Rapid Travel Chai

At 4:15 pm EDT American announced that President Scott Kirby is out, replace by some guy, and at 4:18 United announced that President Scott Kirby is in.

I don’t know a person at either airline, don’t analyze their financial performance or anything else to claim inside knowledge. A central tenet of blogging is to present yourself as an expert through wild, confident speculation. By the time things play out, everyone has moved on.

Here, for entertainment purposes only and does not constitute investment advice, let’s rampantly speculate.

American says:

Today’s management changes are the result of the Company’s Board of Directors’ ongoing succession planning process. As part of that process, and subsequent conversations regarding career expectations and the marketability of its executives, the Company concluded it would not be able to retain its existing executive team in their current roles for an extended period. As a result, the Board chose to act proactively to establish a team and structure that will best serve American for the longer-term future.

United says:

Blah, blah, blah.

Waiving my magic corporate-speak decoder ring, we can guess the progression of events as:

1. Board members leak to Mr. Kirby the obvious that American CEO Doug Parker is not going anywhere anytime soon and that Mr. Kirby is paid an awful lot to be a perpetual #2. Issue may have been forced by Mr. Kirby demanding Mr. Parker and the board agree to a timeline when he will be elevated to CEO, believing that Mr. Parker and American’s board are somehow the exception to the rule of CEOs who decide to linger and board’s who renege on supposed commitments.
2. American board things Mr. Kirby will sit and stew for a while then quietly go to private equity, consulting or board work. Delta wouldn’t have him, he wouldn’t have smaller airlines, and why on earth United?
3. Mr. Kirby strikes a deal with United.
4. PR machines at American and United go into overdrive to make it look like it was all planned and orderly.

Interlude: let’s pause and ask: does American not have its executives under non-compete? Or just not willing to pay the price of non-compete, a way to say Mr. Kirby is not worth the price?

Back to the main program: why on earth United?

Without knowing anything about Mr. Kirby, it is odd for an executive of that level to make a lateral move.

Two scenarios:

First, and less likely, scenario is the man has bills to pay. Executives one rung down from the CEO are rich people competing with people much more rich. Their lifestyle collects bills. In this case most similarly situated executive increase cash flow and avoid the public ego hit by heading to private equity or consulting, which is where we suppose American’s board thought Mr. Kirby was bound.

Second scenario is that since Mr. Kirby instead joined United, we have to suppose United has guaranteed Mr. Kirby the top slot within a certain, reasonably short timeframe, or rather that Mr. Kirby thinks he has been guaranteed the top slot.

A key lesson of corporate life that many fail to learn, or delude themselves to think they are the exception, is that no future promise/guarantee/commitment on personnel decisions is guaranteed unless it happens now. Not next year, not next month, not next day.

No CEO or board will make an iron contract that an executive will get a certain role at a certain date. They may intimate, insinuate, lead one to believe, but nothing to hold them to account later.

Things can change, after all. Such as Mr. Munoz, perhaps in good health, and riding high on stroopwafel-fueled goodwill, deciding to stick around longer and ‘finish what I have started.’ The adoring board cheers on as the dollars roll in.

We wish Mr. Kirby best of luck!