What Are The Pros And Cons Of American Airlines

United Airlines and Continental Airlines, two major airlines companies, agreed to a merger that would create the world’s largest airline. Such important deal has a lot of problems to be dealt with, from technical, for example how to put the companies databases together, to more fundamental, like how the company should be ruled.

The situation of the U.S airlines has been affected by a number of factors through time and is not a secret that has been passed by moments difficult, especially in the economic part. One of these factors were the terrorist’s attacks of 911. No other event in history has changed the way of doing business that the fateful events of September 11, 2001. Apart from the significant human loss, the millionaire impact to the economy of New York and in the United States and multi-million dollar expenditure associated with the global war against terrorism, attacks on the World Trade Center (World Trade Center or WTC) in New York and the Pentagon trembled the authority of the United States, at a time when it was going through a recession. All this made

Southwest Airlines embodies the best that a large company can be. The structure is designed to allow quick action and support of its large body of employees rather than complete control and bureaucratic red tape. It is widely recognized as one of the most desirable places to work and is constantly emulated by its competitors, not to mention other business not in competition. It is an entity that holds its employees in the highest regard, even above its external customers. Its culture is unique and strong and based on love and respect. Even after its current leaders are gone, the

On October 17, 2015, two of the largest airlines officially became one after two years of negotiations. These negotiations came under great scrutiny, whilst pulling one airline out of Chapter 11 bankruptcy. Continuing to use the American Airlines name, U.S Airways and American Airlines became the largest airline in the world.

Isidore an Ellis (Nov 2011) states, “American was the world's largest carrier as recently as 2006. But mergers have pushed it to third in terms of miles flown by paying passengers, behind United Continental (UAL, Fortune 500) and Delta Air Lines (DAL, Fortune 500).” Merging with US airways has yielded a positive result and investment has led to improvement. In American Airlines’ first full year of merging with US Airways, they had a record-breaking financial outcomes that benefited their staff and stakeholders. On their website they stated that, “We’ve reached collective bargaining agreements with tens of thousands of our employees, provided raises and hired more than 7,000 new employees. Our customers are seeing the benefits of integration in billions of dollars in investment in new and remodeled aircraft, terminal areas and amenities. Our investors have benefitted, as our stock price has doubled since the merger. We’ve initiated a multibillion-dollar stock buyback and we’ve issued the first dividend in 35 years.” Isidore and Ellis (Nov 2011) points out, “Kaufman, the industry expert, said American needs contracts that would allow it the greater flexibility and lower staffing levels that other carriers

In March 2012, American Airlines was looking for a merger with another airline under Chapter 11 Bankruptcy Protection. American Airline’s CEO Tom Horton announced that the airline was ready and open to merge. Meanwhile, the parent of US Air Way, US Air Way Groups had showed the interest in taking over the parent company of American Airlines, AMR Corporation since January. US Air Way expressed that the merger would be a great opportunity for American Airline to merge and save over 1.5 billions per year in added to revenue and reducing cost. American Airlines ‘s stakeholders and shareholders supported this merge between two airlines.

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.

As one of the largest, publically held companies in the county, it’s not surprising that United Airlines has some impressive statistics to its name. The Chicago-based airline employs over 87,000 people, operates routes to 360 destinations worldwide, and reported a net profit of $571 million in 2013 (UAL Corporation SWOT Analysis, 2014). While the company has struggled financially in recent years, they’ve been able recover by capitalizing on their size and reputation. In this paper we’ll examine the history of the airline and look into the strengths, weaknesses, opportunities, and threats that will impact their future.

American Airlines is one of the major airways in U.S, with its headquarters located in Fort Worth, Texas. It was founded in 1930 and began operating in 1934 as American Airways. It has been conducting extensive domestic and international scheduled flights to Europe, Asia, the Caribbean, South America, and North America. This airline has five main network centers located in airports of key cities. These include, Miami, New York City, Los Angeles, Chicago, and its main base Dallas. The actual CEO of the company is Doug Parker, the chairman is Tom Horton, and the president is Scott Kirby. In the past years, American Airlines faced a downfall in its profits which caused serious injuries to the company.

Since the merger of U.S. Airways and American Airlines, most people would now agree we are living in the age of airline oligopoly. Oligopolies form when there’s a state of restricted competition, and new companies cannot break into the industry for reasons like high-entry costs or government restrictions. This is the condition of the airline industry, today. In order to breach the oligopolistic nature of the airline industry, airlines must be able to break through high barriers to entry such as: retaining substantial capital requirements, having the need for technical and technological ingenuity and jurisdiction of patent rights. In addition, airplanes must be purchased, employees must be trained and facilities must be procured. Even after all these expenditures, some airlines still experience substantial financial losses. As a result, most of these airlines experiencing a financial hardship are subject to an airline merger. For this reason, the major airlines in the United States now consist of four competing large carriers: American Airlines, Delta Airlines, United Airlines and Southwest Airlines. These companies have survived the deregulation of the airline industry and sustained their places at the top of the industry. In an effort to stand out in an oligopolistic industry, airlines must experience: economy of scale, growth through merger, mutual dependence and price rigidity and non-price competition.

This proposed merger would create the largest airline in the United States by market share, with a combined 21.2% of the domestic market using pre-merger market share levels (see Figure 1). The proposed merger would also bring the total number of major domestic airlines down to four: Delta, United, Southwest and the proposed new airline. These major domestic carriers would combine to control roughly 69% of the market, a dominant position.

Airlines for America (A4A) that is known as Air Transport of Association ATA). This is one of America’s largest and oldest airline trade association, and was founded in 1936. The organization played a key role in all major government decisions regarding the aviation industry since its founding, including the creation of the civil Aeronautics Board, establishment of the air traffic control system and airline deregulation (Airlines for America).

Airlines, if company won’t be able to fulfil those demands next time customer will be less tolerant and more exigent. The level of adequate service will increase and the zone of tolerance will narrow, so American Airlines should try not to frustrate their customers and do everything to meet urgently appeared demands.

In terms of major cities, American Airlines holds significant market share of many of the top domestic routes. According to the U.S Department of Transportation Bureau of Transportation Statistics, American Airlines holds 67.43% share of the Dallas/Fort worth Texas market, 67.46% of the Miami Florida market, 16% of the Chicago market, 16.49% of the Los Angeles market and 13.85% of the New York market; these are significant shares as these are cities within the top five domestic routes in the U.S (DOT, 2015a). American Airlines is also a major employer in the aviation industry. As of June 2015, American had 59,905 full time employees and 7,427 part time employees (DOT, 2015b). Although these numbers makes American the fourth largest employer among major carriers, these numbers are significantly lower from their highest levels of 107,311 full and part time employees reached back in August of 2002 (DOT, 2015b). The managerial accounting significance of this fact will be explored in the Activity Based Costing section of this

In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue