Two sacred cows down, a few left to go... see bolded text below...
FOR RELEASE: Wednesday, May 21, 2003
AMERICAN AIRLINES CHARTS COURSE FOR BRIGHTER FUTURE
CEO Arpey Unveils Turnaround Plan at Annual Meeting
FORT WORTH, Texas – American Airlines, which has grown
to become the world’s largest airline, today unveiled
a plan to preserve its legacy of network strength,
providing customers with the services they value and
ensuring its long-term competitiveness.
With $4 billion in the process of being removed from
our cost structure, American Airlines is going to be a
leaner, stronger and more agile competitor, American
president and chief executive officer Gerard Arpey
told shareholders at the company’s annual meeting.
He used this year’s event, as the new CEO of the
airline, to unveil a four-pronged approach to
accelerating the company’s return to profitability.
American’s Turnaround Plan derives its strength from
four key principles:
- Lower costs to compete
- Fly smart by giving customers what they value
- Pull together, win together
- Build a financial foundation for American’s future
The airline’s leadership team wanted to crystallize
our strategic vision into a crisp, easy to understand
plan, Arpey said, that puts some context around all
of our activities and more importantly, to provide a
framework for the decisions we make going forward.
The $4 billion in cost savings serves as the
foundation of American’s Turnaround Plan, enabling the
carrier to compete more effectively in the new
aviation marketplace.
Arpey said that a number of initiatives – some large
in scale, some a little less grand – will be rolled
out as the airline puts the Turnaround Plan into
action.
Wasting no time, American announced two initiatives
designed to compete more effectively with low-cost
carriers and to more closely tailor American’s wide
range of premium services to the markets that value
them.
The first initiative falls under the first tenet of
the plan: Lower costs to compete.
Effective immediately, American is charging no more
than $299 for coach seats on nonstop flights between
New York’s JFK airport and selected California cities.
The $299 coach fare is the highest coach fare that
our customers are paying for tickets bought today on
nonstop flights from JFK to Long Beach, Orange County
and San Jose, Arpey said. What’s more, our first
class fare is now $599 on the nonstop flights.
He said the carrier is making it crystal clear that
customers can find both low fares and substantially
more service – first class seating, AAdvantage® miles,
Admirals Club® facilities, more flights at convenient
times and more connection opportunities – on American
Airlines.
New print advertising rolling out the $299 fare will
begin appearing tomorrow in the New York City
metropolitan area, the Los Angeles metropolitan area
and in California’s Bay Area. A television
advertising campaign will follow shortly.
These fares do not include applicable taxes, passenger
facility charges or other fees.
The second initiative flows directly from the second
tenet of the Turnaround Plan: Fly smart by giving
customers what they value.
American will also be reintroducing standard seating
to 23 percent of its fleet so that it can offer
competitive fares across more seats in leisure and
vacation markets. The new pitch will ultimately be
found on all of the carrier’s 140 Boeing 757 and 34
Airbus A300 aircraft.
We are still retaining our popular More Room
Throughout Coach product on more than 75 percent of
our fleet, which translates into approximately 80
percent of our daily departures, Arpey said. I also
want to be clear that we are not creating an
airline-within-an-airline because we don’t believe a
successful formula for that concept yet exists. We
are simply returning to standard seating in those
markets where customers tell us price – and seat
availability at low prices – is predominantly how they
choose a carrier.
The fleet reconfiguration will begin this fall, with
A300s to be finished in time for winter holiday travel
to the Caribbean in December. The Boeing 757s, which
fly a variety of markets in the U.S., will be finished
in mid-February 2004. The work will be done at the
carrier’s Tulsa maintenance base.
The third tenet of the plan – Pull together, win
together – has been a major focus of the new CEO
since day one. He has taken time, whenever possible,
to meet with employees, listen to their concerns and
answer their questions.
Today, Arpey thanked American employees for the
contributions they have made during the past two years
to help the airline survive and to enable this new
competitive spirit of compete versus retreat.
Despite our difficulties as a company, I am more
impressed than ever with the team we have, he told
shareholders. Our people have gone through a
tumultuous restructuring, and they demonstrate over
and over again how much they love this airline.
Arpey shared that an important part of our ‘pull
together, win together’ initiative will be making sure
– through the use of stock options, profit sharing and
incentive plans – that each member of the team has a
personal stake in the airline’s success.
American’s Turnaround Plan is being debuted to
employees across the network today through a series of
communications. Arpey and other senior officers will
be visiting employees around the system in the weeks
and months ahead to offer more insight into the
airline’s future.
The final tenet of the plan – Build a financial
foundation for our future – also provides a succinct
overview of its main goal.
By lowering costs, flying smart and pulling together,
we will be laying the groundwork for the future,
Arpey said. But it is also an acknowledgement that
we cannot build that future if we don’t generate
enough earnings and cash flow to restore our balance
sheet.
He pledged to shareholders, customers and employees
that the airline’s leadership team is committed to
dramatically improve the profitability of our
business and that goal will be at the forefront of
every decision we make.
American Airlines is the world’s largest carrier.
American, American Eagle and the AmericanConnection
regional carriers serve more than 250 cities in 41
countries and territories with approximately 4,300
daily flights. The combined network fleet numbers
more than 1,100 aircraft. American’s award-winning
Web site, AA.com, provides users with easy access to
check and book fares, plus personalized news,
information and travel offers. American Airlines is a
founding member of the oneworld alliance.
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GET A GREAT LOW FARE. AND A LOT MORE AIRLINE.
AMERICAN AIRLINES
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25 AM FWAAA wrote: 
