American Airlines Strategy Paper

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Currently the airline industry as a whole seems to be on the road of recovery. We, American Airlines, the fourth largest carrier recently avoided bankruptcy, but had a summer full of pressure due to ongoing union struggles and questionable executive compensation packages. After having incurred such big losses, this recovery has come about because of the government bailout and many of our large competitors’ abilities to survive the turbulence in the industry. So far, the prospects look promising. Revenue has improved across all regions of the business. Domestic unit revenue was up almost 10 percent and Latin American revenue has increased by close to 11 percent in the last quarter of 2012 compared to the same period the prior year. We are performing better than other airlines that have filed for protection and have done so without slashing capacity. In short, American is doing the right things to return to business efficiency and customer effectiveness. In order to establish a sustainable position for the future, American Airlines must adopt a three-pronged strategy moving forward. First, we should focus on low priced operations and increased marketing strategies to improve customer demand. We have to enhance customer experience and our volume of loyal customers to build a stronger presence in Airline Industry. Second, we must focus on increasing and improving the routes to cater to large customer base. Lastly, we must address the difficulties our company might face in integrating with the culture of US Airlines. Our future success is highly dependent on these two entities efficiently operating as a single organization.

Industry Analysis
Current Position
US Airline industry today is dominated by five major domestic carriers. United, Delta and Southwest each has more than 15 percent market share. American is fourth, with around 12 percent and US Airways is fifth with around 10 percent. Four of these five are profitable — all but American. We lost $2...
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