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American Airlines is one airline now.
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And first and foremost that's the answer, but to your broader, that specific set of circumstances but I'm not about to suggest we do everything great, it's a great business and people shouldn't complain.
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It's a difficult function to transport people through bad weather like we're about to have in the East coast.
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And people fail out for the product and there's, if we do everything perfectly, if we do or just perfectly well then The air press perfectly maintained, everyone shows up on time, everyone does their job exactly as they should.
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The best we're going to do, in terms of on time performance, over the course of a year anyway, is probably around 85%.
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85% of the time you should expect at the very, very best run airline that you're going to arrive within, by the way the definition of on time is within 14 minutes of your scheduled arrival time, which is nice too.
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>> [LAUGH] >> That's our government, but none the less, what other business has 15% failure rates? >> Yeah.
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>> And for a product, but that's entirely due to weather.
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In the example I just gave, there's no maintenance, cancellations.
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50% of our flights get delayed because of weather.
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So we have this challenge of a product that is a means to an end.
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Most people don't buy airline tickets to fly around in an airplane, they're trying to get somewhere else.
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And is also because of how complicated it is, and how capital intensive it is.
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It's reasonably expensive, so they expect it to work as a means to an end, and when it doesn't, they get upset.
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Now our challenge is to make sure that we manage that as well, and we're getting much better at this.
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When things do go wrong, make sure that we were able to respond much more quickly and get people where they need to go.
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because people do understand weather.
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But they still want to get where they were trying to go.
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Anyway, I've already forget what the question was, Gracie, but we work really hard in a difficult job to do it really well and to focus on customers.
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We have a phenomenal team of people.
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We got over 100,000 employees who are just out there doing a great job everyday, it's a really noble thing they do.
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They get beat up sometimes because they're the ones standing there when the plane can't go, but the reality is, those people, they make commerce run, business couldn't operate without the airline industry.
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They get people to go see other people, they get people to go see the world.
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And it all happens because of the work they do and we're really proud of it.
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But we know we have to get better at reaccommodating people when things go wrong. >> Yeah.
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And related to things beyond your control, ten days after you became CEO of US Airways >> You woke up to the news that two planes had crashed into the World Trade Center.
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What went through your head at that moment and what did you do that morning?
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>> Yeah, I was in Phoenix at the time, working for America West Airlines.
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Yeah, I was the CEO for ten days. It was a nice ten days.
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>> And then- >> [LAUGH] >> It's all relative.
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>> So look, the immediate concern of course was for the safety of our team, so quickly after learning about the flights at the World Trade Center.
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My phone rang and it was the FAA was grounding the entire commercial airline fleet.
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And so we were putting airplanes down.
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So the best message I got was hearing that everyone of our airplanes was safe and they were on the ground, so.
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But anyway, it quickly turns into the next three days, trying to shut down airspace and those things.
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But not much longer, once you get past the immediate safety concerns.
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And by the way, extreme empathy for those who didn't have their employees safe at American and United.
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But shortly thereafter, we moved into, what are we going to do about the longterm viability of this business and this, and particularly the company that I was running which was America West Airlines?
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We had a range to financing with some suppliers of ours, Airbus and GE, to help get us through what was already a tough time.
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It was arranged but we have not fully executed.
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So that of course, fell through.
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We found ourselves in a position where we absolutely in that environment did not have enough cash to make it through the winter.
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We were going to go, and in that environment, since there was no way, even through a bankruptcy filing to expect things like dip loans that would allow you to survive, we were going to shut the company down.
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We were going to liquidate without some sort of capital infusion.
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So and the only possible way to get a capital infusion in that environment was the US Government.
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They established this Government Loan Guarantee Program so I went from, when I took the job in September of 2001.
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The one thing I remember telling the board is look, I can do all this stuff.
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I've done operations, I've done the marquee side, I've done the finance side.
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The only thing I really haven't done is government affairs, but that's okay, because we're this little airline in Phoenix and we never had to do anything with Washington, really.
