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American Airlines’ Management Principles

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American Airlines’ Management Principles
Table of Contents
  1. American Airlines – Background
  2. Four Functions of Management: Leading
  3. SWOT
  4. Core Problems

American Airlines – Background

American Airlines is one of the largest airlines in the world, which was founded in 1926. The main location of headquarters is in Fort Worth, Texas, and the chief executive officer is Doug Parker. There are currently 133700 employees working at all of the sites of the airline (“American Airlines Group (AAL),” 2020). The company is a leader in the transportation industry, and its sales at $43.7 billion despite the global pandemic (American Airlines Group (AAL),” 2020).

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Four Functions of Management: Leading

One should be aware that there are four primary functions of management, which are leading, controlling, operating, and planning. The first function of management is leading, and the leadership of American Airlines is comprised of the Board of Directors and Leadership Team (“Corporate structure,” 2020). The president of the company is Robert D. Isom, and the leadership style used within the airline is democratic. According to the CEO: “the way to succeed in business is not by being cutthroat or heartless, but rather by building strong personal relationships because business is the ultimate team sport” (Moreno, 2016, para. 1). Therefore, the top management utilizes communication and trust as the key ingredients for effective leading.

The second function of management is controlling, which is an evaluation of the current performance through measurements. It also includes adjustments, which can further be categorized into staff adjustments and budget adjustments. In the case of American Airlines, Robert Isom, President, oversee operations and pricing, whereas Derek Kerr, CFO, controls budgeting (“Corporate structure,” 2020). Even though employees have already shown themselves to be the best examples of work, the manager should not lose his vigilance. Even the most responsible employees can start to lose focus or start doing the wrong thing. Therefore, one needs to control employees and adjust their work, and this applies to all processes that matter to the company.

The third function of management is operating, which is also referred to as organizing. At American Airlines, Robert Isom, President, is the one who manages operating tasks and processes (“Corporate structure,” 2020). The given aspect involves delegating the general functional responsibilities and distributing the essential resources of the company. Having passed the team valuable instructions, but not providing them with all the necessary resources, it is foolish to expect them to solve the task at hand. Therefore, one needs to fully give everything that may be required for productive work. For example, if the office has uncomfortable chairs or sluggish computers, the employee will struggle with these problems instead of focusing on their core task.

The fourth function of management is planning, which can be considered one of the key initial steps. This aspect is comprised of operational planning, tactical planning, and strategic planning. CEO of American Airlines is directly involved in any planning procedures, and it is especially true in the case of a strategic one. The planning function consists of deciding what the organization’s goals should be and what its participants should do to achieve these goals. Planning includes the fact that a comprehensive analysis of the current situation in which the company is located is carried out. The specification of the established goals of the organization’s activities is ensured and bringing them to individual structural links and performers.

SWOT

The main strength of American Airlines is its large size, which makes it more resilient to high-stress situations, such as coronavirus pandemics. In addition, the airline deploys effective loyalty programs, such as AAdvantage, which incentivizes to use of only American Airlines’ services. The company possesses a solid reputation within the industry, and the public mostly trusts the airline. Its financial position is strong, which is partly associated with its size. NAACP discouraged people from using the company’s services due to suspected discrimination, but one should note that there is no evidence and high level of controversy, as in the case of United Airlines (NAACP, 2017). In addition, the airline experiences technical issues regarding scheduling.

In the case of opportunities, American Airlines can aggressively expand and increase routes by properly entering the market after the lockdown. The vast majority of airlines are either weakened or eliminated from the market, which is why the company can use the situation for its advantage. Its size and strong financial position can allow it to re-enter both domestic and international arenas with an intention for expansion through acquisitions and branching. However, the main threat is COVID-19 because the lack of vaccines or delays due to certifications will mean that there can always be more waves of infections. The readiness of governments for lockdowns makes American Airlines’ operations unstable and risky. Large size imposes increased maintenance and fixed costs, which can flip the current situation of the airline from the positive to the negative side.

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Core Problems

In regards to the core problems, the largest one is COVID-19 because it is both an outside threat and an internal issue. The presence of the virus makes any attempt for operations require testing and additional precautions. Although American Airlines conducts pre-flight testing, one misstep or failure of the testing system itself can lead to more spread of the virus as well as damage the reputation of the airline. Another core problem of American Airlines is its reluctant approach to innovations and novelties within the industry, which makes it slow for improvements (Sumers, 2019). Lastly, the airline has major problems with the customer satisfaction aspect of its operations.

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