Us Airways Essay

8571 words - 35 pages

American Airlines

Strategic Report for American Airlines

Jed Cullen Kevin Yamazaki Deirdre Chew April 7, 2010
April 7, 2010 Page 1

American Airlines

Table of Contents
Executive Summary ............................................................................................ 3
  Company History................................................................................................. 4
  Financial Analysis ............................................................................................... 8
  Current Financial Position.................................................................................. 8
  Industry Comparable Analysis ...view middle of the document...

......................................... 23
  Weaknesses .................................................................................................... 23
  Opportunities ................................................................................................... 24
  Threats............................................................................................................. 24
  Strategic Recommendations ............................................................................ 25
  Address Labor Costs ....................................................................................... 25
  Explore Maintenance Outsourcing................................................................... 26
  Continue Fuel Efficiency Initiatives .................................................................. 27
  Pursue Strategic Alliances ............................................................................... 27
  Enhance International Offerings ...................................................................... 27
  Exercise Political Power of Legacy Carriers .................................................... 28
  Appendix ............................................................................................................ 30
  References ......................................................................................................... 34
 

April 7, 2010

Page 2

American Airlines

Executive Summary
American Airlines, a brand that has weathered world wars, deregulation, fuel price volatility and growing threats of terrorism, is continuing to face challenges in the struggling airline industry. American Airlines is burdened by high labor costs, a weak balance sheet, and perpetual union issues. While nearly all of American’s legacy carrier peers are facing a difficult market environment, most were able to achieve cost reductions through bankruptcy or bankruptcy protection, a step that American Airlines has stated strongly that they will not take. Furthermore, AA, like other legacy carriers, faces increasing competitive pressure from low-cost carriers. The enhanced ability for consumers to compare prices further exacerbates this pressure. Despite its excellent management team, the company has recorded an annual loss in seven out of the past nine years. American Airlines must address its high costs, improve its international offerings, and find a solution to the competitive threat posed by low-cost carriers. We recommend that AA avoid excessive concessions to the flight attendants union, citing that AA flight attendants are among the best paid in the industry. To further reduce costs, American should explore maintenance outsourcing, and continue taking initiatives toward greater fuel efficiency. With regards to American’s inability to compete with foreign carriers on international routes, we believe that the company needs to invest in flat bed seating in...

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