My goal in this post isn’t to beat a dead horse or to rag on American, so I won’t talk too much about American’s overall problem, which has led to the downward trend of their stock price.
But to sum it up very quickly, American has an identity crisis. They don’t know whether they want to be a full-service airline or an ultra-low-cost carrier, so they’re trying to be everything to everyone… and it’s not working.
They trail the legacies when it comes to revenue per seat mile, and they can’t compete with ultra-low-cost carriers on cost. On top of that, management’s lack of vision has caused employees to largely become indifferent towards the company, rather than feel like they’re working towards a common goal.
American 737 MAX
American’s current problems
There are two things going on at American at the moment that are causing the carrier’s stock to do especially poorly, and that could cause it to slip even further.
With so many contract negotiations coming up, and with Doug Parker having bragged about how the airline will never lose money again, something tells me these negotiations aren’t going to go well.
Unfortunately, I doubt this will be the low point for American’s stock. Not so much because of the 737 MAX grounding (though it may lead to a disappointing summer for the airline), but more because I think this labor battle is about to get really ugly.
With so many contracts being negotiated at once, and with the lack of alignment between management and the unions, I just don’t see this ending well.
Do you think this will be a low point for American’s stock, or no?