American Airlines
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Essay Subject:
Reviews the history of American Airlines. Topics include history, finances, strengths, weaknesses, threats, & opportunities.... More...
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8 Pages / 1800 Words
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Paper Abstract:
Reviews the history of American Airlines. Topics include history, finances, strengths, weaknesses, threats, & opportunities.
Paper Introduction:
American Airlines
Executive Summary
American Airlines has been a leading US airline since the 1930s. It was a pioneer in the passenger air travel business with the advent of the then-revolutionary DC-3, for which its president, C.R. Smith, made the specifications. After that, American grew and prospered generally, until airline deregulation in the US in the 1980s. Since then, especially in the 1990s, the firm has experienced significant problems in coping with the new environment of increased competition and the consequent need to minimize fares and costs. The company's high wage structure and the strong unions for pilots and flight attendants have led to labor strife through this decade, culminating in a costly strike by flight attendants in 1993 and a threatened strike by pilots in
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for which its president C problems in coping with the newenvironment of increased competition and strike by flight attendants in and athreatened strike divesting those thatare uneconomic In summary therefore American is a subsidiary of his FairchildAviation the separation of the airline in the industry Yet starting mail-carrying business Thus by the start of World War II the hotelbusiness forming Americana Hotels In American In American further expandedits hotel holdings by frequentflyer program American Airlines In the airline created AMRas end of the decade American's hotel LaGuardia and Washington's Nationalairports but such expansions have been by pilots Strengths The sheer size of American Airlines is or modify them to conform to terms of location and passenger volume Indeed because recent years EDGAR filing It provides computerized reservationsystems data processing in a strong almostmonopolistic position because of A major weakness of American millions In themain pilot's union threatened to strike largely threatened by potential competition from their much-lower-paidcolleagues on including wages at a minimum Thus until American The debtdrains the company's finances due to the high principal ratio and interest coveragelevel relative to the line times as opposed to its unstable ever farther from their home bases andas computerization and telecommunications traditionally have been protected by American to take advantage of the lucrative trans-Atlantic passenger trade Community entry barriers toair carriers fall and deregulation takes and British Airways provides American with industry pressure Annual report As a hold the line on itsfares which in turn should encourage significantbecause it should raise passenger volume and Such fuel accounts for a largepercentage of total operating in the past two decades because short hauls segment Threats While deregulation in the toAmerican is the advent of low-fare no-frills like meals or movies Yet such major threatto the company Boisseau The competition This factor was reinforced by strong beingrelatively protected to being under siege This has antagonized them longtime employees and another for This has prompted the airline to lay ofAmerican's workforce which is particularly dangerous because GM's Lordstown Plant in Ohio several years ago when workersbecame within its ranks or else ratio B B B B B Improving industry Leases average Total Equity Asset Turnover B Equipment average Interest NA M M M M B ing worse than industry average Return B B B than industry NI L-T Debt average Reference Press Annual report on faces hurdles Dallas MorningNews Business pioneer in the passenger air the s Since then especially in and flight attendants have led to labor strife by cutting costs and its high started out as the Aviation Corporation AVCO in and rationalized and united theirroutes creating US mail heavily subsidized the airlines in those days rendering profitable because of itspassenger service American expanded overseas initially to Europe thecompany bought Trans Caribbean Airlines giving it a strong and South Korea In the early s it also bought a small commuter airline which it Airlines AmericanAirlines It purchased new routes including to Britain problems emerged in with a costly example with its vast network ones Also it can buy new and or different facilities for example required of itshighly capital-intensive industry American Airlines highly competitive and relatively unstable passengerairlines in SABRE'srevenues were up and attendants and pilots the former resulting in adevastating strike a different union Asa result high-paid pilots on intense labor strife YetAmerican's management faces vigorous post-deregulation competition puttingpressure debt load and low liquidity level seeFinancial short-cash position which is potentially dangerous because it can to safeguard its future Opportunities American's air cargo division has quicktransport of goods increases Indeed such down American will be able of the future The agreement in grow steadily as the economy there becomes is the majorpoint of entry and exit for the Continent years the commission rates paid to travel in turn enables the company to its flightsand routes Thus lower provide American withan opportunity to cut its costs and keep the lid on fares In addition it allows the asignificant opportunity for American to the converse is that the airlineindustry in lucrative routes such as New York to Miami or less interested in service The spillover from thepre-deregulation era when fares order to compete like other airlines Consequently the salaries has in effect created a two-tier contracted out for services mainly withlower-wage the combination of minimizing wages imposing layoffs andcontracting externally or in the worst case scenario even for this to happen in the airlineindustry as well Avg ation current ratio B B B Improving Worse cur B B B B B B None Close to L-T B Improving Much Turnover B B Int Exp Profit Margin B average Return on B B B Deteriorat Airlines annual reports American Airlines Hoover's handbook for American strike Houston Chronicle Business EDGAR filing American Airlines Executive Summary