Business / Amr Case Studie
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Autor: anton 10 November 2010
Words: 636 | Pages: 3
American Airlines started with the combination of eighty-five small airlines, which was formed by the founder of Aviation, Sherman Fairchild. The airline was renamed once again in 1934, after the company experienced some difficulty with the suspension of airmail. The company was the first to introduce SABRE, a computerized ticket reservation system; also the first to initiate the frequent flier program. In 2001 and 2002 the company experienced major losses; some losses were caused by the terrorist attacks which cut demand down by twenty percent. The company also suffered because of an agreement that the government forfeited on forcing American Airlines to give up 224 slots at the Londonâ€™s Heathrow airport.
American Airlines suffered a major lost in 2001-2003, if the company continues to lose profit, the company will be finished promptly. The losses were the results of low price strategies enforced by competitors, government regulations, and the September 11th attack.
Despite their losses American Airlines still holds the number one spot in the United States of America. The company has also gained more control by narrowing losses. In 2003, the company reported that their share prices increased by $14.29 in an eleven month period. The companyâ€™s loss cuts were accomplished by their ability to negotiate reduction in labor cost, laying off thousands of employees (major cut into the companyâ€™s revenue), expand partnership and cutting unprofitable routes.
High ticket prices is a major weakness for the company; majority of their competitors focus on low ticket price strategies in order to stay competitive which is an improvement American Airlines lacks. With the big emerge on E-Commerce most consumers are shopping heavily online; however online consumers are not reacting to the service that American Airlines provides. The lack of online sales can be risky for a company since most consumers are becoming accustomed to purchasing and comparing rates online.
American Airline has the opportunity to be innovative. The company can come up with new strategies for marketing on the internet to increase online sales. The company could also form an alliance with their competitors, which I would recommend United Airlines their strongest competitor. Enhancing their awards programs could also be beneficial to the company. One way to improve the program is by offering an American Airline A-Advantage credit card to business or frequent flier customers; the card will allow consumers to earn credit with each purchase.
Terrorist threats and other security issues is stress to the company because these threats cause security cost to rise. The increased fuel prices is also another threat to the company since the cost of fuel is cutting into the companyâ€™s revenue. Both of these threats could play a role in demolishing the company.
In order to resolve the strategic issue American Airlines should first consider cutting unprofitable route, reason being the if the routes are unprofitable than the company is losing money rather than making money which is dangerous for American Airlines at this point in time. The company could also consider lying off more employees and replacing them with technology. Self Service Kiosk could be installed into the airport which would replace some of the customer service employees. They could also improve their online services so that the customer will not have less contact with a person by purchasing tickets online and checking in at self service kiosk. American Airlines could also consider increasing point to point flight to reduce some of the cost. A point-to-Point flight saves money on fuel and unnecessary routes; these could also attract more consumers because their flights would be cheaper and takes less time.
Replacing employees with more automation services would be the best solution for American Airlines. Downsizing cuts down the companyâ€™s largest expenses which will permit American Airlines to maximize or profit.
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