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United States of America
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- Dallas/Fort Worth International Airport
- United States of America
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American Airlines is a wholly-owned airline subsidiary of American Airlines Group Incorporated. With hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, Washington DC and Tokyo, American Airlines operate an extensive network including domestic and regional services within North America and international services to Europe, Asia Pacific, Central America and South America. The carrier was incorporated from The Aviation Corporation, formed into American Airlines in 1934. The carrier was the founding member of the oneworld Alliance, and introduced SABRE in 1959.
Following the merger of AMR Corporation and US Airways Group in 2013, US Airways integrated with American Airlines under a single Air Operators Certificate (AOC). The companies have already been using a single booking system and operating as a single brand since 17-Oct-2015. US Airways Group and US Airways ceased to exist as a separate entity effective 30-Dec-2015. As a result of the merger, all property, rights, privileges, powers and franchises of US Airways became American's, as well as all of US Airways' debts, liabilities and duties.
Location of American Airlines main hub (Dallas/Fort Worth International Airport)
American Airlines Group Inc. share price
6,413 total articles
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Operational improvement is a top priority for Spirit Airlines' new CEO, who has held the position for just six months. Data from the US government show that Spirit is making progress in some areas of operations, but still lags behind other US airlines. As the busy summer season kicks into full force, Spirit’s commitment to improving operations could be put to the test.
As Spirit’s rivals hone their product segmentation strategies to match Spirit’s low fares, operational improvement takes on a whole new level of importance for the ultra-low cost airline and its particular business model. Spirit’s ULCC rival Frontier is outperforming Spirit in some operational metrics.
Spirit is in undergoing other changes, including a change in its fleet mix to smaller-gauge Airbus narrowbodies. The company has intimated that it would examine smaller markets in the future to decrease competition with larger airlines. Many of the new routes that Spirit has introduced in 2016 feature Southwest and Delta as competitors and it appears that Spirit now has the largest network overlap with Southwest, rather than with American Airlines.
Although Delta Air Lines is facing the same revenue pressure as other US carriers, the company is one of the most successful airlines worldwide by any other number of measures; including cash flow, return on invested capital and shareholder rewards. Delta started the product segmentation movement in the US, allowing the airline to create competitive gaps with its rivals, which are in the early stages of creating fare families.
But Delta also makes moves that trigger a certain amount of head-scratching, reflected in its recent decision to pull a long-term sponsorship of a local Atlanta theatre after Qatar Airways held a private event celebrating its recent launch of service to the city. The decision generated negative PR for Delta and underpinned the general perception of its protectionist philosophy – running counter to the globalisation necessary for the airline industry to thrive.
Not surprisingly, Delta’s new CEO appears to be adopting a status quo stance on some of the more controversial issues that the company has adopted, including the Gulf airline subsidy debate and the privatisation of the US ATC system. The perception is that Delta increasingly presents a go-it-alone attitude, which could hurt its brand and image over the long term, as well as its prospects for international expansion.
Alaska, jetBlue and Southwest cost projections; good in the short term but long term challenges loom
Just as the large three global US airlines – American, Delta and United – work to contain their unit costs, their rivals Alaska, jetBlue and Southwest are committed to keeping their respective unit costs in line as the current revenue environment in the US remains weak.
The latter three airlines face different cost dynamics in the future. Alaska is attempting to embark on a merger with Virgin America, which will inevitably create some cost pressure as the full integration gets under way. Southwest is in the middle of complex pilot and flight attendant negotiations, which makes predicting its cost performance in the near- to mid-term difficult. At some point jetBlue will also conclude a new pilot contract that will affect its cost structure.
Cost performance results for Alaska, jetBlue and Southwest for 2Q2016 and the full year look reasonably favourable, although Alaska has refined its 2016 targets slightly, driven in part by increases in performance-based pay. But its costs should remain competitive compared with its peers, and solidly lower than those of the larger network carriers.
Airlines adopting low cost and ultra-low cost business models have triggered numerous industry transformations, but one of the most important effects of their proliferation is a fundamental change in industry pricing. Traditional yield management techniques have been upended, and full service airlines are working to adapt to new pricing methodologies.
American Airlines is in the process of overhauling its revenue management system, as well as creating crucial product distinctions as a base for revenue growth in the future. Product segmentation has become a buzzword in the US industry, as the three large global network airlines develop products to target a customer base that ranges from the infrequent traveller to high-yielding corporate customers.
The revenue management and product changes that American is putting into place will take some time to generate favourable results. In the short term, the airline is joining its large global competitors in acknowledging investor concern about the industry’s negative passenger unit performance, and stressing that it is working diligently to return to positive PRASM.
The US global network airlines Delta and American regularly receive accolades for the execution of their respective merger integrations. Assessment of the merger between United and Continental has been different, even from the airline’s own executives, who admit the integration was more challenging and took longer than anyone had anticipated.
United is working to adapt to changed pricing structures ushered in by the ULCCs – shifting more of its operations from regional to mainline and ensuring that customers fully understand the attributes of its various product offerings once its version of a basic economy fare debuts later in 2016.
United’s executives are also acknowledging the long standing gap it has in margin performance vis a vis its peers, and stresses its commitment to margin improvement. United in many ways is starting again, attempting to build a new foundation of trust with customers, employees and investors.
The record profits that US airlines are enjoying from lower fuel costs are being shaded by weaker passenger unit revenues and labour discontent as work groups at various airlines strive for market rates that are on an upward slope.
Some of the higher-profile negotiations include pilot collective bargaining at Delta and Southwest. Pilot groups at each airline have rejected contract proposals during the past year, and are currently requesting wage increases that they believe will put them on par with the industry average; an average which has been growing due to contracts brokered by their competitors, American and United.
Even airlines that have typically enjoyed positive pilot relations are encountering higher levels of turbulence in their latest round of talks. Hawaiian Airlines’ pilots have been especially vocal during the current round of negotiations, the pilots voicing their frustration over lower rates of pay versus the airline’s competitors.