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It's more the bigger airlines mess with that.
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Well, I was found myself living in Washington DC, lobbying for a government loan for the next three months. >> Crash course. >> Yeah.
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>> How did you communicate?
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So you had a lot of communications with the government the month that followed.
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How did you think about the various communications to the public, to customers, employees, shareholders.
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>> Yeah, we tried to make them think everything was okay.
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Even though we weren't quite sure it was, we were honest.
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Let everybody know that we were going to get this done even though we weren't certain we were.
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So the communication was important, but the real important part was trying to get through the loan process.
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It's by the way, I'm going to embarrass somebody.
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Is Marlena Sloick in here? Hi.
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Her father John Sloick was our investment banker through all of this.
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He lived through this with me, so anyway. >> Good to see you. Thanks for coming. >> Nice to see you. Thanks.
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>> [LAUGH] >> Tell your dad hi.
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>> [LAUGH] >> So anyway, he and I went through a lot together.
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But I want to give you one quick story which I think can help pull this together and also this career stuff.
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because seeing Marlena reminded me of this.
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We went through this process and we were told by the government, no. We were told.
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Marlena's father and I sat there and had the Department of the Treasury send us a fax at Citi's government affairs office Friday at 5 PM, so they could then leave, that said we've reviewed your file, and need to tell you that we cannot approve your application at this time. Which is no.
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And it's the worst day of my life.
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We were going to liquidate, and I didn't know what we were going to do about it.
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And again, from this time now, so it's now, I'm the CEO of this airline, I've been CEO, this is now October, November, so I've been seeing them for two months. >> Very experienced. >> Yeah, exactly.
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So I just can't help but think, this didn't turn out right.
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My career, I'm shortly going to be the worst CEO of all time.
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[COUGH] I was CEO for two months and we liquidated the company. What am I going to do?
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And all this kind of me, me, me stuff.
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[COUGH] Which again, I don't feel badly about that. That's natural.
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You get into jobs and you kind of worry about your career and I was still worried about my career and what I was going to do.
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And here I knew this company was going to liquidate.
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And here is the career story.
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I go and on that flight home from DC to Phoenix.
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I always get up and talk to our team and crew, because it's important and I learn from them.
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But I didn't want to go talk to the flight crew, because this is front page news.
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No one knew yet about this letter, but everyone was asking so I knew they were going to ask.
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And I knew I couldn't lie to the flight attendants.
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So I was contemplating just spending this four hours in my seat.
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But then I thought I can't do that, I gotta get up, so I go back and talk and I'm glad I did.
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This flight attendant in the back asked me what's going on, I tell her, well, gee, it doesn't look to good right now, I just We're fighting through it but I just, I don't feel good about it and she says, well what's that going to mean?
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I said, well look if we can't get this done, you know, we'll file bankruptcy and we'll try and hang on but I don't feel good about that either and she just looks at me and says you can't do that.
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I've been doing this job for ten years, I'm a single mom, I've got my life arranged around this flight attendant job, I can't do anything else, I'm really good at it, which, by the way, she was, because I'd seen her.
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And you just can't let that happen.
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And I'm like, [LAUGH] So okay, but no, it was really humble.
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So I went back, sat in my seat, pulled out the damn letter again, and realized that it said at this time, cannot prove it at this time.
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So okay, I landed that night, we went straight to work. We worked all weekend.
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We showed back up in DC Monday morning, John with us. With a new application.
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And these guys in treasury said, what are you doing here? You said not this time.
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Here's another application. We're not going away. And we kept fighting. And we didn't give up.
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>From that time, that airline, that little Ameriquest airline had to have that loan.
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That little airline American West Airlines lived off of wage advantages.
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Other airlines went through bankruptcy and got their wages down to ours. >> Mm-hm.
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>> So all of the sudden we had a new problem, which was we didn't have the revenue generating capability they did, but they had the same cost structure as us now. [INAUDIBLE]?
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So we had to do a merger.
