On March 29, 2004, James Ott of Aviation Week and Space Technology comments about the problems facing the industry in general. The article contains one statistic that illustrates the problems facing American Airlines. Year to date, the value of the company's common stock had dropped 17.9%. Ott pulls no punches in this article. He suggests that the prospects for any recovery in 2004 were fading fast. Ott provides the following facts to support his predictions:
Fuel prices are far higher than even the most pessimistic estimates; in fact they are the highest they have been in thirteen years
Domestic revenues for major airlines remain weak
Business travelers post September 11th may have become permanently price sensitive
Only a few attempts to raise prices have been successful
So called "no frills" airlines such as Southwest Airlines are taking market share from full service, higher priced airlines including American
American Airlines has already squeezed concessions from its unionized work force that would have been almost unthinkable a few years ago. Ground crews, pilots and flight attendants have accepted wage cuts. Work rules that benefited union workers have been relaxed. Certain types of work, such as aircraft cleaning have been outsourced to non-union contractors. Pilots have been encouraged to taxi after landing on one engine rather than two to reduce fuel consumption.
These concessions make it clear that the adversarial relationship that often exists between union members and company management has been replaced by the realization that unless workers and management cooperate AMR could be forced to file for bankruptcy protection. AMR narrowly avoided bankruptcy in early 2003, but that still looms in the background for this airline and for other U.S. carriers.
Ott, J. (2004). Market Focus. Aviation Week & Space Technology, 160(13), 10.
Title: MARKET FOCUS ,รก By: Ott, James, Aviation Week & Spac...