SWOT Analysis of American Airlines

Introduction 

Swot analysis of American Airlines. American Airlines is the world’s largest passenger carrier US airlines. American Airlines came into existence in 1930 by the merger of 8 smaller airlines and became operational on June 25, 1936. The headquarter of the company is in Fort Worth, Texas, USA.

American Airlines Group Inc. is a parent company of American Airlines and it came to existence on December 09, 2013, by the merger of American Airlines and US Airways Group. Federal Aviation Administration issued the license on April 08, 2015.

According to an estimate, the annual revenue of American Airlines in March 2021 was 12.830 billion dollars, and it has decreased by 70.64%. Out of which, the net income of the company was -7.894 billion dollars, and it has declined by 966.76%. However, the airline has employed 102,700 employees to manage its worldwide operations.

American Airlines’ top competitors are Northwest Airlines, Delta Airlines, United Airlines, JetBlue Airways, Boeing, British Airways, Alaska Air Group, Air France KLM, and Sun Country Airlines.

Today, we’ll discuss the swot analysis of American Airlines. It’s going to analyze the internal and external factors impacting the world’s largest airline company. Here’s the swot analysis of Airlines as follows;

Strengths of American Airlines 

Global Destination

According to an estimate, American Airlines offers 117 international destinations and 234 domestic destinations in 59 countries across the globe by the end of April 2021. However, it falls one of the world’s largest airlines. The company deals with 500,000 passengers daily and 200 million annually as of 2019. The figure would have been much higher if it wasn’t for the worldwide lockdown and air travel ban due to covid-19.

Strong Brand Image

American Airlines has established a strong brand name over the years. It’s because of various reasons like providing personal devices, seatback screen, overhead screen, and much more. The usage of personal devices and entertainment increase the satisfaction level of customers. That’s why they the airline for travel over and over again.

Loyal Customers

American Airlines has offered many loyalty programs to retain customers. For instance, the passengers earn miles while traveling with AA, and they can use the total millage to buy the retail product, rent a car, hotel stay, or upgrade the flight cabin while traveling. They can also lend the total millage they have earned to someone else. It’s important to mention here that the total millage the time customers have spent on the flight.

Merger and Alliances

The alliance between American Airlines and US Airways is the world’s 3rd largest alliance. AA had filed for bankruptcy in 2011. The merger and alliance with US Airways in 2013 saved the airline from disaster. But the merger kept the brand name “American Airlines” because it had a better and strong brand reputation.

Market Leader

According to an estimate, the market share of American Airlines in 2020 was 19.3% in the US market. It was highest and Southwest Airlines was at the 2nd position with the market share of 17.4%. The high market share provides the airline a leading role in the domestic market.

Brand Value

According to an estimate by Forbes, American Airlines ranked at the 967th position of the Global 2000 companies in 2020. However, AA ranked at the 70th position of Fortune 500 list of 2020.

Weaknesses of American Airlines 

Tech Issues

American Airlines has faced some tech issues regarding the pilot scheduling system in 2017/2018; where the company’s computer system used to accept the pilot request of any pilot who applies for it. However, it caused a lot of tension between the Allied Pilot Association and the airlines.

Discrimination

According to a report by NAACP published in 2017 claiming that the African American passengers could face disrespectful attitude while flying with American Airlines. The report was following the several incidents of discrimination that passengers have experienced. It had a very bad impact on the brand image of AA.

Financial Decline

American Airlines’ annual revenue and net income have dropped during the pandemic years of 2020. Comparatively, it was the same in the entire air industry. But the company’s position is more fragile considering the recent merger.

Opportunities available to American Airlines 

Expansion

American Airlines should expand its market by adding more destinations and countries to its list. Things would get better economically after the pandemic in the next few years. The tourism industry would accelerate once things go back to normal. Therefore, AA should expand and be ready for the opportunity to cash it in.

HDTV

The high definition television trend is growing for the past few years. American airlines should add it in its entertainment section. It would further increase the customers’ satisfaction level and attract more people.

Threats American Airlines has to face 

Air Travel Ban

The pandemic of covid-19 has caused the worldwide lockdown and air travel ban to avoid the spread of the virus. It shut down American Airlines for months, and that’s why the company’s annual revenue and net profit declined to a great extent. The future of the airline industry would be in great jeopardy if things remain uncertain.

Low Fare Airlines

There are many new airlines that offer air travel at a very lower fare. They have attracted a significant portion of the price-conscious customer market share. However, the economic recession and low buying power would further increase their growth.

Regulations

Many politicians and government officials are considering the vaccine passport. It means that the people who are vaccinated would travel and the remaining won’t. However, it has initiated a very heated debate on social media among pro-vaccination and anti-vaccination people. If it becomes mandatory, it would decrease the total number of travelers.

Conclusion: American Airlines Swot Analysis 

After an in-depth study of the swot analysis of American Airlines, we have realized that American Airlines is indeed one of the world’s largest airlines. The pandemic, vaccine passport, regulations, discrimination, and declining revenue are some of the main challenges. American Airlines should expand its destinations and lower the fare in order to attract more customers.