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So we merged with US Airways.
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And then US Airways ended up with essentially the same kind of problems so we ended up merging with American.
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All those things, none of those, from the time of that encounter was I spending time thinking what's best for my career.
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Every one of them was, I'm responsible for these hard working people.
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Who, if we don't do our jobs right, aren't going to have a job.
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And it's not their fault.
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These people are fantastic.
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They're depending upon us to make sure that we put the company in a position where they don't have to worry about whether or not the company's going to be there for them.
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So the reason they work so hard for those mergers, and the reason I personally work so hard on it was not because we wanted to get ourselves in a position of being CEO of the largest airline in the world, is because that was the only way to get that group of people safe harbor.
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Anyway, and so the moral of the story is, from the time I stopped thinking about my career and started thinking about doing my job for a bigger cause, my career took off.
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And so anyway, I like that part.
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So my message of this is, it's hard to do.
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[COUGH] You always hear people say go do what you love.
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To which I thought, that's BS.
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I love playing basketball, but, [COUGH] >> [LAUGH] >> [COUGH] Nobody's going to pay me to do that, but I think what really is true, if you can figure out a way to make what you do be bigger than just you, that'll work out really well for you.
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And again, it's not that easy.
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It's a lot like saying, do what you love.
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But if you can find a way, once you find that, don't let go of it, because that's when things really start happening.
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When you're not just, because look, if it had been me, if I had been worried, gee, I want to be CEO of American Airlines, at some point during this whole fight, I would have said, CEO of US Airways isn't that bad. I'm fine. I'm doing fine. I don't have to move. This was okay.
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But that never crossed our minds, because this was, no, no, no, we gotta get this done for all these people that are counting on us. So.
27:46
And I'm glad you bring up the mergers because I wanted to ask before we talk about the success of the US Airways American merger about what you learned from the failed attempts to merge with United and Continental.
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>> They weren't failures.
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>> Good, I'm already learning.
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>> You're reading it upside-down again.
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>> [LAUGH] >> And, look, this is back to the risk thing, and of course, this is perceived as failure.
28:13
But I'm really glad we did it.
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The first one that Gracie is referring to was shortly after doing the America West, US Airways merger, and we were actually shorter than this part, we were just one year into it.
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Delta Airlines was in bankruptcy, they were about to emerge from bankruptcy.
28:33
We came up with a great idea bringing them out of bankruptcy with a merger with the then-US Airways, which hadn't even really merged with America West very well yet. But it was a good idea.
28:43
It would have been a really good airline.
28:46
And the Delta team didn't like it, so it turned into a hostile.
28:49
[COUGH] Which doesn't happen very often, hostiles of companies in bankruptcy. But we tried it.
28:56
We knew going in it was high risk and probably more likely than not not to work but it was rolling the six on the die.
29:04
Huge upside [COUGH] if it worked, excuse me.
29:07
And if it didn't work, it didn't work.
29:11
And also, if it didn't work, what we knew is, we were going to, they would have to figure out something else to do. And they did.
29:18
What happened is, long story short, that group of people when you're in bankruptcy, you don't have a board, you have creditors. Well, you have a board.
29:24
But the people running the company are the people that you stiffed, so the people they owe money that aren't getting paid are now in control of the company.
29:34
And those people who you are appealing to by saying, look, you'll get much more of your money back if you do this with us than with them, kind of believed us but at the end said, look we're going to stick with them.
29:44
But they insisted that, that board be changed.
29:47
That board put people on that were pro-consolidation, including Richard Anderson, who now runs the place.
29:55
And shortly after the merger, that Northwest, that Delta went and did a merger with Northwest.
29:59
I don't think that would have happened if we had done the hostile.
30:03
And if Delta hadn't merged with Northwest, then our next aborted attempt that we failed at was trying to then, after that happened, merge US Airways and United. >> Yeah.
30:15
And we got pretty close there but United eventually told us no and picked Continental instead.
30:21
So United merged with Continental, another thing that wouldn't have happened had we not tried to get the first one done.
