Economic Effects Of American Airlines

According to MBASkool (2015), a SWOT analysis has been completed to show some of the opportunities and threats that American Airlines faces. They are listed as follows:

6.2.1 Reliance on U.S. Market. American Airlines is heavily dependent and focused on the US market leaving its international market vulnerable. Although American Airlines has carried the most passengers on international flights in 2016; there are quite a few opportunities the airline can pursue to increase the strength of its international presence; American Airlines main revenue stream comes from the US economy.

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

In 2015, it showed in the record that the number of employees American Airline has was 110,300 employees within different departments such as flight attendants, and ground workers and pilots. With this huge number of workers, they need a representative to make their rights will be claimed. That why American Airline has a voice with a different labor unions such as Association of Professional Flight Attendants (APFA), Air Line Pilots Association (ALPA), Transport Workers Union-International Association of Machinists alliance (TWU-IAM) and Allied Pilot Association (APA). Therefore, the airline will be forced to consider and listen to the labor unions and their demands to avoid strikes that can damage the reputation of the company.

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 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

Southwest's greatest strength is its ranking number one in US domestic airlines, in terms of number of passengers/load factor as can be seen from Exibit 1 C with southwest topping the chart as compared to other airlines. American Airlines, the world’s largest airline, was on the brink of bankruptcy despite $1.8 billion .Delta, with combined losses of $8.5 billion from 2001 to 2004, was almost bankrupt. ATA Airlines, the tenth largest carrier in the United States, filed for bankruptcy in 2004. In general Us Airline labor unions issues of wage reductions, pension cutbacks, and job uncertainty were happening. In 2004, Southwest was recorded by the bureau's statistics as serving an amazing

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.

American Airlines had been the largest airline in the United States for a long time. In 1990 and 1991 due to a recession and the Gulf War, demand for air travel dropped drastically, for this reason, fare wars started and all the airlines incurred massive losses.

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.

The airline industry is interpreted as being very unstable due to the immediate reaction to tragedies. The airline industry was affected following the September 11th tragedy and it affected other industries indirectly. The airline industry plays a key role in

3. The economic downturn in the late 1990s had severe consequences on the airline industry that the demand for air travel dropped leading decrease in flights and revenues; increase liquidity concerns.

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.

The growth of airline industry in any country is directly proportional to its GDP growth; the greater the business activity, the more air travel and the higher the GDP of the country. The demand