Is American Airlines CEO Insane Or Incredible? Should Passengers Follow His Lead?

News : Travel

We have a love-hate relationship with American Airlines, but American’s CEO Doug Parker did something incredible or insane this week.

Parker apparently already takes 100 percent of his compensation in stock, not cash. CEO’s of publicly traded companies don’t usually do this. On Tuesday, Parker spent $1.4 million USD to buy 50,000 more shares of American’s stock. Five other top American executives and directors did the same, buying almost $1.7 million USD worth of American stock.

In a letter to employees, these six executives said “These share purchases are not part of our compensation package. They were purchased solely because of the value we see in American today and over time.”

They appear to have bought well. American’s stock was close to its lowest point in about five years when they made the purchases. In the short term, this has increased the price of the shares. American’s stock has surged about 12 percent.

Should We Do The Same?

The question is, do Parker and his team they know something the rest of us don’t about the airline’s future or is this a more temporarily strategy, bumping the price up in the short term? Is it an incredible move which will make these six executives even richer or is it completely bonkers?

I can’t imagine having $1.4 million USD to spend on shares. While I will fly American Airlines when it is convenient, as long as it’s not on a B737 MAX, I will not be gambling on the future of American Airlines, Parker can keep his gamble.

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