It's their employees sir...yes, you know.....them!!!!
February 6, 2004
American's CEO Says Airline Is Learning from Southwest
By Eric Torbenson, The Dallas Morning News
Feb. 6--NEW YORK -- American Airlines Inc.'s chief executive, Gerard Arpey, praised rival Southwest Airlines Co. Thursday, saying his company's new thinking emulates what Southwest has done for years.
"One of the reasons Southwest is so successful and has such high customer service ratings is that they promise a product that is very simple and deliver on that promise very consistently," Mr. Arpey said. "It's a better paradigm ... and that's where we need to move."
Mr. Arpey's comments to analysts at a Wall Street conference represent another significant change in the corporate mindset of the world's largest airline.
Southwest has been profitable for three decades by using one plane type and offering a no-frills point-to-point schedule.
American's system has been far more complex. Just a few years ago, American flew 14 types of planes with 35 configurations, Mr. Arpey said, as part of a strategy to put the right planes in the right markets to bring in the most revenue.
But complexity came at a high cost. As business travelers have grown more cost conscious, discount carriers such as Dallas-based Southwest have gained momentum. In response, American has been simplifying its operations since 2002 by cutting the number of types of aircraft it flies, streamlining its schedule and scrutinizing its processes to squeeze savings.
By September, American will have just 5 types of aircraft, Mr. Arpey said. The carrier would move faster to simplify its fleet if the task weren't so expensive, he said.
"The more complex your operation is, the more chances you have in disappointing your customers," Mr. Arpey said at the morning conference, sponsored by Goldman Sachs.
The Fort Worth-based carrier continues to rethink how it sells itself to customers, Mr. Arpey said, but wants to be sure it has services to offer that fliers will pay more for. American has no plans to drop its first class cabin, for example, because its best customers value the extra legroom and other services, he said.
American will use its frequent flier program to drive more revenue, but Mr. Arpey said he thinks the program's mileage bonuses and incentives are a bit "too liberal." He said he hopes that a strengthening economy and airline industry will let the airline "tighten them up a bit."
The good news is that American's financial recovery continues to take shape. American hopes its costs per seat mile flown, a standard unit of measure for airlines, will be 17 percent lower in the current quarter than in the first three months of 2003, Mr. Arpey said.
"We must keep pedaling as hard as we can," he said.
Some factors are making American's recovery more of an uphill ride. Health care costs for current and retired American employees run as much as $350 million annually. Competitors and newly created airlines such as JetBlue Airways Corp. have little or no expense for retirees, Mr. Arpey said.
Stubbornly high fuel prices will continue to eat into American's bottom line. The carrier has used financial markets to hedge some of its fuel needs for the current quarter, but it has significantly less fuel pre-purchased at lower prices for the rest of the year.
Still, analysts have generally cheered American's overall job of reducing expenses, which are now lower than at Houston-based Continental Airlines Inc.
With leaner costs, American can now flex its muscle against both its traditional foes and the surging low-cost carriers.
"If we face carriers such as JetBlue that come into our markets, we can defend them with all the tools available to us," Mr. Arpey said.
But analysts are concerned that when American and JetBlue compete on a particular route, JetBlue is winning customers in part because it has satellite television in each of its seats. JetBlue offers no first class service or meals.
American has studied adding such systems to its fleet of more than 700 planes, Mr. Arpey said. But for now, it's focused on adding power ports on its planes to let travelers use their computers for work or for watching movies.
"You really have to ask yourself how much we are going to spend on that kind of technology on the airplane when people are bringing it on themselves," he said.
February 6, 2004
American's CEO Says Airline Is Learning from Southwest
By Eric Torbenson, The Dallas Morning News
Feb. 6--NEW YORK -- American Airlines Inc.'s chief executive, Gerard Arpey, praised rival Southwest Airlines Co. Thursday, saying his company's new thinking emulates what Southwest has done for years.
"One of the reasons Southwest is so successful and has such high customer service ratings is that they promise a product that is very simple and deliver on that promise very consistently," Mr. Arpey said. "It's a better paradigm ... and that's where we need to move."
Mr. Arpey's comments to analysts at a Wall Street conference represent another significant change in the corporate mindset of the world's largest airline.
Southwest has been profitable for three decades by using one plane type and offering a no-frills point-to-point schedule.
American's system has been far more complex. Just a few years ago, American flew 14 types of planes with 35 configurations, Mr. Arpey said, as part of a strategy to put the right planes in the right markets to bring in the most revenue.
But complexity came at a high cost. As business travelers have grown more cost conscious, discount carriers such as Dallas-based Southwest have gained momentum. In response, American has been simplifying its operations since 2002 by cutting the number of types of aircraft it flies, streamlining its schedule and scrutinizing its processes to squeeze savings.
By September, American will have just 5 types of aircraft, Mr. Arpey said. The carrier would move faster to simplify its fleet if the task weren't so expensive, he said.
"The more complex your operation is, the more chances you have in disappointing your customers," Mr. Arpey said at the morning conference, sponsored by Goldman Sachs.
The Fort Worth-based carrier continues to rethink how it sells itself to customers, Mr. Arpey said, but wants to be sure it has services to offer that fliers will pay more for. American has no plans to drop its first class cabin, for example, because its best customers value the extra legroom and other services, he said.
American will use its frequent flier program to drive more revenue, but Mr. Arpey said he thinks the program's mileage bonuses and incentives are a bit "too liberal." He said he hopes that a strengthening economy and airline industry will let the airline "tighten them up a bit."
The good news is that American's financial recovery continues to take shape. American hopes its costs per seat mile flown, a standard unit of measure for airlines, will be 17 percent lower in the current quarter than in the first three months of 2003, Mr. Arpey said.
"We must keep pedaling as hard as we can," he said.
Some factors are making American's recovery more of an uphill ride. Health care costs for current and retired American employees run as much as $350 million annually. Competitors and newly created airlines such as JetBlue Airways Corp. have little or no expense for retirees, Mr. Arpey said.
Stubbornly high fuel prices will continue to eat into American's bottom line. The carrier has used financial markets to hedge some of its fuel needs for the current quarter, but it has significantly less fuel pre-purchased at lower prices for the rest of the year.
Still, analysts have generally cheered American's overall job of reducing expenses, which are now lower than at Houston-based Continental Airlines Inc.
With leaner costs, American can now flex its muscle against both its traditional foes and the surging low-cost carriers.
"If we face carriers such as JetBlue that come into our markets, we can defend them with all the tools available to us," Mr. Arpey said.
But analysts are concerned that when American and JetBlue compete on a particular route, JetBlue is winning customers in part because it has satellite television in each of its seats. JetBlue offers no first class service or meals.
American has studied adding such systems to its fleet of more than 700 planes, Mr. Arpey said. But for now, it's focused on adding power ports on its planes to let travelers use their computers for work or for watching movies.
"You really have to ask yourself how much we are going to spend on that kind of technology on the airplane when people are bringing it on themselves," he said.
WHEN?!?!?!?!?!?!? NO MORE A300???????????????????? WOW!
