American Airlines Financial Analysis

An analysis will be done of American Airlines and its company culture and organizational performance. In February of 2013, American Airlines and US Airways announced the merging of the two companies into “The New American Airlines” (American Airlines, 2013). However, while mergers can create immense value for organizations, employees, and customers, they also pose specific challenges, particularly for the maintenance and strength of the organizational culture (Organizational Behavior, 2014).

The combined United Continental Holdings competes on the basis of having what it terms "the most comprehensive global route network", modern planes, and "an industry-leading loyalty program" (UnitedContinentalHoldings.com, 2012). The merger between two struggling airlines was announced in 2010, and the United brand is going to be the one that is most prominent going forward. There have recently been some minor implementation problems in unwinding the Continental name (Martin, 2012).

Good hubs, loyalty programs, strong brand image, the largest airline fleet, good maintenance and infrastructure standard, are just to name a few. The regions dominant U.S. carrier came along with the company’s innovative mind to buy routes that encourages spreading hubs in the most tourist attracted places. As hubs increase rewards become broader redeeming meaningful awards as you fly across the globe with American. American Airlines AAdvantage program awards miles and Elite Qualifying Dollars for every airline affiliated with the oneworld alliance. The many relationships with numerous car rental companies, hotel brands and cruise lines is what set them above the rest. Along with captivating that title they spread their brand image strongly from terminal kiosks, interior seats and logo to website along with the plane’s finish. The company recently redesigned their logo taking a turn from an American image moving towards the American spirit. The reason behind the change was being a global flight servicer the old logo based on just American but also still portraying America without becoming blindly patriotic. There’s over 959 planes in service and 247 on back order bringing the company to the largest operator of aircraft in the world. It operates the A321 aircraft which is the largest fleet but not being limited they operate the A319 fleet, Boeing 737 Next Generation, and much more. Furthermore, increasing the amount of passengers carried increasing the amount of revenue created for the company’s

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

The report finds that Delta Airlines has successfully emerged from its bankruptcy in 2005 to report successful returns in both 2007 and 2008. With its 2008 acquisition of Northwest Airlines Delta became the world's largest airline, further improving its position in the airline industry. Despite this current positive position report also finds potential adversities

The airline industry as a whole has been experiencing great treatment. Individuals are proving to pack up their bags and fill up seats and airline companies have been earnings solid profits. Oil prices are continuing to demonstrate volatility and companies are capitalizing on these trends. Given the general uptick, American Airlines is also set to show investors some promising numbers. The Estimize consensus is calling for EPS of

* Contracts with competition. Their maintenance facility in Tulsa has started receiving other company’s planes for contracted repair. This is an opportunity to increase and build another addition onto American Airlines family.

As it has been anticipated for two or three years now, American Airlines and US Airways as of late reported the goal to blend the two transporters into a super aircraft that would turn into the world's biggest. It is nothing but the same old thing new to numerous explorers who have experienced the Delta-Northwest merger, or the United-Continental merger, or the endless mergers and acquisitions that have now focused more than 70 percent of residential flights into only four organizations.

Financial data from the past three years shows that American Airlines Group, Inc., is financially stronger compared to Southwest Airlines Co., one of its top competitors. Both companies have had similar trends in revenue, stock price, and net income over the past three years. This is why Southwest Airlines was chose for this comparative financial analysis. Although the financial data of both companies show similar trends, American Airlines shows its financial superiority when it comes to Net Income.

American Airlines is the world’s largest legacy airline (Taube, 2014), operating nearly 6,700 flights daily to 350 destinations across 50 countries (American Airlines, 2017). American Airlines operates out of 10 main hubs and numerous spoke cities throughout the United States and Internationally. American Airlines business model is aimed at the premium customer market of business and international travelers as well as leisure travelers who want to enjoy the flying experience and the comforts of flying. American Airlines offers main cabin and first class (for transcontinental flights) and business class (short-distance international flights) structures for their flights. On long distance international flights, flagship first and flagship business classes are offered for “elevated” and “personalized” experiences.

In February 2013, US Airways and American Airlines came out with an official statement concerning their plans to merge into a single airline. The new company would be managed by the majority of the administration of US Aiways whilst retaining the name of American Airlines. Once sealed, the deal would result in the shareholders of American Airlines owning 72% of the company, leaving the 28% to the stakeholders of US Airways.

In 2015, American Airlines (AA) posted a record profit of $7.6 billion, which also included special items. A large portion of this gain came from the forth Quarter, which netted a $3.3 billion profit. AA credits a large portion of their success in 2015 to the plummeting oil prices, which was warmly welcomed across the airline industry. Fuel, which is a third of AA’s operating cost, declined 40.8% in consolidated cost.

Anticipate a need for change: American Airlines need a new communication channels, create a new mission and policy to have a clear future for the organization, new talented management to adapt the changes and accept the challenge for the new (AA), focus on the financial department to avoid the bankruptcy, and employees training to have an effective costumer service.

When it comes to performance and profitability, every airline’s dream is to have a high profit margin with a superior performance for each quarter every year. However, not every airline is successful in attaining such results, mostly due to multiple reasons that result in detrimental financial woes. Avianca Airlines does not fall into this category, or any type that reflects a struggling company. Avianca has prospered tremendously throughout the last several years, mostly due to a multitude of smart and well thought out financial decisions.

The airline industry has been around for years, it has suffered its ups and downs due to attacks such as the one that occurred in September 11, and even most recent as the Paris attack that occurred this past year. Major Airlines have suffered a decline in their profitability which has forced many airlines to file for bankruptcy. However, when bad times hit an industry some companies are forced to quit, while others are forced to change their strategy and continue moving forward.