Slide1 : Amy Kakuk, Beth Theriault, and Jessica Bourgoin
All images from www.aa.com
Agenda : Agenda Company History
A Little More About Us
Our Planes
Where We Fly
Vision Statement
Mission Statement
Company Ratios
External Analysis
Opportunities
Threats
CPM
EFE
Internal Analysis
Strengths
Weaknesses
IFE
Matrix Analysis
SWOT Analysis
Space
IE matrix
Grand Strategy
QSPM
Recommended Strategies
Future Plans
AMR in the News
AMR Timeline : AMR Timeline Started in New York City in 1929 under the name Aviation Corporation. It was founded by Sherman Fairchild.
1930, renamed American Airways after combining 85 small airlines.
1934, airmail was suspended causing difficulty and the cause for new ideas.
Renamed to its current American Airlines and the first plane to pay off itself without the need for postal revenues was built.
1964, AMR introduced the first computerized airline ticket reservation system (SABRE)
1980, new CEO Bob Crandall introduces frequent fliers program.
1982, Purchase of domestic airline.
1987, Nashville Eagle was renamed American Eagle.
1989, Donald Trump was prevented from purchasing American Airlines and new routes to Japan, Latin America, and London were bought.
1996, 20% of SABRE was sold and a code-sharing agreement was made with British Airways.
1999, One world (alliance of major airlines around the world) was formed because of agreement with British Airways.
2000, AMR sold its shares of Canadian Airlines along with the remaining of SABRE.
2001, AMR bought the assets of the failed TWA for $743m.
2003, AMR was on the brink of bankruptcy after losing $1.3B Text Book: Strategic Management Author: Fred R. David
Location : Location AMR Corporation 4333 Amon Carter Boulevard Fort Worth, TX 76155 Phone: 1-817-963-1234 Fax: 1-817-967-9641
Sector Name: Transportation Industry Name: Airline Employees: 92,100 Market Cap (Mil) $ : 1,724.425 Complete Financials: Dec 2004 Updated: 03/31/2005 www.AA.com
Stock Quote (AMR - NYSE) : Stock Quote (AMR - NYSE) http://www.shareholder.com/aa/stock.cfm
Vision Statement (proposed) : Vision Statement (proposed) To become the largest airline in the world.
Mission Statement (proposed) : Mission Statement (proposed) AMR Corporation is committed to providing every citizen of the world with the highest quality air travel to the widest selection of destinations possible. AMR will continue to modernize its fleet while maintaining its position as the largest air carrier in the world, with a goal of becoming the most profitable airline. AMR is the airline that treats everyone with equal care and respect, which is reflected in the way each AMR employee is respected. AMR recognizes that its employees are the key to the airlines success and invests in the futures and lives of its employees. By investing in tomorrow’s technologies and by following a strict adherence towards environmental regulations, AMR demonstrates its commitment to the world environment.
Customer Service Plan : Customer Service Plan American Airlines and American Eagle are in business to provide safe, dependable, and friendly air transportation to our customers, along with numerous related services. We are dedicated to making every flight you take with us something special. Your safety, comfort, and convenience are our most important concerns. www.AA.com
See Our New Campaign, We Know Why You Fly. : See Our New Campaign, We Know Why You Fly. www.AA.com
Our Planes… : Our Planes… Airbus A300-600
Boeing MD-80(S80)
Boeing 737-800
Boeing 757
Boeing 767
Boeing 777 www.AA.com
Our Planes… : Our Planes… ATR 72 - Super ATR
Bombardier CRJ-700
ERJ-145
ERJ-140
ERJ-135
SAAB 340B
www.AA.com
Airbus A300-600 : Airbus A300-600 Seats: 267
Lavatories: 7 www.AA.com
Boeing MD-80 (S80) : Boeing MD-80 (S80) Seats: 131
Lavatories: 3 www.AA.com
Boeing 777 (777) : Boeing 777 (777) Seats: 245
Lavatories: 9 www.AA.com
Where we fly… : Where we fly…
USA (North & South West) : USA (North & South West) All Maps from www.AA.com
USA (North & South Central) : USA (North & South Central)
USA (North & South East) : USA (North & South East)
Canada : Canada
Mexico : Mexico
Asia : Asia
Australia & New Zealand : Australia & New Zealand
Central America : Central America
Caribbean : Caribbean
Africa : Africa
Europe : Europe
Middle East : Middle East
South America : South America
Eurasia : Eurasia
Company Worth Analysis Year ending 2001,2002,2003 average : Company Worth Analysis Year ending 2001,2002,2003 average Stockholders equity 2,125,000,000
Net Income X 5 (10,835,000,000)
(Share price/EPS) X Net Income (2,436,937,716)
Number of Shares Outstanding X Share Price 2,015,000,000
Method Average 2,282,984,429
Key Company Ratios : Key Company Ratios
Key Company Ratios (cont.) : Key Company Ratios (cont.)
