American Airlines Analysis

Introduction

AMR (Ameri tail assembly Airlines and its subsidiaries) is the United States largest airline, serving 150 destinations worldwide, with hubs in Dallas/Ft. Worth, Chicago (OH are), Miami, St. Louis, and San Juan, PR. Overall, AMR has the highest morsel of operating aircraft, full time employees, revenue passenger miles (RPM) and on tap(predicate) seat miles (ASM) in the industry. However, after September 11, 2001, bigger whitethorn not be better. Despite the rich history of American Airlines, the large fleet of operating aircraft and high number of nonpolar employees equate to higher hardened costs for American sex act to its competitors. In a market where fuel costs are extremely volatile and travelers expecting lower fares, it is extremely important to disengage a close belief at Americans cost coordinate as it relates to the potential environmental shocks that could face industry.

Operating Expenses

Examining AMRs operating expenses we can see that the airline business is an extremely capital and crusade intensive business. AMRs major categories of operating expenses are consistent with the industry. By far, the wages, salaries and other employee benefits category is the largest operating expense, followed by aircraft fuel.



Other expenses overwhelm other operating expenses, depreciation and amortization (which will be excluded from the cost analysis because it is not a cash expense in the current period), rental and landing fees, commissions, maintenance and repairs, aircraft rentals, and intellectual nourishment service (Exhibits 1, 2, 3). American Airlines overall cost structure leans more than heavily to fixed costs, some of which are committed fixed costs and others which are more discretionary in spirit (Exhibit 4). Fixed costs primarily consist of airplanes, maintenance, and wages, while unsettled costs come most notably from fuel.

A closer look at AMRs wages, salaries, and benefits shows that the company has the highest number of full time alike employees (FTE). The number...

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