Just as every business unit or product must follow particular business strategy to achieve competitive advantage, every corporation must decide how it plans to achieve growth by considering growth strategies, stability strategies, or retrenchment strategies. In response to global and domestic recession, AMR has aggressively cut capacity where possible in the domestic market. This was in response to decline in air traffic resulting from the effects of global and domestic recession. In addition, American Airlines has reduced flights where possible in multiple flight markets.
The current strategy of AMR Corporation relies on operational flexibility, international growth through selective network expansion and alliances, and domestic partnerships to help reduce balance sheet and operational risks (Horton, 2012). Differentiation of American’s market depends on emphasizing and meeting the needs of premium customers, particularly large global corporate, better align with the network of oneworld, and value proposition. In contrast to other U.S.-based competitors that focus on expanding their operations, American Airlines and American Eagle Airlines focuses on being the best in the industry and aim in achieving this by targeting high value corporate customers. American makes no changes to its current strategy by adopting stability strategies.
The firm’s primacy at New York JFK airport gives it a head start. For a very long time, JKF-London Heathrow is the number-one premium market in the world. Through partnership with British Airways, American Airlines and American Eagle Airlines operates in this route thirteen times a day. In addition, American airlines has recently retrenched approximately 5,000 employees in order to respond to the negative effects of the recent global recession and increase in oil prices (Horton, 2012). The firm also pursues retrenchment strategy by cutting costs on routes losing money and creating profitable routes.
References:
Horton, T. (Third Quarter 2012). Flagship News. American Airlines, 63, 3.