External Audit : External Audit Opportunities
Favorable wage negotiation climate
Travel increasing in general
Low interest rates
Government backed loans
Information technology
New fuel efficient engines
Partnerships with Asian Airlines
Threats
Increased air travel inconvenience (security related)
Business travel declining
Increased competition from point-to-point competitors
Availability of pricing information
Overcapacity in industry
EFE Matrix : EFE Matrix
CPM : CPM
Internal Audit : Internal Audit Strengths
Size of fleet
Number of routes
Partnerships
IT infrastructure
Government relations
Weaknesses
Financial position
Cost structure
Unprofitable routes
Too many divisions
Reliance of business fares
IFE Matrix : IFE Matrix
SWOT Matrix : SWOT Matrix S-O
Develop new partnerships in Asia utilizing the number of routes as a key negotiating point.
S-T
Use IT to reduce the check-in and wait times on flights. Such as more curb side check-ins and e-tickets.
Use market position by reducing number of unprofitable flights and reducing industry capacity. W-O
Sell unprofitable/smaller divisions to improve financial positions.
Negotiate lower wage rates with unions to improve cost structure.
W-T
Use a mixed model. Some operations point-to-point to improve cost structure and reduce customer inconvenience.
Eliminate unprofitable routes to improve financial position and reduce industry capacity.
SPACE Matrix : SPACE Matrix Y axis
*Financial strength 1
*Environmental stability -5
Y axis: 1 + (-5) = -3
X axis
*Industry strength 2
*Competitive advantage -5
X axis: 2 + (-5) = -3
1.Retrenchmnet
2.Diversification
3.Divestiture
4.Liquidation
The Internal-External (IE) Matrix : The Internal-External (IE) Matrix The IFE Total Weighted Score Market Penetration
Market Development Product Development
Grand Strategy Matrix : Grand Strategy Matrix 1.Retrenchmnet
2.Diversification
3.Divestiture
4.Liquidation
QSPM (Internal Factors) : QSPM (Internal Factors)
QSPM (External Factors) : QSPM (External Factors)
Strategies Summary : Strategies Summary Alternative Strategies IE SPACE GRAND COUNT
Forward Integration -
Backward Integration -
Horizontal Integration -
Market Penetration X 1
Market Development X 1
Product Development X 1
Concentric Diversification X X 2
Conglomerate Diversification X 1
Horizontal Diversification X 1
Joint Venture -
Retrenchment X X 2
Divestiture X X 2
Liquidation X X 2
??Which Strategies?? : ??Which Strategies?? Concentric Diversification which is the addition of new but related product, may be something that AMR would want to look into. They could add something to attract new customers too their company.
Another option they could look into in Retrenchment. This is the regrouping by reducing costs and assets. (This option is already being explored).
AMR may also want to think about Divestiture, selling its American Eagle division.
If these strategies do not work, AMR’s last option is Liquidation. With the financial trouble that AMR has been having, this may be the only way.
Future Plans : Future Plans AMR plans to raise their profitability in the future. This is a much needed event in order for the company to stay in business. In order to boost their profitability, AMR is currently in the process of doing some restructuring. This restructuring includes:
Reducing Number of flights from the Dallas/Fort Worth and the O’Hare Hubs.
In 2003, 27,000 employees were laid off and more will be needed to keep the company alive.
Retiring older aircrafts that are too expensive to keep running. AMR also needs to start getting rid of some of its least profitable routes, this will simplify their program and eliminate the spending of money to fly on them. Text Book: Strategic Management Author: Fred R. David
News Releases : News Releases March 30 | American Airlines Cargo Division Announces Increase in Fuel Surcharge
March 29 | American Airlines to Resume Seasonal Nonstop Service From New York to Rome on April 3
March 28 | Sizzlin' Summer Travel Deals - Get 'Em While They're Hot
March 28 | New Online Program Lets American Airlines AAdvantage Members Redeem Miles for Hotel Stays and More