It was just a few years ago I was fielding questions about the future of American Airlines. The company was losing hundreds of millions of dollars, had the most contentious relationship with their employees of any U.S. airline and saw their most loyal customers running to competing airlines. The fear was American was flying off into the sunset to join the ranks of Eastern Airlines and Pan Am.
When the latest round of merger-mania kicked in seven years ago investors speculated how American would respond. Would they merge with Northwest or even United? Delta perhaps? Instead of merging, American watched Delta and Northwest combine followed by a United and Continental merger. Investors were perplexed and many industry analysts were starting to write the obituary of American Airlines…a once great airline gone wrong.
Then quietly American began to make changes to the way they operated and opted to take the Chapter 11 bankruptcy path as so many airlines before them had done. Soon thereafter discussions began with US Airways, an airline anxious to merge with anyone and few gave the discussions much credence because, after all, how much difference could a merged American Airlines be? Non-profitable routes were cut, fuel hedging programs were better utilized and the airline (like every other airline) capitalized on the newly created fees for baggage and reservation changes.
American Airlines was starting to make money and a lot of it.
The most recent report shows American Airlines has more than $10 billion in uncommitted cash, which is more than Delta and Southwest combined! Now, having too much cash is not the best business model and I am sure American will make some changes, but it certainly is an indicator of how far the airline has come in just a few years.
American is now looking to upgrade their fleet, as they remove outdated and less fuel efficient aircraft from service. Additional employee reductions will also take place as more automated systems, especially in the boarding gate areas, are installed.
Combine all of this with the savings the airline will realize with a combined US Airways/American system and one must admit that the future of American Airlines looks far better than it has for decades.
Look out, here comes American Airlines.