One takeover attempt is bold. Two? Rare indeed. But when news broke in mid-April that the United CEO was interested in acquiring his rival American Airlines, it was the third time this maverick air exec decided he wanted to reshape the playing field. As Fortune reported earlier, it’s far from clear such a merger would ever be approved, and on Friday American said it was “not engaged with or interested in any discussions regarding a merger with United Airlines.” Still, sources that spoke to Fortune called it “not impossible” given a President who “loves big deals.” And it’s worth looking back at Kirby’s track record to understand that, when he sees a deal, he is serious.
Put simply, Kirby has a long history of audacious ideas. It was back in the early 2000s that he rose at America West to become the top lieutenant to CEO Doug Parker. In 2005, the pair orchestrated the offensive that devoured much bigger U.S. Airways from Chapter 11. In 2007, American’s current CEO Robert Isom joined U.S, Airways—America West took its target’s name—as chief operating officer and served alongside CEO Parker and president Kirby in what become known as an industry “dream team.” Kirby gained a reputation as one of the best in business at network planning and revenue management. Isom totally transformed the airline’s industry-trailing record in on-time performance baggage handling, and customer service so that within two years, U.S. Airways ranked among the industry’s best in each category.
In December of 2013, the braintrust reprised the David-beats-Golaith playbook when U.S. Airways snagged American from bankruptcy, and reflagged once again as the bigger name. Parker, Kirby and Isom continued as CEO, president and COO respectively, mounting a comeback that by the mid-2010s, got American’s stock back near the pre-GFC levels.
Parker made it clear that Kirby wouldn’t succeed him, and in 2016, United CEO Oscar Munoz pounced, hiring the 50-year old as president and heir apparent. Kirby built on Munoz’s success in going up-market, and burnished his credentials as a master of capturing high-fare business customers in the mold pioneered by Delta. “He’s the smartest person I’ve ever worked with,” says Jim Olson, who worked with Kirby at US Airways and United, heading communications at both companies. “He’s like an AI supercomputer in establishing routes, but he shows it even in funny ways. At US Airways, we had this contest at quarterly all-hands meetings where they’d put out this giant jar of jelly beans, and you’d win by getting closest to actual number of beans in the jar. Kirby just eyed it, and won, he was off by just a few jelly beans. He’s also extremely politically savvy, and employees love him.” (Olsen just published an acclaimed memoir and crisis management guide called “Tailwind: A Compass for turning your Setback Story into a Comeback Legacy” featuring a forward by Munoz that this highly writer highly recommends.)
Instead of following the United and Delta push for affluent flyers, American emphasized competing on price, even removing premium rows on its aircraft. The low fares didn’t support a top product, and the airline generated low yields on seats sold. American viewed its competition as low-cost carriers such as Spirit and Frontier. Its low profitability and high debt levels made the carrier super-vulnerable to the COVID shutdown, and to survive, it piled on gigantic levels of debt that hobble its finances to this day. Its current market cap stands at just over $8 billion, one-fourth and one-fifth the respective numbers for United’s and Delta. Given its giant size in revenues, that American harbors such a tiny valuation underlines that investors are extremely downbeat on its prospects.
So Kirby would be pursuing a hobbled American for the second time. On this occasion, he’s confronting the leader who was part of brainiac trio that performed the US Airways-American coup a decade ago, and now has the CEO job at his old employer. It won’t be an easy quest, that’s for sure. But given his track record, it’s not an impossible one either.
