American Airlines CEO Robert Isom had some good news this week about American’s earnings call. Let’s let him speak in his own words here:
The big news is this. We are very pleased to report a quarterly profit for the first time since the start of the pandemic, which is two and a half years, driven by strong demand and the hard work of our team.
“Gain.” It’s a very important part of their “why are we even running a business?” comparison.
And I admit, at the start of the pandemic I wasn’t sure if we’d get through on the other side (assuming we’re on the other side) as a country that still had at least four major airlines (and a bunch of smaller ones). .)
So congratulations are in order. But American Airlines — and yes, all airlines — also face a summer of immense challenges and struggles.
Canceled flights. Pilot shortages. A redistribution of demand, as the major corporate accounts that once bought non-stop flights (pun intended) for their employees have been scaled back, leading to a change in the customer base of airlines themselves.
Still, I wasn’t prepared for five other pressures Isom explained on the faces of American Airlines. To be precise, four out of five were surprises; the last one was pretty obvious.
[T]not a day goes by that we don’t have problems providing pillows, blankets, plastic cups and food on our plane. At various times we have problems with refueling. It’s just — the concessionaires at the airport.
It’s just a bunch of things that have to — all of which have to come together to get a plane in the air. And yes, the aircraft parts supply chain is something that we are closely monitoring. But all those other things really make us dependent on so many other parts of the system.
You know that old saying, “For want of a nail the shoe was lost; for want of a shoe the horse was lost,” and it goes all the way to a war or a kingdom that is lost?
Isom spoke here in response to a question from aviation reporter Mary Schlangenstein, and his response got me thinking: both about how to make air travel more comfortable, if you can get back to doing a lot, and also about opportunities.
Let’s start with the “pillows, blankets, plastic cups, [and] food”, which are more or less comfort items for the customer. I suppose the solution for passengers is clear: if you are on a plane in 2022, bring your own food along with comfort items such as blankets and an inflatable pillow. What As for “refueling,” this one is harder to miss.As I wrote earlier this month, American Airlines, Delta Air Lines, and United Airlines are currently at a potentially major disadvantage compared to their more quirky-modeled competitor Southwest Airlines on this front.
Why? Because Southwest has been trading and hedging fuel prices for years, while American, Delta and United gave up on the idea in the mid-2010s. As a result, American paid an estimated $3.92 to $3.97 for a gallon of fuel earlier this year, while Southwest paid just $3.30 to $3.40.
Long-time readers will know that I think almost everyone in any industry should follow the airlines. What other major commodities industry has so many publicly traded players whose smallest moves are followed by an army of analysts and reporters?
(I asked American Airlines if they wanted to respond further, but got no response.)
Still, as I write in my free ebook, Flying Business Class: 12 Rules for Leaders From US Airlines, the industry offers a non-stop parade of business school case studies that can help you overcome challenges in your business.
Today’s lesson? Profits matter most, but unforeseen problems can lurk around every corner.
I mean, “Pillows, blankets and plastic cups?” I didn’t see it coming.
The opinions expressed here by Inc.com columnists are their own, not Inc.com’s.
This post American Airlines: We Make Money, But We Can’t Find Enough Of These 5 Things
was original published at “https://www.inc.com/bill-murphy-jr/american-airlines-were-making-money-but-we-cant-find-enough-of-these-5-things.html”