American Airlines Group has confirmed that its Chief Commercial Officer, Vasu Raja, will leave the company next month. He has fulfilled this role since April 2022.
Raja’s departure coincided with the airline’s announcement late Tuesday afternoon of lowering its financial outlook.
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 AAdvantage loyalty program.
Previously, he served as Chief Revenue Officer and Senior Vice President of Network Strategy, where he was responsible for networks and alliances. Raja joined the airline in 2004.
American Airlines said Vice Chairman and Chief Strategy Officer Stephen Johnson will assume Raja’s assignment effective immediately. Johnson will also lead the search for a permanent replacement.
The American Airlines statement did not provide an explanation for Raja’s departure.
America cuts financial forecast
The shake-up comes at a challenging time for the airline. The airline’s recent financial performance has lagged behind that of its two main rivals, Delta Air Lines and United Airlines.
On Tuesday, the company lowered its financial outlook. It now expects second-quarter adjusted earnings of $1 to $1.15 per share, up 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 revenue. Just a month ago, a modest year-on-year decline was expected. Now the decline seems much more serious.”
American’s disappointing financial performance comes despite the fact that the company has notable strengths, including a number of fast-growing airport hubs. It also has a relatively young and streamlined aircraft fleet.
America’s lagging profitability
During Raja’s tenure as CCO, American significantly underperformed rivals Delta and United. In 2023, operating margin, 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 airline’s lower profits lies in weaker international connectivity. Strong demand for long-haul travel, especially for routes to Europe and Asia, has pushed the so-called “Big Three” airlines to post profits, but American lacks the same extensive network as its two biggest competitors.
A further commercial blow came from the Northeast Alliance’s loss with JetBlue, which a federal judge found illegal on anticompetitive grounds.
Raja also oversaw American’s controversial direct sales changes to its ticket distribution channels. This move resulted in the American Society of Travel Advisors (ASTA) filing a formal complaint about the carrier’s distribution processes.
In after-hours trading on Tuesday evening, American Airlines shares fell by more than 8%.
“One question is: are other airlines also seeing a similar revenue weakness, or is this something specific to America?” Shabat asked.
Watch Vasu Raja’s speech at the Skift Global Forum 2022 here:
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