What are the expectations for American Air Lines?
American Airlines is a major airline that is ranked globally and is a member of the OneWorld alliance. American Airlines declared bankruptcy in 2013, and after the company was able to regain its financial stability, it concentrated on devising measures to renew its fleet, enhance customer relations, and successfully implement the merger with US Airways.
Going forward, here are some of the key expectations for American Airlines:
Fleet Upgrade American has been active in acquiring even newer planes that use less fuel, like the Boeing 787 and Airbus A350. In the next five years, American intends to phase out numerous older, less-efficient models, such as the McDonnell Douglas MD80 and replace them with the A320 and 737 families. They are more effective in reducing fuel consumption, have lower service costs and offer improved comfort to the users. American has a vision of becoming one of the youngest flight fleets among the other U. S. network carriers within the next few years.
Customer Experience Improvements American’s most important strategic direction is centered on enhancing the flying experience for passengers, particularly those in the business and first-class categories. The seats in business class will also be lie-flat, with better privacy on international and transcontinental flights. It also intends to launch a new premium economy product on its international services as it seeks to challenge Delta and United. American is also modernizing airport lounges, incorporating the choice seating, offering free entertainment on a flight, developing Wi-Fi access, and optimizing baggage solutions. This is the reason to intend to increase American Airlines competitiveness for high-value, multiple-time-a-week traveling clients.
New Routes and Growth Since problems related to the merger with US Airways have subsided, American is extending its coverage by adding numerous new destinations, with a particular focus on Asia and Latin America. It is worth recalling the fact that in 2018, American Airlines launched a non-stop flight from Los Angeles to Beijing. Further ultra-long-haul expansion is anticipated once the company receives Dreamliners and other wide-body planes. American is also increasing the coverage of domestic flights in relevant states and is also seeking to reinstate some of the routes that it had earlier axed. America wants to compete directly with Delta and United in domestic capacity in major markets as well as open new markets. This means that American will increase the number of profitable routes, thereby increasing its revenues.
Operational Improvements Thus, the new and primary goal for American Airlines to compete in product and service, not merely on the price factor, is to operate a punctual airline. To reduce mechanical delays, American has plans to upgrade older aircrafts and make changes in its schedules to raise the completion factor. Baggage operations are also being integrated in order to avoid some of the problems they have had with baggage handling systems that caused bags to miss connections or be placed on incorrect flights. American understands that if there is anything that can separate customers from the numerous companies in the tourism industry, it is the provision of a perfect travel experience.
Technology and Innovation Like its counterparts in the industry, American management is keen on improving the overall effectiveness of technology for customers and workers. It has enhanced the development of its website and mobile application to help users plan, book and manage their travel. American is incorporating more self-service options in kiosks at airports and via mobile to enhance the check-in process and for re-accommodation during events such as weather-related disruptions. American is also embracing innovative solutions such as data analytics and machine learning that can help it improve efficiency. Efficient and non-problematic management of potential problems by employees utilizing technology contributes to enhanced customer service for travelers.
Shareholder Returns After a period in which American made reasonable profits after it was evidently a money-loss proposition, is now looking to shareholders. American had declared a dividend in 2014 and has increased it multiple times, which means profits were also on the rise. It also has a strong policy of share repurchase to realise value for shareholders. It is also important for American to keep earning returns through dividends and share repurchases, in addition to holding back cash to meet its obligations in the form of debt, acquisitions of planes, and further improvements of products, technologies and operations. Pursuing this strategy will sustain long-term creation of shareholder value; it is a balanced approach.
Labor Relations America has large number of union labour contracts to be renewed in the coming years with employees like pilots, flight attendants, mechanics, and many more. Since the airline is financially stable, the labor unions are going to demand massive pay raises and improvements to benefits after having let employees accept cuts for several years. Management desires to arrive at fair remunerations that remunerate employees and continue to make America competitive in terms of costs. If the process of negotiation is done in good faith, the subsequent rounds of contract can actually enhance the labor-management relationship after years of strike and demonization.
Leadership Changes Doug Parker has been named as the chief executive of American Airlines and he is expected to retire in 2023 after the company merges with US Airways and after it has completed its post-bankruptcy remaking process. Currently, the American President of FedEx, Robert Isom, is expected to join FedEx as the new CEO. By the time Isom was fired, he was in charge of operation, planning, marketing, and pricing. leadership handover will not bring a radical change in strategy, as is commonly assumed. Still, some shifts might occur in the future because times have changed across the executive team. Most notably, American was displaying its first ever CEO change since the merger of 2013 and this perhaps means fresh blood.
Financial Performance While American is in the process of expanding the size of its network and enhancing services,
The airline is far fromposting recessionary losses, but it still trails Delta And United operating margins as it continues with the integration of systems and merger benefits. American is positioned to reduce expenses while simultaneously increasing the revenue growth rate higher than peers, planning for industry-leading margins by mid-2020s. Achieving cost savings and synergies in merger will assist in reducing the gap between American and rival companies and provide returns to shareholders.
In essence, American Airlines seems to be keen on revenue generation through innovations in the products, such as newly offered routes and upgraded products, and the customer experience through investment in technology, such as planes, lounges, seats, WiFi and technology. This means that airline intends to offer standard service delivery with high on-time arrivals rating. American wants to maximize the value for its shareholders while at the same time ensure that it gets the best from its employees through labor contract negotiations. And changes in leaderships will not alter strategies but may quicken operational and technological advancement. With all these efforts in place, American is preparing for the future to compete as a customer-oriented and financially healthy airline during the next ten years.