American Airlines - Dead Broke and Dead Last
Roland is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Some of my friends think I'm rather snobbish when it comes to flying. I don't do it very often so I'm very picky about it. To start with, if I see seats on a plane going for less than $100, I won't take the flight. If I see airlines running big commercials offering sub $100 seats, I won't book a flight on them. Likewise, if an airline is currently in bankruptcy they are an absolute last resort.
There is nothing snobbish about my choice. Unless you were born last week, you have seen "Miracle on the Hudson" news footage. The kind of continual training that allowed Captain Sully and crew to make a perfect water landing doesn't come cheap.
So, is the 2011 airline scorecard really any surprise?
American Airlines (OTC: AAMRQ.PK) finished dead last. Until this company finds the money to actually make system and maintenance improvements, they aren't going to climb any higher in the rankings. Delta (NYSE: DAL) is a shining example of what happens when a big airline throws real money at a problem. Last year they were a laughing stock, this year they came in second and, most importantly, have a lot of good word-of-mouth on the street.
United (NYSE: UAL), my, how the mighty have cratered. This merger is starting to sound like two MBAs sat in a room and said "their computers are the same color as ours so we ought to be able to merge over the weekend." I have been a Mileage Plus member for decades. Never a share holder, but a mileage club member. There was a time back when I joined the mileage club that United was considered the Bentley of the industry by everyone I knew. The only complaint you ever heard was that they charged $200 for the same flight some cut throat airline charged $39. When those people asked why I wasn't on their flight I would tell them "For the same reason I don't get my brakes done at a place that offers Good, Better, or Best brake jobs. There's exactly one way to do a brake job, the right way! I want to know my flight crew was well paid, well trained, and well rested. I want to know the mechanics had all of the time and parts they needed when checking out the plane before I got on it, but feel free to take chances with your own life. That price difference was made up somewhere, and I don't intend to find out where."
It's hard to tell people you belong to the United Mileage Plus program these days. Saying something like that out loud usually gets a rash of horror stories from people who've never met you but feel compelled to tell you anyway. I've know the "system" portion of the merger was in trouble for some time. I live in the Chicago area and the "recruiters" for the consulting firms claiming to be involved in that project have been speaking less and less English, offering less and less money but calling more and more often. I'm not surprised when I hear stories about people who pay money to belong to one airline's premier lounge getting kicked out or blocked from entry when they try to enter the other airline's lounge. I'm not shocked when I hear about people booking connecting flights across both airlines simply not showing up on the other airline's passenger list. These things happen when the people who saw the computers thought the merger would be easy because they were the same color.
Trying to develop a new system that contains the best of both worlds is all well and good, but it is something that requires several years of design-development-testing. It's not something you can do at the same time as a merger when you are just trying to make things work. I do hope they finally pull it off. I certainly wouldn't have tried it as part of the merger. I would have placed a second terminal at each and every location and trained people how to use both systems until the new system was ready. Things might have been slow and confusing, but you wouldn't have horror stories about really wealthy people getting kicked out of your premier/private lounges or lost between connecting flights. That kind of reputation doesn't go away any time soon. Oddly enough, that is American Airline's worst problem right now, not the money, the reputation. Even if Warren Buffett were to write them a blank check, passengers aren't going to beat a path to their door with all of the stories out there.