AAG company analysis
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School
University of Management & Technology, Lahore**We aren't endorsed by this school
Course
BUSINESS MGT 245
Subject
Management
Date
Dec 30, 2024
Pages
7
Uploaded by CountIron15882
Company Analysis: American Airlines GroupINTRODUCTION TO MANAGEMENTZAYED UNIVERSITYName: Student ID: Instructor: Course: Section:
Table of ContentsIntroduction and History....................................................................................................................2SWOT analysis....................................................................................................................................2Ways to create a competitive advantage strategy..............................................................................4References............................................................................................................................................6Page 1of 7
Introduction and HistoryAmerican Airlines group Inc. is a publicly traded airline holding company headquartered inFort Worth, Texas, America. It was founded on 9thDecember, 2013, by the union of AMRCorporation, which is the parent company of American Airlines, and US Airways Group (theparent company of US Airways). It is one the largest airlines in the world, which is declaredas the ‘Airline of the Year’ by Air Transport World (ATW), back in 2017. According to thenumber of passengers carried, the size of the fleet, and the scheduled passenger kilometersflown, the group runs the largest airline in the world. Based on its 2019 sales, the companywas placed No. 70 on the Fortune 500 list of the largest American corporations, but afterbeing affected by the COVID-19 epidemic, it lost $2.2 billion in just the first quarter of 2020and requested government assistance. According to reports, American Airlines is reducingthe size of its aircraft. They offer almost 6,700 flights to 350 destinations in 50 countriesdaily. Also, they are a creation member of the “oneworld alliance”, and their members andmembers-elect offers around 14,250 flights daily to 1,000 destinations in 150 countries. In2016, American Airlines Group got top position in Fortune magazine’s list in one of the bestbusiness shifts and its stocks joined the S&P 500 index.SWOT analysisAn organization can discover internal elements, such as strengths and weaknesses, as well asexternal factors, such as opportunities and threats, by using the SWOT Analysis framework. StrengthsWide range of flights over 250 destinations with a great fleet size of 600 carriers.Page 2of 7
Excellent Performance in New Areas: American Airlines Group Inc. has developedcompetence in entering and succeeding in new markets. The company's expansion hashelped it develop new revenue streams.Automation: American Airlines Group Inc.'s products now have a consistent level ofquality thanks to automation, which also allows the business to scale up and stand inresponse to market demand.Reliable suppliers: Reliable raw material suppliers give the organization a strongfoundation from which to overcome any supply chain constraints. High customer satisfaction: The business, with its devoted customer relationshipmanagement department, has been able to attain a high degree of customer happinessamong current customers and good brand equity among potential customers.Product innovation: American Airlines Group Inc. has a successful track record ofcreating new products.Strong distribution network: American Airlines Group Inc. has developed adependable distribution network over the years.Strong trading community: It has created a culture where the traders don't justadvertise the company's products but they also spend money on training the sales staffto show the customer how to get the most out of the products.WeaknessesLosing out market share to LCCs and other competitors. Financial planning is not carried out effectively and correctly. The corporation can spend thecash more effectively than it is currently doing, according to the current asset ratio and liquidasset ratio.Page 3of 7
The organization's structure only works with the current business model, which prevents itfrom expanding into related product sectors.Lack of accurate forecasting of product demand causes more missed chances than its rivals.Because American Airlines Group Inc. struggles with demand forecasting, it ends upmaintaining more inventory both internally and externally. American Airlines Group Inc.'s profitability ratio and Net Contribution% are below the sectoraverage.OpportunitiesThe American Airlines Group Inc. may be able to enter new markets as a result of new trendsin customer behavior. It offers the company a fantastic opportunity to create new revenuestreams and diversify into other product categories.Less inflation - Less inflation makes the market more stable and makes it possible forAmerican Airlines Group Inc.'s clients to obtain loans at lower interest rates.The adoption of new technology standards and a government free trade agreement have givenAmerican Airlines Group Inc. the chance to enter a new emerging market. This has resultedin the opening up of new markets.The growth of the market will erode competitors' advantages and boost American AirlinesGroup Inc.'s competitiveness in comparison to its rivals.ThreatsIncrease in fuel cost: The high transportation cost due to the increase in fuel prices afterCOVID-19 is a major threat to the Airline.Page 4of 7
Increase in labor cost: due to increase in prices of everything labor costs also increasesand profit margin decreases. COVID-19: COVID-19 is the greatest threat for all companies and organizations, flightswere stopped for almost 1 year and airline had a great loss and also profit decreases.Competitors: Competitors are always a biggest threat for any organization. The majorcompetitors of AAG Inc. are United Airlines, Delta Airlines and Northwest Airlines.Ways to create a competitive advantage strategyThe first strategy suits the company and assumes that the industry structure already exists.Building a defense against the competitive force or securing a position in the sector where theforce is weakest can be seen as strengths and weaknesses to a company's competitiveadvantage. Knowing the capabilities of the airline business and, of course, the competitiveforce, will highlight the areas where the sector should engage in competition and those whereit should avoid it. A corporation might develop a strategy that goes on the offensive whenaddressing the industry force that drives industry competition. This posture aims to changethe forces' causes rather than merely coping with the forces themselves. The cost ofinnovation in the airline industry market may increase brand recognition.American Airlines Group strives to provide passengers with the utmost comfort and security,proper treatment of their possessions, first-rate services, and a competitive advantage witheye-catching offers. The business has differentiated its offerings from those of its rivals byfiguring out ways to ensure the best advantages, simple booking, and an exceptionalexperience. Because American Airlines competes on service, it has developed the largest fleetsize, websites, social media platforms, and online booking capabilities. It has achieved a topposition in the sector thanks to the preference of a large number of clients.Page 5of 7
References1.Airline Competitive Advantage. (2018, August 1). Retrieved from UK Essays: https://www.ukessays.com/essays/management/strategic-thinking-in-the-airline-industry-management-essay.php2.Group, A. A. (2020, December). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/American_Airlines_Group3.History of American Airlines. (2016, june 27). Retrieved from American Airlines: https://www.aa.com/i18n/customer-service/about-us/history-of-american-airlines.jsp4.Horton, W. (2020, june 28). Why American Airlines Is Growing Twice As Fast As Delta And United. Retrieved from Forbes: https://www.forbes.com/sites/willhorton1/2020/06/28/why-american-airlines-is-growing-twice-as-fast-as-delta-and-united/5.Minda, M. (2022). Swot Analysis of American Airlines 2022. Retrieved from Digiaide: https://digiaide.com/swot-analysis-of-american-airlines/6.Team, M. S. (2020, April 12). American Airlines SWOT Analysis, Competitors & USP. Retrieved from MBA Skool: https://www.mbaskool.com/brandguide/airlines/4269-american-airlines.htmlPage 6of 7