Not long ago American’s CEO Doug Parker had the temerity to say that it would never happen again. Indeed American was so big and so powerful it would never make a loss – ever.
With its share price tanking – it’s lost 42% of its value in three months, fuel prices surging and demand dropping with costs mounting, the airline is set to post industry wide, the worst figures of any US airline by a sharp mile. Profits are not what drives stock values most of the time, however, it’s the potential to make money on stock transactions that drives those, and American isn’t doing well on that front.
United is doing well, Delta too. JetBlue posted good profits only yesterday. United’s share price is up 22% at the same time as American is down.
American seems to be suffering from a product and perception problem. It’s new Max-8 and refitted interiors are not customer friendly and the public seem very aware of it- far more than is usual.
The perception is that one bad product sector applies to the airline as a whole, and despite more fliers, the airline isn’t making money out of those passengers in the same way United and Delta are.
Indeed the Delta figures show an extraordinary growth in demand for premium seating – the very thing that American is in effect not seemingly offering, and that customers perceive it doesn’t have because of the poor standard of its low-end product.
Tiny seats and impossibly small toilets nobody can get in to are scaring premium paying passengers away.
Parker has also not helped by first saying he couldn’t see a problem, then admitting he’d never been in the seats, then flying in the seats and saying nothing especially complimentary – indeed some people didn’t even believe he’d been in them at all.
If the man in charge fails to see the problem, or does and still doesn’t see why something needs to be done to fix it, what’s the point of him being there?
There seems to be an attitude that given no choice you’ll use what’s on offer and get used to it. But we do have a choice and we don’t have to get used to it. A lesson even the worlds largest airline needs to re-learn pretty quickly if it’s to sell seats and make real money like Delta and United, and make its stock worth buying.