American Airlines has been R Smith made thespecifications After that American the consequent need to minimizefares and costs The company's high by pilots in As a result of the problems cited trying to adjust to themodern era Corporation American Airlines In the following from its airplanemanufacturer parent because in thanks to its purchase and use of the highly American Airlines had surpassed Unitedas the biggest airline company in introduced theindustry's first automated reservation system called SABRE whichrevolutionized that buying the Howard Corporation and by operated hotels its parent company becoming its main subsidiary business was failing so it sold most such holdings inthat disappointing in terms of profit which in turn has a strength because it allowsfor new geographic market needs In addition itcan switch of itssize American Airlines can consulting and other information services toboth American and external its advanced technology which hasprovided the impetus Airlines is the high pay structure of itsmostly unionized because American's pilotsin its commuter services are paid the commuter routes In effect the airline has a resolves its labor problems they will continue toundermine and interestpayments Such debt service has helped industry as a whole American highly cyclical passengerbusiness American Airlines This offers great opportunity for advances continue to increase thedemand for quicker delivery times In theirnational governments Thus air freight offers a major opportunity Maxon With increasing market unificationin Europe and liberalization of its hold American can use Britain asits the potentialof great profits from the ever-expanding US-Europe result American has been able to cut such higher passenger volume and a decrease unit costs in thelong run costs for the airline so with the pricesrelatively consume more fuel on aper mile basis than long US offers greater opportunities for Americanto expand airlines which are croppingup in numerous places Annual basic transportation appeals to vast numbers of the root of the problem lies in the factthat unions particularly for pilots flight attendants and mechanics But sincederegulation andled to conflict and at least recent hires withthe latter amounting to cheap labor off significant numbers of itsown work force which invariably airlinesafety comes into play Disgruntled angry with management's attempt to speed up the fact the considerable downsiderisk of not Worse cur assets B B B than inventory cur B B B Improving Worse Sales Total B B than NA Much Coverage M M M M worse EBIT On Equity B B B B Deteriorat Much Equity Conclusion Company's financial condition is significantly US industry January Annual statementstudies Philadelphia PA Robert travel business with the advent of thethen-revolutionary DC the s the firm has experienced significant through thisdecade culminating in a costly debt level Inaddition it is rationalizing its route structure and when Sherman Fairchild formed it as American Airlines in the process However in postal regulations force it great influence and power and shed its dependence of the American Airlines In the company diversified into foothold inthat region's booming tourist trade American introduced the industry's first developed andexpanded into American Eagle However by the and Japan as well as Midway Airlines' gates at strike byflight attendants and in with a threatened strike of routes the company can add drop aircraft to conform to changingmarkets in SABRE Information Services Group has grown rapidlyin business this division of the company is its operating margin was about Weaknesses in which cost the company the main routes feel that their salaries andjobs are on them to keep fares and costs Analysis constitute another weakness of the firm lead toinsolvency As evidenced by its low current shown steady long-term growth inrecent growth in this sector isinevitable as corporations expand to enter more overseasmarkets for air cargo which between American and British Airways provides amajor opportunity for more Europeanized In addition as intra-European Thus the alliance betweenAmerican Airlines agents by USairlines have decreased because of improve itsbottom line as such a factor allows American to commission rates for travel agents is therefore increase its efficiency andprofitability Annual report firm to expand its commuter service which has prospered andgrown both cut costs and expand into aprofitable market general is more competitive than ever A similar threat Chicago to LasVegas and provide no or few amenities continued labor strife at American Airlines is also a and therefore wages were relativelyinsulated from andworking conditions of the company's employees have gone from system of wages andwork rules one for non-union vendors and sometimes even abroad in order to cutcosts for services can easily undermine the quality commit sabotage The latterwas done at Thus in conclusion American Airlines must amelioratethe labor strife assets cur B B B than liabilities Industry Average quick Debt L-T B B B worse Sales Property than Plct industry B B B Deteriorat Much NI Sales B Much Investment B B B ing worse Return on Capital of American companies Austin TX America Online Maxon T June American deal a leading US airline since the s Itwas a grew and prospered generally untilairline deregulation in the US in wage structure and the strong unionsfor pilots above American is attempting tooptimize its operations of a deregulated more competitive airline industry History American Airlines year itpurchased about separate airlines of antitrust concerns This was possiblebecause the successful DC passenger airliner American Airlines became the US After the war crucial part of the airline operation In and resorts in the US Latin America in the process In thesame year sector The s have been difficult times for American caused retrenchment by the airline Finally and mostsignificantly labor flexibility in a changing market environment American Airlines For emphasis from long-distance routes to shorter commuter raise the high levels of financing forinvestment aircraft and airport customers such as other airlines and travelagencies Unlike the for its rapid growth For example workforce Boisseau This has created labor strifewith both its flight much less and re in two-tierroster of pilots which invariably engenders the company and its profits American Airlines' huge put the firm in a chronically must improve itsliquidity in order thecompany particularly as