American Airlines

American Airlines

Every company aims at improving its performance year after year. Organizations try to modify operations to make them effective and efficient. Among other things, companies will be keen to evaluate the quality of services and products as well as feedback from customers. In addition to this, companies check their financial reports from time to time. In most cases, an organization would look at its financial performance on a quarterly basis. This is essential since it enables a corporate to gauge its performance and make appropriate adjustments to enhance performance. American Airlines, just like any other organization, releases quarterly financial reports to access its progress. This work, therefore, will discuss the latest financial status of American Airlines, how it is handling economy currently, and the organization’s future financial plans.

American Airline Current Financial Status

American Airlines has already released a financial report for the third quarter. The organization seems to have registered significant growth in its incomes. The Third-quarter report shows the organization r collected $11.9 billion in revenue. This was a 3% increase in revenue. This amount produced a pre-tax income of $557 million. The net profit for the third quarter was $425 million compared to $372million in the same period last year. This growth in revenue resulted in an increase in earnings per share. Since adjusted earnings for the quarter were $630 million compared to $547 million in the previous year, the EPS rose from $1.19 to $ 1.42. This shows that the shareholders also benefited from the good performance. Also, a total of $ 244 million was returned to shareholders either as dividends or through shares repurchases. A total of 7.3 million shares valued at $200 million were repurchased from shareholders. Shareholders were also paid dividends worth $44 million (American Airlines). This was great for shareholders.

Despite these desirable results, the company faced some challenges. This means in the absence of the challenges; there could be better results. The grounding of Boeing 737 MAX as well as challenges as a result of labor contract negotiations. A directive by Federal Aviation Administration (FAA)  to ground Boeing MAX aircraft led the airline to cancel 9475 flights in the third quarter. Cancellation of these flights could have caused the company about $140 million pre-tax income (American Airlines). These cancellations could have serious effects on the revenue of the airline. It is projected these cancellations could lead to a loss of $ 540 million in pre-tax income for the year 2019.

American Airline and Economy

American Airlines is making its operations more admirable. For instance, the airline allows passengers booked at the lowest fare class to have a free carry-on bag. This is not necessarily a personal item that can be placed in a seat before you. This is regardless of the distance one will be flying. This came as a result of failure to meet revenue expectations from the basic economy.  This has meet t6he airline more competitive since United Airlines doesn’t offer such.  This is a great stride since customers with less income find it more attractive and will be willing to board American Airlines flights. Also, the airline has an up-grade system. For example, top-tier executive platinum elites enjoy unlimited upgrades, especially when they are flying in North America.  Top-tier Executive Platinum elites receive four systemwide upgrades (SWU) (Steinberg). These upgrades can enable a passenger to upgrade on a flight to the next cabin of service. This makes it a desirable airline by many Americans. It is also possible to earn elite status t by using this airline. The airline requires one to earn 15000 elite qualifying Dollars (EQD) to earn top-tier executive platinum status. Through this, American Airlines is able to create customer loyalty and become more competitive.

American Airline Financial Plans

American Airlines aims at expanding its operations. The airline will begins services to Morocco in 2020. This could be a beginning for more connections to Africa. American airline will also add three weekly flights from DFW. These flights will allow many customers to make one stop instead of the previous two stops. The airline will have three destinations in Eastern Europe. This will include the first flight to KRK and a new service to BUD and PRG (Steinmetz). Also, the airline plans to increase the number of seats of its planes. The company has been increasing seats in the Boeing 737 fleet to 172 from 160. However, this stopped since these aircrafts were grounded. The success of these initiatives will make American Airlines accommodate more customers, which will translate to higher financial returns.

In conclusion, American Airlines is doing well financially. This is reflected in the recent financial report, which has recorded significant growth in its revenues.  This shows the airline is becoming competitive and hence attracts more customers than before. The company has plans which could make it remain competitive. For instance, it has introduced a plan which will make passengers of the lowest fare class have free carry-on bags. The airline also has an upgrade system that can make a passenger move to the next cabin of service. Despite these plans, which could have made it more profitable, the airline was affected by the grounding of   Boeing 737 MAX, which made it cancel several flights. The airline aims at expanding its operations to  Morocco, add three weekly flights from DFW and have three destinations in Eastern Europe.