Karla Reigosa Dr. Jim Farah August 19, 2017 Case Study American Airlines, Inc. Founded in the 1930s, American Airlines (AA) is the world recognized airline company and is headquartered in Fort Worth, TX. Before 2013, AA ran under three carriers; American Airlines, American Eagle and American Connection, and with these three carriers they were in over 260 airports all over the world and operated in more than 50 countries and territories while maintaining an average of 3,500 flights a day. It 's difficult to think of this as a possibility that the largest airlines known in the United States had to file bankruptcy but a deeper look into how it lead to this should be able to clear and help us understand. In the first 25 years of AA 's …show more content…
AA proposed a solution but it required to push out the GDS. The current problem was that AA paid the GDS and the GDS would then pay the OTA (online travel agent). The proposal was to cut down on distribution costs charged by GDS 's and directly negotiate with the OTA 's through direct cost. In 2011, AA had to file a lawsuit against SABRE, Travelport, and Orbitz. Travelport and Orbitz were dismissed but SABRE continued through trial. Within the year, SABRE settled with an amount to AA and renewed contracts for multiple years. We 'd think that this would have helped AA but in 2011, they filed bankruptcy. On December 9, 2013, the American Airlines Group was formed. This was a merger between American Airlines and US Airways. This instantly doubled the flights a day and increased the number of airports which gave it an average of about 6,700 flights a day and a little over 300 locations along with adding 968 operated aircraft 's The merger aimed to yield $1.5 billion in terms of added revenue and costs savings a year. So why the merge? AA was in bankruptcy and under the Chapter 11 bankruptcy protection, this could really help them out. By doing this, AA would officially become the largest airlines in the world and with this, came to a few lawsuits to stop this as many lawyers argued that AA would become a monopoly. So far, American has been able to find a way to stay afloat and the merger was the best way to get out of the bankruptcy
American Airlines has some key operational and financial strengths that keeps it ahead of its competitors in the airline industry.
The three major challenges that arose after the merger were the following: firstly, the companies needed to integrate their flight information systems. Secondly, they needed to integrate their passenger information systems. Finally, there was a need to reconcile both airlines speedup-slowdown algorithms.
From studying the various financial reports of both Southwest and JetBlue, we would recommend that both companies proceed with the merger. While Southwest has more liquidity and will be financially stable upon paying their debt in 2021, JetBlue has a less favorable debt to equity ratio (Morningstar.com). However, given the combination of their assets we believe both companies can benefit from the opportunity to pool resources and drive down operational costs. The merged company would gain a great competitive advantage over other low cost airlines such as Frontier, Spirit, and Allegiant Air. The merged company would benefit from being able to use more routes and gates, which would lead to higher margins with which the company could employ various strategies. Both companies would come together and benefit from the horizontal relationships within the industry. They would be able to leverage core competencies and pool negotiating power to produce greater revenues and help the company grow. Merging companies can be very difficult; there will need to be many goals, and careful analysis of how these goals are being achieved, over the next five years to determine how successful the merger has been.