30:26
So anyway, I was being flippant with you saying we didn't fail.
30:29
>From the outside those are failures.
30:32
And that's getting back to my point.
30:33
I don't feel badly about them at all.
30:34
And people would write at the time, gee, again putting it all on me, Doug failed at this merger attempt.
30:41
But it didn't do exactly what we wanted.
30:43
We wanted them both to work, but it progressed us to where we could do what we needed to do.
30:48
And it moved the industry where it needed to move and there was no one else out there trying to make that happen.
30:54
I don't know where we'd be if we hadn't tried do those things.
30:57
>> And so with American, I think one of the reasons it was so successful was you built this strong relationship with the labor unions.
31:04
Can you talk about the freights and what about you as a leader made those relationships so successful?
31:10
>> Well again, not all me.
31:12
A really good team of people who cared about so much about taking care of our team that we knew that we could do so much for them that we also knew is going to be best for the employees of American.
31:28
So, but we did the, rather non-traditional step of while American was in bankruptcy, beginning negotiations, [LAUGH] so, we're at US Airways, we started negotiating with the American Airlines unions for a contract that we would be willing to sign, if indeed a merger got done.
31:47
These people didn't work for us, [LAUGH] they worked for American.
31:50
And we're meeting with them in Phoenix and signing contracts with them.
31:54
Which, look, I didn't do lightly.
31:55
I know it offended my friends in American that we were meeting with their employees.
32:00
But again, we had to get this done for our team.
32:03
It was the right thing to do.
32:05
So to your point, we recognize and we learned it in the Delta transaction frankly.
32:11
We did have the creditors on board in the Delta transaction.
32:14
What we didn't get was the employees on board.
32:17
They were very proud of Delta.
32:18
They wanted to stay with Delta and that hurt us.
32:21
So we recognized we needed to get the team on board.
32:24
So we approached American's employees.
32:27
We laid out for them what we planned to do.
32:30
We told them why we thought it was better.
32:32
They agreed, and it wouldn't have gotten done with out them.. It worked out well.
32:39
>> And now that the merger is successful, your the CEO of the largest airline in the world, 120,000 employees around the globe.
32:48
You're also the father of three. >> Yes.
32:50
>> How does being a CEO compare to being a father?
32:53
>> [LAUGH] Father's a lot harder. I don't know. I have great kids.
33:00
I try really hard to be a father more than a CEO.
33:06
My job, I probably spend more hours at CEO, unfortunately.
33:11
But frankly, I learned so much from being a father that I can use at work.
33:20
[COUGH] Anyway, raising children is this amazing thing.
33:28
Everybody does it at some point so it's not like I'm an expert here.
33:32
But just watching the development and watching how people interact and watching how your kids interact helps me a lot to understand and to actually go manage the company.
33:42
So I learned a lot more about, I've become a better CEO because I'm a father.
33:47
I try really hard to be a good father as well.
33:50
I do things to make sure that I'm home as much as I can be.
33:53
This is a rarity for me where I'm out of town for a night, and it's not required work, but I wanted do it. >> Appreciate it.
34:01
>> Well, I wanted to do it for George.
34:04
And I appreciate it as well.
34:06
So I try and stay home as much as I can.
34:10
My job requires me to travel.
34:11
I refuse to do, I almost never do work dinners in Dallas.
34:17
If I'm going to be home, I'm going to have a meal with my kids.
34:21
If somebody wants to meet with me, of course, that's important to the company.
34:23
We can do it at lunch or breakfast, or we can do it at my office.
34:27
But there's no reason for me to be going to a dinner in Dallas.
34:30
So I have rules like that.
34:31
That I just make sure that I stay engaged, stay balanced.
34:34
>> When you moved to Dallas after the acquisition was that a family conversation about how you balance where the kids have been raised versus where you're doing work? >> Yes.
34:45
>> [LAUGH] >> [LAUGH] >> You're good at this.
