American Airlines
Situational Analysis:
Internal factors:
Strengths:
Joint Venture with Japanese Airline
Partnership with JetBlue
Member of oneworld alliance
International - Flies to North America, the Caribbean, South America, Europe and Asia
Number of routes
AAdvantage frequent flyer program
Weaknesses:
Older airplanes
Unstable chairs on their airplanes
Current financial situation External factors:
Opportunities:
Merge with another airline
Reorganization of their company
Successful retrenchment strategy
Increase profits
Update planes
Purchase new aircrafts
Satisfy consumer needs
Threats:
Company filed for bankruptcy in November 2011
Competition with competitors low cost strategy
Price of fuel has increased
Labor costs have increased
US economic slowdown
Problem: American Airlines is struggling with higher costs, mainly, higher fuel costs and labor costs. These costs became so excessive, that American Airlines had to declare bankruptcy.
Alternative 1: American Airlines needs to emerge from bankruptcy as a profitable company, which would enable them to explore the possibility of a merger with another airline provided that the two airlines combined would provide efficiencies and higher profitability. Strengths:
Potential increase in profits
Opportunity to eliminate duplicate costs
Potential to enhance brand recognition because now they will have more routes and more to offer Weaknesses:
Always potential for disruption and disorganization as the merger takes place
The cost of the merger (usually underestimated) Miscalculation of the difficulties of merging two corporate cultures
Alternative 2: They must use the bankruptcy process to lower their labor cost, both by wage concessions and more efficient work roles.
Strengths:
Lower costs
More efficiency of workers
Potential increase in profits
Lead to lower flying inconveniences
Help exit bankruptcy
Weaknesses:
Resistance from the employees
Internal factors:
Strengths:
Joint Venture with Japanese Airline
Partnership with JetBlue
Member of oneworld alliance
International - Flies to North America, the Caribbean, South America, Europe and Asia
Number of routes
AAdvantage frequent flyer program
Weaknesses:
Older airplanes
Unstable chairs on their airplanes
Current financial situation External factors:
Opportunities:
Merge with another airline
Reorganization of their company
Successful retrenchment strategy
Increase profits
Update planes
Purchase new aircrafts
Satisfy consumer needs
Threats:
Company filed for bankruptcy in November 2011
Competition with competitors low cost strategy
Price of fuel has increased
Labor costs have increased
US economic slowdown
Problem: American Airlines is struggling with higher costs, mainly, higher fuel costs and labor costs. These costs became so excessive, that American Airlines had to declare bankruptcy.
Alternative 1: American Airlines needs to emerge from bankruptcy as a profitable company, which would enable them to explore the possibility of a merger with another airline provided that the two airlines combined would provide efficiencies and higher profitability. Strengths:
Potential increase in profits
Opportunity to eliminate duplicate costs
Potential to enhance brand recognition because now they will have more routes and more to offer Weaknesses:
Always potential for disruption and disorganization as the merger takes place
The cost of the merger (usually underestimated) Miscalculation of the difficulties of merging two corporate cultures
Alternative 2: They must use the bankruptcy process to lower their labor cost, both by wage concessions and more efficient work roles.
Strengths:
Lower costs
More efficiency of workers
Potential increase in profits
Lead to lower flying inconveniences
Help exit bankruptcy
Weaknesses:
Resistance from the employees