American Airlines Case Study

Table of Contents

Executive Summary 2

Issue Identification 3

Environmental & Root Cause Analysis 3

Alternatives and Options 4

Recommendation 8

Monitor and Control 8

Members of the Board,

American Airlines Inc. details a strong revenue management strategy on a few important platforms, but fails to address improvements in key areas. With the current cash constraints and the risk of radical change unsettling their core business and values, it is my teams experienced opinion that we revamp the SABRE system to better address employee management.

After thorough consideration of all the options, the benefits of more effectively managing our employees with an updated SABRE system would fit seamlessly with Americans Airlines current revenue management strategy. This investment now will enable us to stay ahead of our rivals and help reduce our total costs.

A multi-pronged strategy is still the approach American needs to take into the future, and adding this improved employee management system will help continue Americans strong bottom line.

Best Regards,

Elliott Carter

Head of Research

Issue Identification

American faces important short and long term issues when looking to make strides in the Airline Industry. They need to determine a way to more effectively shift customers to take more legged flights, while still keeping customer satisfaction high. As shown in the exhibits, American fails to consistently fill its airplanes, with the average hovering around 63% capacity. This is a high level of spoilage and needs to be addressed. Fuel costs and rising prices of maintenance have a negative impact in profit margins. Fuel costs eat up more then 10% of expenditures and the price fluctuation causes inaccuracy in forecasts, which can be costly. With American not being the largest or the lowest cost carrier in the US, it falls into an intermediate market which it needs to establish a foothold in or...