American Airlines is the world's biggest carrier by both revenues and passengers, formed in 2013 from the merger of the predecessor business of that name, then in bankruptcy protection, with more profitable rival US Airways. The two brands continued to operate side by side until Oct 2015, when the US Airways banner was discontinued. In normal times, the company operates around 6,700 flights a day, though the bulk of these are within the US. The system also houses several regional US "feeder" carriers operating under the American Eagle brand. However, the Covid pandemic devastated performance across the airline industry during 2020. American was no exception. Its revenues reached a record high in 2019 of $45.8bn, with net income of almost $1.7bn. For 2020, though, topline plunged by almost two-thirds to $17.3bn, resulting in a net loss of $8.9bn. (That loss was actually lower than many investors had feared). Combined passenger enplanements were 215.2m in 2019, but more than halved to 95.3m, while total revenue passenger miles fell from 241.3bn in 2019 to less than 92m. International flights accounted for less than 20% of revenue passenger miles. American Airlines is a founder member of the OneWorld Alliance, and a long-standing strategic partner of UK-based IAG. Following the merger with US Airways, most senior management positions in the combined business were taken by the latter's executives, led by chairman & CEO Doug Parker. American Airlines traces its heritage back to numerous early pioneering regional airlines of the 1920s which merged at the end of that decade to form American Airways. For several decades until the 1960s it was America's biggest airline, establishing a significant international footprint. It managed to struggle through the difficult decade post-911 before finally succumbing to bankruptcy protection in 2011. US Airways traces its heritage to a company founded in 1939 by members of the du Pont family, becoming Allegheny Airlines in the 1950s. Like several US airlines it bounced its way through Chapter 11 administration during the 2000s (not once but twice), before achieving an extraordinary turnaround in both performance and reputation. It made unsuccessful merger approaches to several rivals before finding a willing partner in American.
Capsule checked 12th February 2021
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Recent stories from Adbrands Update:
Adbrands Daily Update 26th Mar 2020: America's airlines - one of the sectors hit hardest by the lockdown - are likely to return to some form of partial state ownership under the terms of the government's $2 trillion emergency aid package. The eight main airlines - American, Delta, United, Southwest, Alaska, JetBlue, Hawaiian and Atlas - as well as cargo carriers UPS and FedEx are to share around $25bn of grants to be used exclusively for staffing costs as well as another $25bn of loans. That's considerably more than the total of $15bn they received following the 9/11 attacks. In return they must agree to suspend any staffing reductions until at least the end of September. Terms have yet to be finalised, but in exchange for the grants the government is expected to receive warrants to acquire equity at a future date at a fixed price.
Adbrands Weekly Update 29th Jun 2017: Qatar Airways announced plans to acquire a stake of up to 10% in American Airlines, at a cost in excess of $800m, prompting a sudden surge in American's share price. Qatar aims to acquire 4.75% through the open market, and would then seek approval from American's board to increase that stake. However, that approval is unlikely to be forthcoming. The announcement met with negative reactions from both American's CEO Doug Parker and also from unions representing pilots and cabin crew. Qatar's plan expands the tiny Gulf state's international investment strategy. Its state-owned airline already has around 20% of Anglo-Spanish carrier IAG, parent to British Airways and Iberia, while its CEO Akbar Al Baker represents the Qatari state on the board of Volkswagen in which it has a holding of 17%. There are similar investments in numerous other Western companies, making a proposed 10% holding in American Airlines comparatively unexceptional. However, Qatar has come under an unwelcome spotlight in recent weeks as a result of the blockade imposed by Saudi Arabia and other Gulf neighbours, who accuse it of supporting Islamist groups in the region. Qatar denies those allegations, but the backlash from American increases the pressure to come clean about any funding for extremist organisations.
Adbrands Weekly Update 29th Oct 2015: The week's most notable assignment was probably the termination of a 32-year relationship between American Airlines and McCann's TM advertising. Interpublic had been pitching to retain the business through the Martin Agency, but instead the account was won by Crispin Porter & Bogusky, with media moving to Mediacom.
Adbrands Weekly Update 14th Nov 2013: American Airlines and US Airways have received the green light for their proposed merger after agreeing to surrender a small parcel of slots at Reagan National Airport in Washington and La Guardia New York. Only around 112 flights will be affected, significantly fewer than had been anticipated, and making barely a dent in the two carriers' combined 6,500 daily flights. The deal had originally been opposed by the Justice Department on antitrust grounds, but American and US pledged to fight that ruling in court. The case was due to start later this month, and their tough stance appears to have softened the regulators' position. The agreement is seen as a major victory for the airlines, who hope to complete their merger before the end of the year to create American Airlines Group, which will become the world's largest by passengers.
Adbrands Weekly Update 7th Nov 2013: A merger of American Airlines and US Airways could still go ahead. The two carriers are in talks with the US Justice Department to offer last-minute concessions that might secure regulatory approval ahead of an impending court case. Earlier this year the Justice Dept issued an unexpected lawsuit to block the proposed merger on antitrust grounds. The airlines countered with their own lawsuit alleging unfair opposition, given that rival US carriers had already been granted merger approval. The antitrust case is due to go to court in a few weeks, but US Attorney-General Eric Holder says he hopes to resolve the discussions before then. However, while American and US are prepared to surrender some airport slots, it's not certain that their offer goes far enough to satisfy the regulators.
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