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American Airlines AMR Inc. Amy Kakuk, Beth Theriault, and Jessica Bourgoin. All images from www.aa.com. 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

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amy kakuk beth theriault and jessica bourgoin
American Airlines AMR Inc.

Amy Kakuk, Beth Theriault, and Jessica Bourgoin

All images from www.aa.com

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

Agenda
location
Location

AMR Corporation4333 Amon Carter BoulevardFort Worth, TX 76155Phone: 1-817-963-1234Fax: 1-817-967-9641

Sector Name: TransportationIndustry Name: AirlineEmployees: 92,100Market Cap (Mil) $ : 1,724.425Complete Financials: Dec 2004Updated: 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.
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

AMR Timeline

Text Book: Strategic Management Author: Fred R. David

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

our planes
Our Planes…
  • Airbus A300-600
  • Boeing MD-80(S80)
  • Boeing 737-800
  • Boeing 757
  • Boeing 767
  • Boeing 777

www.AA.com

our planes1
Our Planes…
  • ATR 72 - Super ATR
  • Bombardier CRJ-700
  • ERJ-145
  • ERJ-140
  • ERJ-135
  • SAAB 340B

www.AA.com

airbus a300 600
AirbusA300-600

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

usa north south west
USA (North & South West)

All Maps from www.AA.com

company worth analysis year ending 2001 2002 2003 average
Company Worth AnalysisYear ending 2001,2002,2003 average

Stockholders equity2,125,000,000

Net Income X 5(10,835,000,000)

(Share price/EPS) X Net Income(2,436,937,716)

Number of Shares Outstanding X Share Price2,015,000,000

Method Average 2,282,984,429

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
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
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.

SWOT Matrix
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

Strong

Average

Weak

3.0 to 4.0

2.0 to 2.99

1.0 to 1.99

High

I

II

III

3.0 to 3.99

American Airlines

Medium

IV

V

VI

The EFE Total Weighted Score

2.0 to 2.99

Low

VII

VIII

IX

1.0 to 1.99

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

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
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