34:50
>> [LAUGH] >> So do you want to hear this story? >> I do. >> Okay, sorry. You know, it's horrible.
34:58
I said the worst day of my life was that day that I got the letter.
35:01
This might have been the worst day of my, this was a really hard day.
35:04
My kids, my eldest who's 20, was born in Minneapolis, when I was at Northwest, but we moved when he was three weeks old.
35:11
And the other two were born in Phoenix, and that's where they were raised.
35:17
>> And this merger was in the papers all the time.
35:22
One day my daughter, who at the time I guess was, she's 15 now, so she was 13, sends me a text and says Mrs.
35:31
Roswell told me the mergers going through [LAUGH]. >> Who's Mrs. Roswell? >> Mrs.
35:37
Roswell's a friend of a friend.
35:40
Like, well, I don't know before Mrs. Roswell.
35:44
>> [LAUGH] >> And I promise I'll tell you.
35:48
But because things would happen like a rumor that we got a deal done with the unions.
35:54
And okay, the merge has gone through is the way gets reported.
35:57
So all of a sudden my kids are just going crazy.
36:00
So anyway they didn't want to move.
36:03
So anyway, the bad part was when we finally did do it, and I'd been telling them all along, quit listening to everybody else.
36:08
When I tell you is when it's happening.
36:10
Don't worry about it until then.
36:11
So they at least had some comfort in that.
36:13
And then one day I had to come home and Clara would say hey, I need to talk to you.
36:17
And as soon as my daughter walked, I said hey, I need to talk to you and pulled her.
36:22
And we'd already had the two boys and my wife there.
36:24
And she walked in the room and just saw that they were there and just started sobbing.
36:28
So, aren't you glad you made me to tell that story? >> I'm sorry. >> It's all right.
36:31
So no, it was really real, but look, that's stuff you gotta do. She's fantastic. She's fine now.
36:35
She wouldn't leave Dallas. So it's all fine.
36:37
But, yeah, that was the bad part of doing this.
36:40
And again, it gets back to, look, if we were just doing this for ourselves, we would have stayed where we were.
36:47
We were perfectly fine and happy.
36:48
But you gotta do what's right for the organization.
36:51
>> And now that you're at this point, the merger, the final pieces have come together, hopefully friends have been made in Dallas, what's next for American as a company, and what's next for you as CEO?
37:03
>> Well, look, we have set an objective for ourselves of becoming the greatest airline in the world, and we're not there yet.
37:09
So we have a lot of work to do.
37:11
We spent the last two years integrating, which sounds boring and it is.
37:15
>> [LAUGH] >> But it's really hard work.
37:18
And it takes a lot of time and effort, and our team has just knocked the ball out of the park.
37:22
But now we've gotten through the vast majority of that. We still have some left.
37:26
And now we really need go start producing now that we are working as one airline.
37:31
And we know what we need to do.
37:32
Our objective is to be the best in the world and that's a somewhat nebulous term, but we know we're not it now.
37:39
So that at least we know we have to make some progress, but what it certainly means is you gotta be an airline that people want to fly.
37:45
You have to be an airline where people want to work, and you have to be an airline where investors want to put their money.
37:52
And we're doing okay on each of those, but we can do a lot better on each.
37:56
And we're not the best at any of them, and we want to be the best at all of them.
38:00
So we're going to make huge improvements to the product. It's already begun.
38:03
That includes the operational liability issues that you mentioned.
38:06
But it also includes entire modernization of the fleet, brand new airplanes.
38:12
We now have the youngest fleet in the world, or in the United States.
38:15
We have, that includes WiFi throughout all our airplanes, including international, lie-flat seats international.
38:24
Taking our air miles clubs to look like the kind of clubs you'd see when you fly internationally, not just when you fly in the United States.
38:29
So making it a true global airline with a real global product.
38:32
So we have a lot of work to do, and we have a lot of work to do with our team.
38:35
There's a lot of history at American Airlines of management-labor relations that are just horrible.
