American Airlines cuts profit forecasts as Chief Commercial Officer departs 

American Airlines has simultaneously announced a cut in its profit forecasts for 2024 along with the sudden and unexpected departure of its Chief Commercial Officer (CCO). In a statement issued on May 28, 2024, it was revealed that Vasu Raja, a 20-year veteran of the airline would step down from his position in June 2024. The two announcements combined led to a sharp drop in the company’s share value (around 8%) on the US stock market.  

According to the carrier’s statement, adjusted earnings for the second quarter of 2024 (2Q24) are expected to be $1.00 to $1.15 a share. This represents a drop from the expected $1.45, according to a regulatory filing made on May 28, 2024. The carrier has also reduced its expectations for operating margins, costs, and revenues.   

The update published by the carrier forecast dampened prospects for the carrier as it heads towards the summer 2024 peak travel period – a season that is widely expected to be the busiest ever for US-based airlines. In recent months, the company has been working towards finding a better balance between meeting surging demand with rising operating costs.   

The announcement that Vasu Raja is to leave the airline in the coming weeks came as a shock to many in the industry, particularly as the airline only stated on May 21, 2024, to The Airline Observer blog, that Raja was simply “working remotely for a few weeks while dealing with some personal matters”.   

Raja (aged 47) was appointed as American’s CCO around two years ago and was seen to be the driving force and catalyst in various controversial changes in how the airline deals with corporate travel agents, along with being a leading proponent of the carrier’s domestic-focused network strategy. 

“American Airlines today announced that Vasu Raja, Executive Vice President and Chief Commercial Officer, will depart the airline in June [2024],” said an airline statement. “Raja has served as America’s Chief Commercial Officer since April 2022. Previously he held the role of Chief Revenue Officer and Senior Vice President of Network Strategy, where he was responsible for Network and Alliances. He joined American in 2004 and has held a variety of roles in Sales, Planning, and Revenue Management.” 

“In addition to his current responsibilities and effective immediately, Stephen Johnson, Vice Chair and Chief Strategy Officer will assume leadership of the Commercial organization and help lead the search for a new Chief Commercial Officer,” added the statement.

Kevin Porter / ShutterstockCuriously, the lack of any endorsing comments from the airline’s CEO Robert Isom, a quote from Raja himself, or any hint as to why he is leaving has become the focus of much speculation across the US airline industry since the statement was made.  

The carrier’s apparent shift away from making preferential deals with corporate travel agents angered many in both large corporate travel firms and travel management organizations who felt they had been sidelined after serving the airline for many years.  

Equally, the carrier’s shift away from its traditional hub airports in Texas and the US Northeast has caused a degree of controversy in recent months, with the airline being accused of walking away from loyal customer bases in those key areas. The carrier has been focusing more on its so-called Sunbelt hubs of Dallas-Fort Worth, Miami, Charlotte, and Phoenix in recent months, relying on regional flights and feeder carries to serve these airports with smaller aircraft while deploying larger, more popular aircraft types within its fleet onto other routes.  

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Aviation SafetybyIan Molyneaux2024-05-25

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