American to grow international, premium business post-Chapter 11

I don't think this will work. I doubt AA can generate 1 Billion in new revenue with an out-of-date First Class product, soon to be reduced AA domestic flights and heavily de-moralized employees. Focusing on International traffic is a repeat of the 1970's "Pan American" strategy of grabbing for higher yielding international traffic, while cutting USA domestic feed. That didn't work for Pan Am then, & I would be amazed of it works for AA now.

What about Cathay Pacific, American should also try to develop closer ties with Cathay, they could teach AA a thing or two about how to grow its international market share by providing first rate service and a superior on-board product.

Hello, this is exactly what DL did (they transferred ALL their 767-400 from domestic to int'l, remember), this is what UA did with the merge with CO (and on its own expanding to Africa and Middle East) and even US has invested much more in int'l expansion by cutting LAS, PHX and other loss-making domestic connections and added capacity (sometimes seasonal) on the int'l flights...what one may ask if it is not too late for AA or if the int'l environment is receptive to this (fuel prices, crisis, etc). So, YES, it works - is the moment right - WHO KNOWS?

Agree with Kevin and Hubby.

In addition, AA is a member of the weakest alliance, OneWorld, with three carriers involved in bankruptcies (AA, Japan Airlines and Malev), and one permanently gone (Malev), ongoing labor issues at Quantas and Cathay, I think the international business traveller will choose a larger alliance as SkyTeam or Star, with better coverage and more memeber airlines. In addition, AA will compete against carriers on international flights and markets that invest in state-of-the-art aircraft (A380s, 747-8s, 787s etc.), that flies today and not in five years time.

If re-vamped and approached well,I think it could work. This is exactly the strategy B.A. has had now right through all the troubled recent years (from September 11) and it has not only kept their heads above water,but has made them a strong and profitable company. Get the service right with the right attitude and AA can come back. It is interesting to note the apparent demise of the low cost strategy in the U.S...at least judging by the high level of airfares now. PanAm's problems started and finished with Juan Tripp's retirement so I don't think the analogy holds up.

Just on the issue of premium customers I am amazed that a premium airline flying maybe 737-7 or A319's with circa 80 seats on the main city business routes has not taken off in the States! Something like the Bombardier C Series would also be an ideal aircraft with 2 abreast seating and a circa 36" pitch.

AA is proud that their soon to be delivered B-777-300s will offer over 150 channels of entertainment. They should be congratulated that they have finally made it up to 1995 technology! Airlines (EK specifically) have been offering almost 1,000 channels of entertainment for several years. More important is the crack management group that took AA into bankruptcy is the same group that put 140 degree recline seats into Business class and claimed it was "Lie Flat" when the competition had true "Lie Flat" in their J and F classes.... They are still fooling themselves and 1995 was 17 years ago!

You are an embarrassment...there's no U in Qantas because it stands for:
Queensland
And
Northern
Territories
Air
Service

From my experience on the inside at the late Braniff I know that the suits who run airlines fly in first class and get spoiled by the level of service. They put the focus on the first class and forget about the people in steerage who just want to get from one place to another on a reliable schedule and at a reasonable price and don't care about the flaming desserts and a floor show in the aisle. This is why Southwest is a license to print money. Learn from this.

There are a lot of comments in the posts above that the plan to focus on higher yield passengers is bound for failure and AA wont be able to compete against the other majors. Well I think it depends how you spell compete. If you spell it as to being the world biggest airline again, then yes, I agree. But if it means to compete to be a financially successfull airline, then it could very well be the first step to successfull recovery. It's a long shot but go for it!

I have three biases in the AA proceeding: (a) one it was a completely unnecessary bankruptcy, but now that the pin has been pulled on the hand grenade, it will take its course through the courts with a handful of lawyers and a few "managers" making a score; (b) a good many of my friends at AA are pilots, who have been bigger promoters of the airline than any gate agent, flight attendant, and certainly any "manager" I have met since Bob Crandall retired; and (c) I am one of those passengers that "Premium" pricing is going to continue to gouge in favor of some guy going to Montego Bay on a 2 week advance purchase ticket when I did not know I needed to be in Dallas or Santiago until the day before yesterday, and I will have to sit in a middle seat because all the aisle seats were hogged by the low yield passenger, who was luckier in the "AA Pricing Lottery" than me. Contracting the airline has proved not to be the answer as the revenue decline is always faster than the drop in costs. One does not deal with an engine failure 100 feet off the runway by dialing in the flaps and trying to land, but rather one climbs out on all available remaining power. And when you are 25% of the US industry, you climb out to 30-35%, and not shrink to 15-20%. The rest of it -- high fuel costs, high labor costs is rhetoric as is the $1 billion in new revenue -- that figure barely represents a 5% of yield improvement on the existing $18 billion of sales, which was easily achieved by a senior "manager" knowing what the relatively low-level guys running the "AA Pricing Lottery" were doing other than "matching," if they even knew where the guys were located inside HQ.

Let me say that for me it's impossible to take the least bit of delight in seeing any of the founding airlines fail -- Pan Am, TWA, American, etc.

Few thoughts: WN has by far the highest labor costs in the business. And as much as it tries to complicate its wonderfully simple business model by fiddling with its “Business Select” product or making its frequent flier program more annoying to use, it really has no premium product at all and probably won't ever go long-haul. At the other extreme end of the spectrum you have Singapore and Emirates who have the government’s checkbook at their disposal and publish dubious financials, so unless you want state-owned airlines in the United States, we will never be able to invest on the free market at the level of these state-run carriers do.

Several posters have compared AA to BA, which is problematic. BA dominates LHR and MAN is a distant second to London for all the premium int'l traffic that has transited though slot-controlled LHR practically since the days of the Empire. AA dominates only two of the five cornerstone markets and requires far more domestic feed for its international routes to work than does BA. BA is set up so well at LHR and is so protected in this market that to extrapolate their experience on AMR is not useful.

I think what AMR needs is a radical and creative and ruthless leader who thinks BIG. Another Crandall, a Jack Welch, a Steve Jobs, indeed, a Genghis Khan. Not an introverted finance talent content with tweaking the status quo; a leader to smash the status quo, hit ‘reset’ with the unions and do a merger or some other outrageous thing to leapfrog the competition and then figure out how to thrill customers again (former-AAer David Cush -- along with Virgin's mighty backing -- has the most exciting product in the domestic skies; his marketing people in SF are simply genius, having created a compelling brand and thrilling product practically overnight).

Good luck AA – ask yourselves what would C.R. Smith do.

FROM WHAT I READ ABOVE ON AA
They should acqiire an airplane,
that has the premier service for
psgrs. To acuire 100% Rev load
factor, GO COMBI 7478M Ernesto

Pan Am didn't have any domestic feed for their international routes. At least AA has a sizable domestic structure to feed into the international expansion. DAL & United,Continental recently have become profitable on international expansion. I think AA is just copying a page out of their business plans. Admittedly they (UAL & DAL)conceded domestic routes to SWA in my opinion.

It has been tried many times but the companies were under capitalized.

AA Dallas market share is twice that of BA at Heathrow, and Dallas is about the same. Yes LHR benefits from established historical routes ,but its a competitive market with Virgin Atlantic cherry picking the high capacity routes.
If OneWorld keeps its eye on the ball, the CX an BA model will work for all members. There are always people that can do something cheaper, but delivering quality is much more difficult.