Skift Take
Raja’s departure comes as the airline has struggled to gain ground on its two major competitors.
American Airlines Group has confirmed its chief commercial officer, Vasu Raja, will leave the company next month. He has been in the role since April 2022.
Raja’s departure coincided with the airline announcing a cut to its financial outlook late Tuesday afternoon.
As CCO, Raja oversaw American’s customer organization and global network. He also had oversight of the airline’s alliances and partnerships, revenue management, and loyalty program, AAdvantage.
Previously, he served as chief revenue officer and senior vice president of network strategy, where he was responsible for network and alliances. Raja joined the airline in 2004.
American Airlines said its Vice Chair and Chief Strategy Officer Stephen Johnson will take on Raja’s brief with immediate effect. Johnson will also lead the search for a permanent replacement.
No explanation for Raja’s departure was given in the American Airlines statement.
American Downgrades Financial Forecast
The shake-up comes at a challenging time for the airline. The carrier’s recent financial performance has trailed its two main rivals Delta Air Lines and United Airlines.
On Tuesday, the company cut its financial outlook. It now expects second-quarter adjusted earnings of $1 to $1.15 per share, down from a previous range of $1.15 to $1.45 per share.
Commenting on the move, Airline Weekly analyst Jay Shabat said: “American’s updated forecast for the current April-to-June quarter reflects a significantly more pessimistic view on revenues. Just a month ago, it anticipated just a modest year-on-year decline. Now the decline appears much more serious.”
American’s disappointing financial performance comes despite the company enjoying notable strengths, including several fast-growing airport hubs. It also has a relatively young and streamlined fleet of aircraft.
American’s Lagging Profitability
During Raja’s tenure as CCO, American has significantly underperformed rivals Delta and United. In 2023, its operating margin, which is a key measure of profitability, was 8%, excluding one-off accounting items. Delta’s figure was 12%, while United’s was 10%.
One of the reasons for the carrier’s lower profit lies in its weaker international connectivity. Strong demand for long-haul travel, particularly routes to Europe and Asia, has buoyed the so-called ‘Big Three’ carriers to record profits, but American lacks the same extensive network as its two biggest competitors.
A further commercial blow came from the loss of its Northeast Alliance with JetBlue, which a federal judge deemed illegal on anti-competitive grounds.
Raja also oversaw American’s controversial direct selling changes to its ticket distribution channels. The move resulted in the American Society of Travel Advisors (ASTA) making a formal complaint about the carrier’s distribution processes.
In after hours trading on Tuesday evening, American Airlines stock dropped by more than 8%.
“One question is, are other airlines also seeing similar revenue weakness, or is this something specific to American?” asked Shabat.
Watch Vasu Raja Speak at the Skift Global Forum 2022 Here:
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