PRESENTATION

ON

STRATEGIC EVALUATION OF AMR CORPORATION

PREPARED FOR

Major General(Retired )Prof. Alauddin M A Wadud, BP

As a part of strategic management Course in Bangladesh University of management

PREPARED BY
Mozammel Haque Bhuiyan Syed Adnan Parvez Hossain Md. Abad Adward Sapan Dhaki Shafi Samiur Rahman --- Roll No. E1104041 --- Roll No. E1104042 --- Roll No. E1104043 --- Roll No. E1104050 --- Roll No. E1104044

Salauddin Wahid Adnan

Mohammad Shahidul Haque Talukdar Md. Wahid Murad

--- Roll No. E1104032

--- Roll No. E1104033 --- Roll No. E1104035

OBJECTIVES
Identify significant points of AMR corporations strategy Evaluate the companys performance in regards of different aspects Identifying the problems and success of the strategy Evaluate AMRs performance in regards of industry Recommendations for improving the strategy

PRESENTATION SEQUENCE
Introduction to AMR corporation

Strategies of AMR

Performance of AMR in 2011

Success and failures Comparison with competitors Recommendations

AMR CORPORATION
Formed in 1982

Own 2 mainline airlines and 3 regional airlines Headquarter at Fort worth, Texas Founding member of One World Alliance Operates American airlines and American Eagle

STRATEGIES OF AMR
Flight Plan 2020 Cornerstone Strategy

Reduction of consolidated seat capacity

Joint Business alliance Voluntary petition for Bankruptcy $3 billion cash flow enhancement

PERFORMANCE OF AMR IN 2011

$1.4 billion net loss

Revenue,Expense and Income

26000 24000 22000 20000 18000 2011 2010 Year 2009 in million $

Total operating revenue total operating Expense

PERFORMANCE OF AMR IN 2011(CONT.)

Revenue increased by $1.8 billion

Revenue break down

30000 25000 20000 15000 10000 5000 0 2011 2010 Year 2009 Other Revenue Cargo

million $

Regional Affiliates Passenger American Airlines passenger

PERFORMANCE OF AMR IN 2011(CONT.)

Operating expenses increased by $ 3.1 billion

26000 26000 24000 24000 22000 22000 20000 20000 18000 18000

Total operating Expense Total operating Cost

In million $ In million $

2011 2011

2010 2010 Year Year

2009 2009

PERFORMANCE OF AMR IN 2011(CONT.)

Fuel cost increased by $1.9 Billion

Fuel consumption and cost

10000 8000 6000 4000 2000 0 2011 2010 Year 2009 in million

Gallons Consumed Total Cost (in doller)

PERFORMANCE OF AMR IN 2011(CONT.)

Passenger load factor increased by only .1%

Passenger Load factor

82.5 82 81.5 81 80.5 80
2011 2010 Year 2009

Passenger Load factor

PERFORMANCE OF AMR IN 2011(CONT.)

Net revenue per available seat mile decreased by .61 cent to - 2.29 cents

Revenue And expense per available seat mile

20

cents

15 10 5 0 2009 2010 Year 2011

Passenger revenue yield per seat mile (cents

Operating expenses per available seat mile (cents)

SUCCESS AND FAILURES

Increase in the customer loyalty ,quality and base size Unable to cope up with fuel price rise

Unsuccessful Network Enhancement

Legal Disputes with GDS Companies Increasing Debts Increasing Pension Obligations Large competitors with more market share

COMPARISON WITH COMPETITORS(CONT.)

Net Revenue, expense and Income
40000 30000 In Million $ 20000 10000 0 -10000 AMR Delta UnIted Net revenue Net Expense Net Income

Airlines

COMPARISON WITH COMPETITORS(CONT.)

Fuel Consumption and Cost
14000 12000 10000 8000 6000 4000 2000 0 AMR Delta Airlines UnIted

In Million $

Fuel consumption in gallon Fuel Cost in doller

COMPARISON WITH COMPETITORS(CONT.)

83 40000 82.8 In Million $ % 82.6 30000 82.4 20000 82.2

passenger load factor Net Revenue, expense and Income

82 10000 81.8 0 81.6

-10000

Net revenue Net Expense Net Income AMR AMR Delta Airlines Airlines Delta UnIted United

COMPARISON WITH COMPETITORS(CONT.)

17 17 16 16 15 15 14 14 13 13

operating expenses per available seat mile operating expenses per available seat mile

In cent In cent

AMR AMR

Delta Delta Airines Airines

United United

COMPARISON WITH COMPETITORS(CONT.)

Passenger revenue yield per available seat miles
13 12.5 in cents

12
11.5 11 AMR Delta Airlines United

COMPARISON WITH COMPETITORS(CONT.)

Increase load factor to match its competitors Decrease operating cost Increase revenue per available seat miles Increase market share through merger

RECOMMENDATIONS
Increase the passenger load factor Increase the fare to match the oil price Increase its global presence Look for a merger partner

RECOMMENDATIONS
Consider salary cut Reevaluate the cornerstone strategy Implement enhanced load capacity strategy for regional carrier

Add new high profit routes

Thank you