Brief History of American Airlines
The recent merger between American Airlines (AA) and US Airways resulted in The American Airlines Group (AMR) forming the largest airline in the world. AMR operates over 6,700 flights daily to over 350 destinations in 50 countries and recently set new records for both traffic and capacity in February, 2016 (AA, 2015, 2016). AA earned many successes and even more challenges over the decades. This paper will briefly highlight a few of the major events in American Airlines history including how the airline was created, important mergers and related business aspects, and a brief summary of American Airlines pioneering achievements in aviation.
A young accountant named Cyrus R. Smith was promoted to general …show more content…
First, the merger with Air Cal in 1988 was intended to establish a foothold on California market. However, with the entrance of Southwest Airlines into the California market in 1989, AA soon learned it could not compete in the low cost pricing arena. Ten years later, the second questionable merger was with Reno Air in November, 1998. Pay issues developed with incorporating the Reno Air pilots into the company. A lengthy sick-out cost $200 million in lost revenue and more than the original purchase price of the airline. Next, a disastrous merger with Trans World Airlines (TWA) was the result of terrible timing as the terrorist attacks of September 11, 2001 occurred just five months after AA paid nearly $800 million for TWA’s assets and assumed $2 billion in debt. Demand for air travel plummeted, forced route retractions, and employee and fleet sizes were reduced by a full third (Reed & Reed, 2014). Long known as one of the only major airlines never to go bankrupt, AA announced they filed for Chapter 11 bankruptcy protection on November 29, 2011. CEO Thomas Horton told CNN’s Richard Quest in an interview, AA was plagued with contractually obligated higher wages over the last 10 years as a result of a failed two-tier wage system and as a result, lost 800,000 dollars per year above their …show more content…
However, in 2011 AA placed the largest aircraft order in the history of aviation in a deal with Boeing and Airbus. AA contracted for 460 single aisle narrow body aircraft from the Boeing 737 and Airbus 320 families. In order to decrease operating and fuel costs, these new families reduce fuel cost by 35 percent over the MD-80 and 15 percent over the wide bodied Boeing 757 and 767-200. This will also increase commonality across their fleet and have a positive impact on maintenance costs (AA,
The recent merger between American Airlines (AA) and US Airways resulted in The American Airlines Group (AMR) forming the largest airline in the world. AMR operates over 6,700 flights daily to over 350 destinations in 50 countries and recently set new records for both traffic and capacity in February, 2016 (AA, 2015, 2016). AA earned many successes and even more challenges over the decades. This paper will briefly highlight a few of the major events in American Airlines history including how the airline was created, important mergers and related business aspects, and a brief summary of American Airlines pioneering achievements in aviation.
A young accountant named Cyrus R. Smith was promoted to general …show more content…
First, the merger with Air Cal in 1988 was intended to establish a foothold on California market. However, with the entrance of Southwest Airlines into the California market in 1989, AA soon learned it could not compete in the low cost pricing arena. Ten years later, the second questionable merger was with Reno Air in November, 1998. Pay issues developed with incorporating the Reno Air pilots into the company. A lengthy sick-out cost $200 million in lost revenue and more than the original purchase price of the airline. Next, a disastrous merger with Trans World Airlines (TWA) was the result of terrible timing as the terrorist attacks of September 11, 2001 occurred just five months after AA paid nearly $800 million for TWA’s assets and assumed $2 billion in debt. Demand for air travel plummeted, forced route retractions, and employee and fleet sizes were reduced by a full third (Reed & Reed, 2014). Long known as one of the only major airlines never to go bankrupt, AA announced they filed for Chapter 11 bankruptcy protection on November 29, 2011. CEO Thomas Horton told CNN’s Richard Quest in an interview, AA was plagued with contractually obligated higher wages over the last 10 years as a result of a failed two-tier wage system and as a result, lost 800,000 dollars per year above their …show more content…
However, in 2011 AA placed the largest aircraft order in the history of aviation in a deal with Boeing and Airbus. AA contracted for 460 single aisle narrow body aircraft from the Boeing 737 and Airbus 320 families. In order to decrease operating and fuel costs, these new families reduce fuel cost by 35 percent over the MD-80 and 15 percent over the wide bodied Boeing 757 and 767-200. This will also increase commonality across their fleet and have a positive impact on maintenance costs (AA,