international trade grows and the need for addition as barriers tointernational trade come for thecompany in the increasingly global economy airline market in particular themarket should toehold in that market particularly since that country air travel market In recent costs considerably on aper-passenger basis This higherload factor in determining whether the airline breaks even on for American Relatively low jet fuel prices at present also low as now the firm can hauls Thus lower fuel prices provide into new and different markets report Such airlines tend to focuson single US flying public whoare more interested in saving money and the high pay scale for the firm's employees is a American has had to minimize fares and therefore wages in one strike by flight attendants Inparticular American in competition with the former Inaddition American has increasingly has decreased morale and loyalty to thefirm So employees are inclined to performpoorly assembly line so itis not inconceivable by any means doing so Financial Analysis Trend Indst Interpre t B industry liabilities average Debt Equity Assets industry average Fixed Asset B B B Int Exp than NI Int Inc industry Inc Tax average B B ing worse NI Equity than industry worse thanindustry average in general References American Morris Associates Boisseau C February Gearing up for which its president C problems in coping with the newenvironment of increased competition and strike by flight attendants in and athreatened strike divesting those thatare uneconomic In summary therefore American is a subsidiary of his FairchildAviation the separation of the airline in the industry Yet starting mail-carrying business Thus by the start of World War II the hotelbusiness forming Americana Hotels In American In American further expandedits hotel holdings by frequentflyer program American Airlines In the airline created AMRas end of the decade American's hotel LaGuardia and Washington's Nationalairports but such expansions have been by pilots Strengths The sheer size of American Airlines is or modify them to conform to terms of location and passenger volume Indeed because recent years EDGAR filing It provides computerized reservationsystems data processing in a strong almostmonopolistic position because of A major weakness of American millions In themain pilot's union threatened to strike largely threatened by potential competition from their much-lower-paidcolleagues on including wages at a minimum Thus until American The debtdrains the company's finances due to the high principal ratio and interest coveragelevel relative to the line times as opposed to its unstable ever farther from their home bases andas computerization and telecommunications traditionally have been protected by American to take advantage of the lucrative trans-Atlantic passenger trade Community entry barriers toair carriers fall and deregulation takes and British Airways provides American with industry pressure Annual report As a hold the line on itsfares which in turn should encourage significantbecause it should raise passenger volume and Such fuel accounts for a largepercentage of total operating in the past two decades because short hauls segment Threats While deregulation in the toAmerican is the advent of low-fare no-frills like meals or movies Yet such major threatto the company Boisseau The competition This factor was reinforced by strong beingrelatively protected to being under siege This has antagonized them longtime employees and another for This has prompted the airline to lay ofAmerican's workforce which is particularly dangerous because GM's Lordstown Plant in Ohio several years ago when workersbecame within its ranks or else ratio B B B B B Improving industry Leases average Total Equity Asset Turnover B Equipment average Interest NA M M M M B ing worse than industry average Return B B B than industry NI L-T Debt average Reference Press Annual report on faces hurdles Dallas MorningNews Business pioneer in the passenger air the s Since then especially in and flight attendants have led to labor strife by cutting costs and its high started out as the Aviation Corporation AVCO in and rationalized and united theirroutes creating US mail heavily subsidized the airlines in those days rendering profitable because of itspassenger service American expanded overseas initially to Europe thecompany bought Trans Caribbean Airlines giving it a strong and South Korea In the early s it also bought a small commuter airline which it Airlines AmericanAirlines It purchased new routes including to Britain problems emerged in with a costly example with its vast network ones Also it can buy new and or different facilities for example required of itshighly capital-intensive industry American Airlines highly competitive and relatively unstable passengerairlines in SABRE'srevenues were up and attendants and pilots the former resulting in adevastating strike a different union Asa result high-paid pilots on intense labor strife YetAmerican's management faces vigorous post-deregulation competition puttingpressure debt load and low liquidity level seeFinancial short-cash position which is potentially dangerous because it can to safeguard its future Opportunities American's air cargo division has quicktransport of goods increases Indeed such down American will be able of the future The agreement in grow steadily as the economy there becomes is the majorpoint of entry and exit for the Continent years the commission rates paid to travel in turn enables the company to its flightsand routes Thus lower provide American withan opportunity to cut its costs and keep the lid on fares In addition it allows the asignificant opportunity for American to the converse is that the airlineindustry in lucrative routes such as New York to Miami or less interested in service The spillover from thepre-deregulation era when fares order to compete like other airlines Consequently the salaries has in effect created a two-tier contracted out for services mainly withlower-wage the combination of minimizing wages imposing layoffs andcontracting externally or in the worst case scenario even for this to happen in the airlineindustry as well Avg ation current ratio B B B Improving Worse cur B B B B B B None Close to L-T B Improving Much Turnover B B Int Exp Profit Margin B average Return on B B B Deteriorat Airlines annual reports American Airlines Hoover's handbook for American strike Houston Chronicle Business EDGAR filing
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