38:41
I'm not trying to say anything bad about prior management.
38:46
They had a really difficult situation to go through.
38:49
But the result was a really, really bad history that's hard for people to let go of.
38:55
And so we're trying to convince people that that's over and this is new.
38:59
And we try and figure out ways to do that everyday, just surprise people with something to say wow, that's different. This feels different.
39:05
So we gotta lot of work to do with out team, too.
39:07
And by the way, it's incredibly important to the first one.
39:12
That the airline business is so much about the employees that you interact with and their attitudes.
39:18
So if we can get our employees to be excited about being where they are, our customers will be much happier on the airplane.
39:25
And that'll help us drive more passengers to the airline.
39:28
And that'll help us meet our goals of getting a return for our investors.
39:32
So it starts with the employees.
39:33
>> A lot of exciting work ahead. >> Thanks.
39:35
>> Excellent, I'd like to open up to the audience now for questions.
39:38
I think our first one is from Twitter. >> Yeah, that's right.
39:41
Thanks both for a wonderful conversation.
39:44
So the first question from Twitter comes from a chap called Jake who says that the Economist wrote that airlines are wonderful generators of profit for everyone except in sales.
39:56
How do you envision changing that, especially with headwinds such as climate change and so forth?
40:00
>> Yeah, that was true from the beginning of time until recently.
40:06
Look, this airline, this business, is transformed.
40:11
And I believe that as much as I can believe it, as much as I can possibly stress, no one not no one, very few others seem to believe it.
40:21
The market doesn't believe it, as you can see with the way our stocks trading versus what we're looking at in terms of earnings.
40:30
It's hard for our employees to believe it.
40:32
It's hard for the management team to believe it.
40:34
But this is, and it's obviously hard for the economists to believe it but look, this is a real business now.
40:38
We're producing real returns and we've got a business now that it's still a cyclical business.
40:43
People will fly less in bad times and fly more in good times.
40:48
But we're producing profits now that are in line with the general industry, actually a little ahead of them.
40:58
Peaks, double the highest earnings in the industry that are produced.
41:03
Hopefully, we're not at peak margins right now.
41:06
So I think the industry has been largely transformed mostly due to the consolidation that we discussed so that's what we needed to do.
41:15
The problem with the world before where everyone else made money and we didn't.
41:18
All of our suppliers made money, Boeing made money.
41:20
That's probably how America West and others stayed around because those who lived off our carcass needed us to be around a little more so they loaned us money to keep us kicking around.
41:37
On three occasions, I've received loans from either GE or Airbus, to save a company from going bankruptcy.
41:43
We're going into bankruptcy, America West and US Airways.
41:47
But no one talks about that anymore.
41:48
We're not even kind of doing that.
41:50
We raised last week a billion dollars of aircraft financing at below 4%.
41:57
So anyway, the answer to that question if you asked me five years ago or ten years ago was we got to get consolidation done because the industry is too fragmented.
42:05
And we can't provide to consumers what they want, which is the ability to have one airline take them everywhere they want to go.
42:15
And as a result we all end up trying to do that, and we're incredibly inefficient.
42:19
So anyway, I think we're past it. A lot of questions.
42:24
>> There's mics going around. Thank you.
42:29
>> Morning, thanks for coming. >> Sure.
42:29
>> Really appreciated your remarks on teamwork.
42:33
It made me think right away of one of your agents in Raleigh, her name is Tammy Fields. We fly a ton.
42:40
And she has basically adopted our family.
42:42
She keeps an eye on like award seat searches that we're trying to do to Tokyo or somewhere and calls me up when something comes through.
42:49
Just so far above and beyond the call of duty.
42:52
We were stranded one time in Peru.
42:54
It was Tammy that got us out of the fix and got us flights and pulled whatever strings needed to be pulled.
42:59
Really the kind of success story you're looking for.
43:01
I'd like to give you her name when you're finished if that's okay.
43:03
>> I've got it, and I see my colleague down there typing it into his iPhone.
