American Airlines announces departure details of Chief Commercial Officer Vasu Raja

Raja will remain on payroll through January 31, 2025, collecting an additional $462,019. He will then receive a payout of $968,750 plus $261 towards COBRA continuation health coverage.

He retains officer travel privileges (confirmed travel in any class of service including for spouse or companion and dependent children; Executive Platinum status with Admirals Club access) through January 31. Subsequently, he will receive “‘the 65-point plan space available travel’ privileges for Executive and Executive’s eligible family members pursuant to the terms and conditions set forth in the Company’s travel policy for officers.” However, American Airlines will not gross up the tax liability for this travel, which is designated for personal purposes only.

Raja will also receive career transition services from Lee Hecht Harrison and is subject to non-compete and non-solicitation rules through January 31, 2025.

Most readers may view Raja's $1.4 million severance as extremely generous compared to typical expectations of two weeks' pay. However, his compensation package last year was worth $12.2 million.

Raja's earning potential remains strong; he could lead another airline, consult within the industry or work for suppliers. His severance appears modest when considering his future remuneration potential.

American Airlines does not seem to gain much from their $1.4 million expenditure on Raja's severance package. Some might argue that using his lump sum payout to partially fund a longer severance period during which he remained on payroll could have been more beneficial—essentially "gardening leave"—to allow time for his unique knowledge of American Airlines' plans and strategies to become outdated.