Makeover needed: American Airlines


This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

This summer I had the misfortune of flying AMR Corp.'s (NYSE: AMR) American Airlines. In my experience, it ranks near the top in its expression of contempt for its customers. As I wrote in my book Value Leadership, it is almost the opposite of Southwest Airlines (NYSE: LUV), which has tarnished its flawless image with its first quarterly loss in 17 years due to a $247 million charge resulting from a jet fuel hedge gone sour. But to give American Airlines a makeover, it would be wise to borrow selectively from what makes Southwest so great.

In August, I was scheduled on a 1:50 pm flight from Boston to Miami -- trying to get a connecting flight to Chile on its excellent airline, LAN Air. American Airlines said the flight would be delayed for 15 minutes because of a mechanical problem that caused the air-conditioning in the back of the plane not to work. Half the plane got out, and an hour later American Airlines announced an indefinite delay.

A big line formed at our gate to rebook. Next to our gate was an empty one with two American employees who were working on their computers. I waited patiently until one of them finished her work and asked if she could help me. She stared at me and said no, she could only help people on the flight scheduled for that gate, and went back to her computer. No thanks to her I ended up booking a flight that left at 6 pm, causing me to miss my connection to Chile.

American Airlines probably does not treat its employees very well, and employees share that meanness with their customers -- at least they did with me. And I would certainly go out of my way to avoid flying that airline again. Evidently, it is not doing too well making money for investors either -- it just reported a $360 million operating loss accompanied by a 5% drop in passenger traffic.

I do not think it is possible to fix American Airlines. But, as I posted and wrote in my book, Southwest does many things well, including hiring people who enjoy serving others, treating them well, and rewarding them for creating happy customers. This is much harder to do than it is to say.

If American Airlines figures out how to achieve this, I will gladly fly it again.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Does American Airlines need a makeover? What would you suggest? Be sure to check out the other makeover posts.

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