43:07
We got Tammy Fields in Raleigh.
43:08
>> Tammy Fields in Raleigh.
43:08
>> We will definitely let her know.
43:10
>> Tammy Fields in Raleigh.
43:11
>> Thank you for telling me.
43:11
We do, we have a phenomenal group of people like those. Thanks for telling me.
43:14
>> [APPLAUSE] >> Hi, I wanted to ask about how you keep loyal customers given the recent award program devaluation among your competitors United and Delta.
43:32
And American Americans impending award devaluation of March 22nd.
43:37
How do you look at customer loyalty and maintain their trust and their business? >> Yeah, thanks.
43:45
We don't view it as devaluation, we view it as a change.
43:47
>> [LAUGH] >> And look it is, these programs when they were established for whatever reason, they were established as we measured loyalty by how many miles you fly.
44:04
And that's one way to do it, but we don't report our PNL as miles flown minus expenses, it's revenues minus expenses.
44:14
And what's more important and what we want to reward for most people miles on revenues are a reasonable approximation, but with that model you have these very very odd things we created.
44:31
People finding the lowest possible fare they could find.
44:36
And spending their weekends flying around the lowest fares they could find so that they could get free travel somewhere else.
44:44
Look, we love those people, those are customers of ours.
44:47
But when that happens what we as an airline are choosing to do is give that individual a first class seat to Paris instead of the individual who didn't fly as many miles.
45:00
And actually spent his time and weekends at home, but during the week paid full fair and that's not the right model.
45:10
So it's a shift in the model.
45:12
It's one of these things again where it's a transformation.
45:14
So everyone that grew up in that old model says that you're making this worse for me, but we're not making it worse for everyone.
45:21
It's worse for some, it's better for others and I think it's more fair and more equitable.
45:27
And it's rewarding what we want to reward, which is those people who fly us, who pay the most.
45:37
And who purchase the fares that are not just going around and trying to find $100 fares Transcon on a weekend to figure out how you get more miles.
45:49
So again, it's great they do that.
45:51
We encourage that by the model we had.
45:54
We like to actually have those seats for the people that are producing the most revenue for us.
46:03
>> Hello, Tobias from Germany.
46:05
I would like to talk about technology because I haven't heard this at all today.
46:10
I remember like 15 years ago I was reading somewhere Internet in airplanes. I got very excited.
46:15
I was very addictive to Internet back then and then it took 15 years until at least in Europe it was most of the airplanes a and even now EasyJet right now, Lufthansa just started.
46:26
It took like 15 years until people were able to use Internet.
46:30
In US, it was a bit earlier but it was still taking a long time.
46:33
So my question is like how in the future you can guarantee that technology is being integrated much earlier into airplanes, especially in regards of customer experience.
46:43
Because I would love to have all within American Airlines app I could upgrade myself during a plane, maybe for a special price, business class where maybe could skip the line or maybe get fast boarding because there's no large queue and I feel like I'm just tired.
46:56
I really feel like the customer experience, which a lot of online companies are offering and the mobile technologies out there has arrived at the airlines? >> Thank you very much.
47:08
Look, we're moving as fast as we possibly can and because of customer demand, because of people like you, who are insisting.
47:17
The reality is Wi-Fi on aircraft now that you talked about there I remember Russ sitting around and debating it and jeez, there's no way you can possibly pay for yourself, you gotta carry this stuff around.
47:30
These are antennas that communicate down the cell towers and they're really expensive and they're heavy and people got it moved.
47:38
There's no way we're going to, people pay for it.
47:41
But once it was on the airplane, on a few, customers started saying, this airplane doesn't have Wi-Fi anymore?
47:48
So there's no choice, because we needed to have Internet.
47:51
It came really quickly, so I don't know if that was so much technology as maybe resistance from airlines to go do something that we couldn't cause just as one.
48:06
But that's all behind us now and this is going so fast, we're all trying to figure how it lead from somebody else.
