What’s American Airlines Business Model?
American Airlines Group Inc. operates an airline that provides scheduled passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe, and the Pacific. The Company also provides connecting services throughout the United States, Canada, and the Caribbean.
What American Airlines is doing in more details?
American Airlines Group (AAG) is one of the largest airline in the world. The company’s mainline carriers provide scheduled air transportation along with its group of regional subsidiaries and third-party regional carriers operating as American Eagle. It also offers freight and mail services through its cargo division.
In all, American operates an average of nearly 6,700 flights daily to some 365 destinations in about 50 countries. It operates more than 850 mainline aircraft and approximately 540 regional aircraft.
American Airlines Group is also a founding member of oneworld alliance, where member carriers share airport lounge facilities and offer interconnected loyalty programs. Over 80% of passenger sales of American Airlines Group is generated from the US.
Where American Airlines is Operating?
American Airlines Group are managed as a single business unit that provides scheduled air transportation for passenger and cargo through its mainline carrier network as well as through regional carriers. Its passenger segment accounts for about 85% of total sales and operates about 855 aircraftfts.
Regional operations provide services under the “American Eagle” brand. American Eagle carriers include wholly-owned subsidiaries Envoy, PSA, and Piedmont. Third-party regional carriers including Republic, Mesa, and SkyWest.
The company’s Cargo segment (accounts for more than 1% of total sales) also provides a wide range of freight and mail services with facilities and interline connections available across the globe. Other operating revenue associated with loyalty program generate more than 10% of sales.
Where is the geographical reach of American Airlines?
Headquartered in Fort Worth, TX, American Airlines Group has hubs located in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington DC, and partner gateways, including in London, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others).
The company international services to Canada, Central and South America, Asia, Europe, Australia, and New Zealand.
Over 80% of sales on passenger sales are generated in the US. More than 10% are generated in Latin America, 5% are generated in Atlantic and about 1% in the Pacific.
What is American Airlines’ Sales and Marketing Strategy?
American Airlines sells its tickets through several distribution channels including its website (www.aa.com), mobile app, reservations centers, and third-party distribution channels. Its loyalty program offers rewards to travelers for their continued patronage.
Advertising expense was $50 million, $129 million, and $128 million for the years ended December 31, 2020, 2019 and 2018, respectively.
What is American Airlines Financial Performance?
In 2020, American Airline’s total revenue plunged to $17.3 billion, a decrease of $28.4 billion, or around 62%, as compared to 2019.
Passenger revenue was $14.5 billion, a decrease of $27.5 billion, or 65.4%, as compared to 2019, due to a severe decline in passenger demand and government travel restrictions related to the coronavirus pandemic.
The company’s cargo revenue was down by 10.8%, or $769 million due to a decrease in cargo ton miles, reflecting declines in freight volumes which resulted from international schedule reductions.
The company reported a profit loss of about $8.9 billion in 2020.
The net loss was driven by lower revenues as a result of a severe decline in passenger demand and government travel restrictions related to the outbreak and spread of COVID-19, offset in part by a decrease in expenses due to its reduced schedule and cost reduction actions.
Cash at the end of fiscal 2020 was $399 million, an increase of $109 million from the prior year. Cash from operations used $6.5 billion while investing activities used $4.3 billion, mainly for capital expenditures, aircraft purchase deposits, and short-term investments; and financing activities contributed $10.9 billion.
What is American Airlines Future Strategy?
An important part of its strategy to expands its network has been to expand its commercial relationships with other airlines, such as by entering into a global alliance, joint business and codeshare relationships, and, in one recent instance involving China Southern Airlines Company Limited (China Southern Airlines), by making a significant equity investment in another airline in connection with initiating such a commercial relationship.
It may explore similar non-controlling investments in, and joint ventures and strategic alliances with, other carriers as part of our global business strategy.
What is American Airlines’ Background?
In 2011, American Airlines’ parent company, AMR Corporation, filed for bankruptcy. It emerged from Chapter 11 in late 2013 and at the same time merged with rival US Airways in a mega deal worth $11 billion.
The milestone transaction created the world’s largest airline. The combined entity formed the American Airlines Group and is led by former US Airways CEO Doug Parker.
What is American Airlines’ History?
In 1929 Sherman Fairchild created a New York City holding company called the Aviation Corporation (AVCO), combining some 85 small airlines in 1930 to create American Airways.
In 1934 the company had its first dose of financial trouble after the government suspended private airmail for months. Corporate raider E. L. Cord took over and named the company American Airlines.