The Dallas Morning News Airline Biz Blog had THIS blog entry last week about analysts taking issue with American Airlines’ plans for 2011.  In short, American has already said they would trim their capacity growth by about 1 percent but Wall Street doesn’t think that is nearly enough.  Actually, I think Wall Street Analysts would prefer an aircraft not even take off unless every seat is filled.

I’ve been following the airline industry for a long while now.  I’ve been writing this blog for nearly 3 years and I cannot recall American really responding with liveliness to any economic change or crisis.   Delta, an airline that is bigger and less “integrated” so far, responds quickly and adjusts its system with great fidelity.  There are no half measures and the same is pretty true for most other US based airlines.

American plods along not earning money, not dealing with its labor problems and not really making any great adjustment to any of their plans.  When they do something, even rather small, we all tend to act surprised.  Recall that everyone was surprised and commenting about their announcement that they’ll add the 777-300ER to their fleet.  Even I was surprised and a bit excited.  Then about a week later, I realized we all got excited over a purchase of 2 aircraft.  Yes, a third order was added but so what?  This was a nothing move and a nothing announcement.

Analysts are tired of half measures coming from AA and they’re tired of the rather large losses coming from AA when behemoths such as Delta and United (also Super Legacy airlines) are earning profits.  Big profits.   Defenders of AA (usually from within AA itself) love to point out that they didn’t declare bankruptcy and “screw” their investors.  No, perhaps not but they aren’t doing their investors any good right now either. 

The truth is, AA resembles that person we all know who continues to live with a toothache instead of going to the dentist and doing something about it.   Those people are tiresome and they’re often unproductive because they live with their pain instead of moving it out of the way to make progress. 

Why?  I can’t say for certain.  The motives of the executive leadership of that airline are not visible to anyone.  We can’t see inside their heads but I can speculate.  First, the board of directors is virtually handpicked by CEO Gerard Arpey.  They are, for all intent and purpose, Arpey supporters much more than AA supporters. 

Second, being an executive at AA is a powerful position and maintaining the status quo is a far more successful strategy for maintaining that power.  Revolutionaries and evangelists are not tolerated at AA.  Success is defined by increments rather than wholesale directional changes even if those increments merely mean you lost less money than in the previous financial quarter.

Third, momentum is keeping AA going.  AA has done a great job of managing its finances.  How else could it loose hundreds of millions of dollars for years and keep on going.  The well can’t keep on going forever though and it would seem that the best time for a change in leadership would be now rather than 2 years from now with AA contemplating bankruptcy then.  You can only mortgage so much equipment to keep on going.  You can only issue so much debt to keep on going. 

At some point, you need to earn a profit.  Most airlines did that in 2010.  Most will in 2011.  AA did not in 2010 and will not in 2011.  Frankly, I’m surprised that analysts are roughing up AA even more at this point.

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