Planning and Ethics in American Airlines It is

It is not a good time for any of the airlines; although passenger loads are at an all time high and projections are good for passengers for the summer, fuel prices are also way up and there is a price war between all of the carriers, driving costs up and profits down. American Airlines has expanded rapidly in both domestic and international markets, building a reputation for dependable and quality service. American Airlines has managed to grow in an industry that has been characterized by many startups and failures, and has emerged as an industry leader competing effectively on a global scale. The purpose of this paper is to discuss and evaluate the planning function of management in American Airlines.

American Airlines has been suffering due to the recession, labor relations problems and the public relations fiasco of its airplanes being used in the 9/11 terrorist attack. It faces staggering payments on its $25 billion debt load and its pension plans are underfunded by $2.7 billion.

It was estimated that unless American could effect dramatic cuts in their cost of doing business, the airline would run out of cash by mid-2003. Just before March31, 2003, the three labor unions with which American must deal agreed to $1.6 billion in ægivebacksÆ. It was a tight agreement, barely passed, and required huge goodwill on the part of employees. Even workers at the top of the food chain, the pilots, have been knocked off stride. Ch

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employing them. They pursued a strategy to cut their labor costs by implementing a two-tier compensation plan which encouraged internal growth. Acquisition of another airline was not an option. Employees were also compensated with a cheap travel package, which increased recruitment and the level of the people applying to work at AA, mostly for the travel packages. The model of HR policies that best applies to AA was the job characteristics model, broadbanding and elimination of job classifications. AA went to great extreme to flatten their organization, removing supervisory personnel and making employees more responsible and accountable for what they were doing. This improved morale by empowering employees û it also resulted in greater employee input, which made sense since they were on the front lines, knew what was going on so they could either suggest improvements in the organization to save costs and improve service, or to fix a short-term, immediate problem themselves. Operating without supervision was accomplished by creating new work roles including crew chiefs and lead agents who were appointed to leadership amongst their peers. AA broadened employee relations to include customer service so that employees were
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Approximate Word count = 1692
Approximate Pages = 7 (250 words per page)

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