Sunday, June 24, 2012

USAIRWAYS AND AMERICAN IN FACE OFF
After reading this article in the Wall Street Journal, it seems that the airline industry is always in trouble and seeking ways to avoid claiming Chapter 11 bankruptcy. Why is it that we keep finding ourselves reading articles of the airlines troubles? Why can’t these airline companies execute successful strategies?
The airline industry should take some lessons from I.B.M., as Steve Lohr writes in his article “Lessons in Longevity, From I.B.M.”. The company struggled to stay alive in the early 90’s because of pressure of lower-cost technology. The company restructured by revamping its products and services and let go of thousands of workers in order to cut costs. I.B.M. was able to rebuild and evolve past its challenges.  As stated in Steve Lohr’s article, industry experts stressed one piece of advice: “Don’t walk away from your past. Build on it. The crucial building blocks, they say, are skills, technology and marketing assets that can be transferred or modified to pursue new opportunities. Those are a company’s core assets, they say, far more so than any particular product or service.”
US Airways CEO, Doug Parker, is seeking to take control over American airlines because of its financial problems. The issue here is that the CEOs of US Airways (Doug Parker) and American (Tom Horton) are friends and now are in a feud over airline control. Battle between corporate executives is often the norm; however, in this case, the friendship ties between Parker and Horton are increasingly fading away.
Even Mr. Parker mentions in the Wall Street Journal article “We think we can build the best airline in the world. That is the vision. American has had that vision in the past. Unfortunately, it isn’t there right now.” Does American Airlines need to bite the bullet and forge an alliance with US Airways in order to maintain its longevity?
References:
1.      Lohr, Steve. “Lessons in Longevity, From I.B.M.”
2.      The Wall Street Journal. “Old Friends Face Off for AMR: US Airways CEO Guns for Control of American From Ex-Colleague; It’s Not a ‘Popularity Contest’.” 22 June 2012.

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