Skift Take
— Meghna Maharishi
American Airlines CEO Robert Isom was awarded $31.4 million in 2023, his highest compensation since he was appointed to the top spot in 2022, according to a proxy statement filed Thursday.
Isom had a base salary of $1.3 million, a bonus of $2.75 million, $19.5 million in stock awards and around $7.8 million in non-equity incentive compensation. Isom made around $4.8 million in 2022 and a little over $5 million in 2021.
Part of the reason for Isom’s high compensation is because CARES Act restrictions on executive pay expired in 2023. Isom had been American Airlines’ president and was promoted to CEO during the pandemic. The board’s executive compensation committee noted his salary was capped at $5 million as a result and that Isom’s pay was considerably lower than his counterparts at Delta and United.
“The Compensation Committee recognized the critical need to retain Mr. Isom as the Board’s long-standing choice for CEO and the most important element of the broad senior leadership succession plan,” the proxy statement read.
American Circles in on Small Cities, Loyalty Program
While United and Delta have been bullish on chasing premium and international travel, American is taking a different approach.
A hallmark of American’s strategy under Isom is a renewed focus on expanding its presence in smaller cities, particularly those in the Sun Belt region.
“There is a large pool of high-growth, high-value customers because air travel needs are simply not being met,” said chief commercial officer Vasu Raja at American’s investor day in March. “And that’s where American Airlines comes in.”
American is betting on its ability to attract flyers from the likes of Tulsa, Oklahoma or El Paso, Texas — areas that are also served by ultra-low cost carriers — with its operational reliability and bigger schedule.
Another ambition for American is to expand its loyalty program. In 2023, around 65% of American’s revenue was driven by its frequent flyer program. Around 80% of American’s revenue in 2024 is expected to come from its loyalty program and premium products.
As a result, American plans to add more premium seating and is in the process of retrofitting some of its older Airbus planes to include more first-class seats.
