American Airlines' FlightPlan 2020
AMR Chair and CEO, Gerard Arpey, has stressed the company’s FlightPlan 2020 plan (which outlines goals for American for the next decade) centeres on five principles which all conspire to ensure more profitability for the carrier. Those principles include investing wisely, earning customer loyalty, strengthening and defending its global network, being a good place to work and flying profitably.
Arpey noted that the challenges of the first decade of the 21st Century were like no other in history and indicated that trying to fly through whatever is thrown at the industry, the company needs to develop a new framework to guide it into the second decade. He called it survival for success in the 4Q2009 FlagshipNews, the company’s employee newsletter.
Investing "wisely"
“We have a clear vision of what we need to do to be successful,” he told employees. “To secure our future, we must be competitive in everything we do. We must compete for every dollar of revenue by offering a product, schedule, and network that can stand up to any in the marketplace. We need to be as good as, or better than, our competitors at dependably getting people and their bags where they want to go. We need our planes and facilities to be modern, clean, and well-maintained. And we need to accomplish all that while also keeping our costs competitive. In a capital-intensive business, we must compete for capital by generating profits that are competitive with what investors could earn putting their money to work elsewhere. We need to compete, and compete hard, on all these and many other fronts - every single day. With that as a starting point, let me turn to the individual tenets of FlightPlan 2020.”
Investing wisely largely means maintaining and improving its assets whether it be an aircraft, airport lounge or technology. It was able to get financial partners to “make some pretty big bets on our future".
Complementing that is making America the airline of choice for all level of passengers. “It's about delivering value for every customers and differentiating the travel experience for our premium customers,” Arpey wrote.
The company has developed a Customer Blueprint for delivering safety, dependability, cleanliness, baggage handling, courtesy and professionalism, which Arpey called critical but only a first step. “To succeed in the next ten years, we must continue to win a disproportionate share of [passengers who fly in business and first class] business,” he said. “So we are going to have to stay focused on delivering the things they value most, in addition to the basics.”
Defending the network
Arpey stated plainly during the 4Q2009 investor’s call on Wednesday that its 'Corner-Post Strategy' – focusing on Miami, New York, Chicago, Dallas and Los Angeles - was crucial. “We led the industry in the wake of last year's fuel crisis and this year's economic crisis by making the tough call to strategically remove capacity,” he told employees. “We reduced thoughtfully and by doing so, we put ourselves in a much better position to weather those storms. “We have…laid down our marker, and defined the future of our network in the United States. We are going to stand, fight, and win in those markets.”
Expansions this year include bolstering its current network strategically with new international routes such as Chicago to Beijing, Chicago to Vancouver, JFK to Manchester, JFK to San Jose, Costa Rica and JFK to Madrid. It will also complement, he said, its BA/Iberia joint venture and “level the playing field between oneworld and the Star and Sky Team alliances.”
Saying it is critical to pay attention to the employee compensation marketplace, Arpey said during the investor call that he was not asking employees to match the bankruptcy pay rates of competitors. “So we must redouble our efforts to maintain a safe, collaborative, and respectful work environment where everybody's contributions are valued, and everyone's ideas are not only welcome but sought out,” he said, adding that “there is no place in our company for those who do not share our belief in honesty, professionalism, collaboration, and respect for every individual in the workplace.”
Flying profitability is not only a goal but a means to achieve all the other things the company wants to achieve, including better employee compensation. “The other four tenets are our road map to profitability - but of course, only by being profitable will we be able to pursue all our strategies effectively,” he said. “So we're going to have to keep finding new ways to drive revenue and reduce our costs - because as our recent results make clear, we are not there yet. In fact, we have a long way to go.”
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