Watching American Airlines Under Rise in Fuel Costs
When the sudden rise in fuel costs after Hurricane Katrina pushed two more airlines off the business tightrope and into bankruptcy Wednesday, the immediate question for travel-dependent North Texas was about the effect on the two big local airlines
Of course, there's not much worry right now about Dallas-based Southwest Airlines and its 31,000-plus employees.
But American Airlines, the world's largest air carrier and the largest part of Fort Worth-based AMR Corp., with 25,000 employees in North Texas alone, is a different story. American is still struggling to get a grip on profitability, and any number of things could cause it to fall.
So does the fate of Delta and Northwest, joining United and U.S. Airways operating under bankruptcy protection, bode ill or well for American?
The best answer probably is that when you're on a tightrope, it doesn't matter a whole lot whether the wind is in your face or at your back. It's still an unsettling factor.
The best thing American has going is the working relationship forged with its employee groups in 2003.
After the Sept. 11, 2001, and a simultaneous economic recession sent the airline industry reeling, American saved itself from bankruptcy largely by persuading its unions to agree to $1.6 billion in concessions. There were also massive layoffs, difficult business cutbacks and new agreements forged with lenders, but the real turnaround was between management and labor.
American literally opened its books to union leaders, and together the company and its workers have figured out ways to keep the airline alive.
Bankruptcy is part of business, but it is still not an honorable part. There has been much hardship at American, but what the company and its employees have done is honorable.
Bankrupt airlines have been allowed to walk away from their pension obligations to thousands of employees. Their creditors have lost millions of dollars. Not so at American -- at least not so far.
Of course, that could change. Bankrupt airlines keep operating, and their ability to shed obligations means that they can cut costs. That can allow them to gain competitive advantage.
American must fuel hundreds of planes that must fly virtually all day long, every day. Price spikes hurt.
Add to that today's normal business challenges, such as ever-increasing costs of health care and other benefits. And include the vibrant competition from low-cost carriers.
The key to survival through all of this and whatever else might happen to American now and in the foreseeable future will be the ability of labor and management to pull the load together.
American's managers have to look out for the best interests of company shareholders. Labor leaders have to look out for the best interests of their members. Since 2003, the key people involved on both sides have seen common interests and acted on them.
If those interests diverge before some sort of miraculous turnaround in the sorry state of the airline industry, that's when American will be in ultimate danger of falling.
Prefer to remain optimistic? Look at what the company has done already.
News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.