In the past three years the airline industry has faced an unparalleled list of challenges and American Airlines has certainly had more than the others. Year by year AA has tried to recover with a great deal of effort to turn the company around. The strategies they are applying to counteract the status are : Lower costs to compete, give to the customers the service they are expecting
"Today, we are glad to dispatch the new American Airlines – a head worldwide transporter very much prepared to contend and win against the best on the planet," said Tom Horton, Chairman, President, and Chief Executive Officer of American Airlines. "Together, we will be surprisingly better situated to convey for the majority of our partners, including our clients, individuals, speculators, accomplices, and the numerous groups we
American Airlines, Inc. (AA) is a major airline of the United States. It is the world's largest airline in regards to accumulated passenger miles. American Airlines took off on April 15, 1926 when Charles Lindbergh flew a bag of mail from Chicago to St. Luis in a DH-4 biplane. A year later the first passenger flight flew from Boston to New York, heralding the real first passenger airplane travel by American Airlines. A subsidiary of AMR Corporation, the head quarters of American Airlines is in Fort Worth, Texas adjacent to the Dallas/Fort Worth International Airport. American operates scheduled flights throughout the United States and flights to Canada, Latin America, the Caribbean, Europe, Japan, the
American Airlines is one of the major American airlines who serves nearly 50 countries globally and also a member of the one world global alliance. The airline corporate headquarters are in Fort Worth, Texas. Over the years the airline expanded through the union or merger of 85 companies. Robertson Aircraft Corporation and Colonial Air Transport were the core of the foundation of this company. In 1921, Robert Aircraft organized first in Missouri as a general manufacturer and flying service who flew its first mail route on April 15, 1926 between Chicago and St. Louis, Missouri. The first flight flown by pilot Charles A. Lindbergh. A charter, Colonial Air called Bee Line formed in 1923, flew mail between New York City and Boston which began on
The Risk of Entry by Potential Competitors – Since the deregulation of the airline industry in 1978 over 1,300 new airlines have opened for business. However, most now are bankrupt or merged with the other carriers to stay workable. The established giants were Delta (merged with Northwest), American Airlines (merged with U.S. Airways), United Airlines (merged with Continental), and now Alaska Airlines (merged with Virgin America). Now the Low-Cost Carriers (LCCs) are posing a massive threat which includes Southwest Airlines (merged with Air Tran), and JetBlue.
According to Fortune 500 (2015), Delta airlines is the largest airline in the world today and is able to fly to 567 worldwide destinations in over 100 countries. Delta airlines owns and operates its own reservations system and data and they give the employees stock in the company with profit sharing and stock ownership. One weakness of Delta airlines is the relying on it 's much older refurbished airplanes. Since oil prices are low they are able to save on costs but that could change if they oil prices increase again. US Airways has merged with American Airlines and the two have since become the world 's largest airline but both have since faced losses since the 2008-2009 economic crisis. US Airways has also had poor customer service
American Airlines has went through bankruptcy and a merger, and they are still flying. Many people would identify American Airlines (AAL) as once being “great.” Today, it is not seen as highly as it once was, but the CEO, Doug Parker, believes the company will, in fact, be great again. He is quoted in multiple articles stating the company is working hard to make AAL “the greatest airline in the world.”
American Airlines Inc. initially known as American Airways was one of the largest airlines in the world creating job opportunities for more than 900,000 people and supporting close to 1,400 nonprofit organizations. It changed its name to American Airlines Inc. in 1934. American Airlines has gone through many stages during the past years; from being known as one of the largest airlines in the world to reaching bankruptcy. Even though the company is not seen and known to be “great” as it was, it is working on becoming successful and being great as it was once before.
* Competition. Other airlines have started using the same strategies, this allows them too possibly under cut prices and with a lower overhead have less risk than AA would have.
bankruptcy protection bigger and better than ever. It also solidified American Airlines as the largest airline in the world. This merger has become to cornerstone of American Airlines affecting all areas of the organization both internal and external.
American Airlines was the United States’ largest carrier in 1992 with a fleet of 622 jet aircraft, flying 2,450 flights daily to 182 locations, as well as new innovative technology and programs. American Airlines was the first to introduce a computerized airline reservation system called Sabre, “Super Saver” fares and frequent flier programs. Regardless of the innovations, American Airlines and the airline industry was still not operating as profitably or providing customer satisfaction the way it should have in 1992. In 1991, As a result of a recession and the Gulf War, demand for air travel fell, fare wars came about, and the airlines
With 1988 operating income of $801 million on a revenue of $8.55 billion, American Airlines, Inc. (American), principal subsidiary of Dallas/Fort Worth-based AMR Corporation, was the largest airline in the United States. At year-end 1988 American operated 468 aircraft on 2,200 flights daily to 151 destinations in the United States, Bermuda, Canada, Mexico, the Caribbean, France, Great Britain, Japan, Mexico, Puerto Rico, Spain, Switzerland, Venezuela, and West Germany.