48:14
As it relates to some of the things you're talk about we're working diligently to figure out everything we can to make sure the customer experience can be done as much through technology as possible.
48:28
Some of the things you describe we just simply can't do because the regulations we have to live with.
48:33
I can tell you right now, if the way I travel and the way probably most of you travel, there's no reason for me to see an individual until I get on the airplane.
48:47
There's no reason to have an interaction or even to see an American Airlines employee until I get, because I'm not checking a bag and I've got my boarding pass, my iPhone, and I hand it to someone, who then puts it under the thing, and I can do that.
49:03
But we're not allowed to not have an agent stand there, and just let an individual decide that they're going to get on the airplane.
49:10
So some of this is just requirements that we're always going to have, but we can do a lot better and we're working really hard at it.
49:17
I can tell you American Airlines as it relates to this, we're putting Internet onto our international flights.
49:26
It's not on all of them yet, but we're way ahead of the game there.
49:30
So trans Atlantic, things you couldn't do before.
49:32
Now we're shooting up satellites instead of going down to cell towers.
49:37
And with that technology that's new technology, now we can actually provide Wi-Fi service anywhere in the air, so we're moving to that as quickly as we can.
49:49
So we'll keep working on it but we agree with you.
49:52
>> I'm afraid I'm going to take the last question for myself, which thanks.
49:57
Which is- >> You earned it.
49:58
>> [LAUGH] Thank you, I've tried. >> Yeah.
50:01
>> What advice do you have for the MBAs in the room?
50:04
If you could go back and it's your time at Owen.
50:07
What do you wish you could tell yourself?
50:09
>> Again, so many of your would go off and live in your basements.
50:17
So I'm not sure what to tell you about.
50:18
>> [LAUGH] >> About how to do that.
50:23
You're smarter than I am.
50:24
But what I can tell you is what I do know at least from a more traditional perspective, where you go show up at a job.
50:36
I was honored that's part of the introduction to have this the relationships matter piece mentioned.
50:45
That's what I think, what I believe is and what I would encourage, the reason I was talking to everybody like this, and what I told them was what I have learned in my career.
50:56
I know it's taught at business schools and it seems so matter of fact that why do you even teach it, but you can't stress it enough.
51:05
It's how important relationships are and how you treat people in your relative success.
51:13
And there's this perception amongst some outside of business that business is this, the way you get ahead is backstabbing, cutthroat that doesn't work at all.
51:28
It worked for a short period of time but you'll be done and you'll go need to find another job before too long in another industry because it doesn't work.
51:35
What matters is people that in every relationship they have, you treat people with respect and dignity and you show up and do your job well.
51:48
I watch people and I don't think they fully appreciate is, from the time you walk in the door that starts, and you're building relationships with people.
51:58
And you don't have any idea, you can't possibly decide that's the person somebody really need to have a relationship and that person's not.
52:07
That's what I've learned through all this crazy story of all the stuff I've been through.
52:11
This American Airlines, US Airways merger, we ended up with people in part of this process that helped us out.
52:16
That 15 years ago, we worked on this project and at that time, there's no way we would have thought that individual was going to be representing the flight attendants who are really important to us at that time.
52:32
But thank goodness we treated that person well, 15 years ago.
52:35
And if they hadn't been treated maybe so well from the other side, it made a huge difference.
52:42
So anyway, the message is this.
52:43
You're going to, from the day you walk in the door you're going to start these relationships.
52:47
And if you try and say I care about that person not that person, that's not going to work.
52:54
So treat everybody the same.
52:55
Treat everybody, and if you do that the people that do that versus those who don't, do it dramatically better.
53:02
And I think that's the biggest key as anything.
53:04
So you give somebody the same intellect, energy, integrity, all that, but not the ability to build relationships with somebody who can, and they're going to have dramatically different careers.
53:16
So that would be my advice, just be nice to people.
53:20
>> That's great advice- >> Thanks.
53:22
>> Thank you so much Doug. It's been amazing. >> [APPLAUSE] [MUSIC]