American Airlines parent company, AMR, shares have dropped based on analysts projecting larger losses for the full year of 2010 than originally expected, reports Bloomberg BusinessWeek.

Yes, AA isn’t projecte to earn a profit this year.  They will, instead, improve their performance over last year.  Or, to put it bluntly, survive and hope.

No one who follows the airline industry thinks that airlines are a great way to earn money.  Investing in airline stocks can be because that is about buying low and selling high which continues to be possible in the airline sector for some unfathomable reason. 

Even though it’s possible, you have to wonder why anyone would purchase the stock of an airline that already is the size of a SuperLegacy when it comes to revenue and network but which consistently underperforms compared to any other airline it directly competes with.  Make all the execuses for AA you want in the area of labor costs, not going bankrupt, etc.  At the end of the day, they appear to be just very good at surviving.  There were a few other airlines that were rather good at surviving.

TWA and Pan American come to mind. 

Yes, AA has labor cost problems and an older fleet and those get in the way of earning those pesky profits.  As time goes by, it seems to me that AA has managed to be very good at holding onto large amounts of cash and manuevering from one crisis to another.  However, they don’t seem to ever really solve their problems, do they?  They’ve got labor negotiations that have gone on for 4+ years now.  The issues surrounding those labor negotiations were a known value all the way back in 2003.  They have a  fleet that most in the business would have pointed out the liabilities of all the way back in 1999. 

It’s not that AA executives are bad.  They aren’t.  But over time one has to question if they’re good enough for the way the airline world is operating today.  Is following the AA way a successful model for the future?  Is it wrong to expect them to earn a profit at least when their industry competitors are?  Even if it isn’t as much unit profit? 

How much longer do the AA board of directors and their shareholders wait for performance that at least indicates movement that at least generally points in the same direction as the industry?  I would argue that it’s time to wonder if it isn’t time to think out of the box before AA is managed right into a nasty little corner without any options.  It’s  at least time to perform a objective analysis of whether or not to stick with the current team.

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