American laid out their strategic objectives for 2019 to employees. (.pdf) It breaks down goals into financial performance, employees, and customers.
American expects $1 billion in incremental revenue from:
- Product segmentation (basic economy, premium economy)
- Network enhancements (changes to flying, including through joint venture partners)
- Merchandising (post-purchase upsells)
They also expect to achieve $300 million in lower costs by ‘eliminating post-merger redundancies’. They plan to do this while holding cost growth excluding fuel and excluding raises in new labor deals to 2%.
Their joint ventures are of strategic importance, and plan to see approval of deals with Qantas and with Aer Lingus (as part of their transatlantic joint venture) in 2019 — but only make ‘progress’ on their deal with LATAM — while they expand their partnership with China Southern.
Employees and Culture
There’s naturally focus on culture which is about pay and benefits and safety but not about performance expectations. Delta’s similar employee document talks about industry-leading pay for industry leading performance, something which seems missing to me here.
For Halloween CEO Doug Parker was Boy George lip syncing Karma Chameleon with a giant chameleon running around in the background (he says ‘this is how we’re making culture a competitive advantage’)
Their primary customer goal, at least the one they list first, is operational reliability. Their goals,
- Exact On-time Departures (DO) 69.7%
- On-time aircraft turns (T0) 76.4% (turning around a plane that arrives after one flight and takes off for the next in the exact allotted time)
- Controllable completion 99.6% (not cancelling flights if they can help it)
For inflight product they plan:
- Finish installation of satellite wifi and live TV on 737s and A319/320/321s by end of June
- Finish installation of premium economy on international widebodies, Boeing 787-8s are left, and this is expected by end of June
- Seat power in 88% of planes by end of year.
- 32% completion installing bigger overhead bins by end of year. This comes along with the ‘Project Oasis’ retrofit of narrowbody aircraft squeezing more seats into the same space (not a customer-friendly initiative)
Bigger Overhead Bins Let Each Passenger Bring on One Bag Laid Sideways
They plan 15 more gates at Dallas Fort-Worth, 4 more in Charlotte, and closer collaboration with joint venture partners in 2019.
Finally they plan “customer-focused airport and world-class lounge construction and development at LGA, DFW, DCA, LAX, BOS and SFO on time and on budget” and to “[i]mprove Likelihood to Recommend scores to best in company history.”