Name: As Interest in Travel Grows, American Airlines' Profits Soar
Uploaded: 2018-01-25
Duration: 5 min 35 s
Description: CEO Doug Parker sees 2018 as a continued year of strong, consistent growth.

Doug, how's American doing these days? You got that whole bankruptcy chapter way in the past. It's been four years now since the merger with American Airlines and now you're the world's largest airline. So how are things going? They're going great. We've been nicely profitable now. Continue to be nicely profitable. It's a transformed business, and certainly American Airlines has been transformed much for the better. And now you are giving $ 1, 000 cash bonus to every single American Airlines employee, all 130, 000 of them. By my math, that's $ 130 million. Why are doing that? Well, because this tax reform. Over time, we'll certainly be beneficiaries and we think we should share that with our team. So, that's what we've done. And we've chosen to give each of our team members $ 1000. They're certainly appreciative. We think that's the right thing to do with this kind of basically a windfall that the airline wasn't expecting. Apple says that it's gonna bring back home all of the cash that it has parked outside of the United States. I know that America doesn't have much money outside there. But do you think other companies are gonna follow Apple's example. Well, yeah. I think that's another piece, I think of why we as a nation did this. Now, with lower tax rates, they're able to bring it back. I think you'll see others do the exact same thing. And that's One of the big reasons why this tax reform is important to the United States. Mm- hm. Well, Apple is promising that a lot of this money is gonna go to jobs, new facilities, and it says that it's gonna really contribute about $ 350 billion dollars to the U- S economy over the next 5 years. Is this the sort of thing, can America do something like this? We'll have more cash around to invest even more than we would ever thought once. Investments for airlines made by new airplanes from manufacturers like Boeing which creates jobs for them and allows us to expand our airline, create jobs at the airline. So all that is better for American airlines, it's better for the economy. Let's talk a little bit about the economy. From what you're seeing so far this year, how is 2018 shaping up? I mean, how is the economy and the business environment looking to you right now? Looks really good. Steady growth that we've seen for a number of years now. It continues demand for air travel, looks particularly strong. It has been that way like I say for a while now, but 2018 looks like much of the same Not gangbuster growth by any means, but growth, and nice steady growth. What's gonna drive that growth? Demand, much of that is driven by business. As other business is profitable and growing, their demand for our services grow. And also, as you know, in today's world, as more and more people are spending their dollars on experience as opposed to Material items that's good for air travel. We see more and more people wanting to use their discretionary income for travel and to go see other places, and that's helpful to us as well. Well, we see that the airlines are packed, every seat is filled. And now that you've come out with this new category of Basic economy. How much is that contributing to the demand? Well that it- Because it's basically a discounted fear now. Yeah it is. While not all of our customers care entirely about price, certainly some do. And for those, we have a lot of competition from some of these ultra low cost carriers with products that are vastly inferior to ours. But they, if we don't mention their prices. And some of our customers will migrate in that direction, so we need to be able to match those prices. For that price, you'll get a much better service than you would on some of those ultra low- cost carriers, you'll still be on American Airlines, but you'll board last, you won't have the ability to upgrade that fare, you won't be able to bring on a bag that goes in the overhead, for example, but you'll have a very, very low fare. Can you quantify how much this new business Is contributing to American Airlines. How significant is it? It's significant to our profits. We've obviously been nicely profitable about it. But it's hundreds of millions of dollars a year in terms of higher revenues we think, versus not having this product in place. What are your plans for customers in 2018? It's such a hassle to travel. You probably hear this all the time between the flight delays, between the seats that are much more compact, lost luggage. Do you have any perks plan for us travelers? [ LAUGH ] Well, first off, all those things, we're at intent upon improving of where we are. American Airlines produce its best operating performance Ever in 2017 and we are hope to do even better in 2018. We are in the middle of putting satellite wi- fi in all of our aircrafts, so people on the airplay will be able to stream anything they want throughout the entire flight. It has a lot more capacity than the existing service. Improving our advantage program. It has a lot more seats to be allocated to our customers than we have in the past. So we are well aware that in today's world As we've gotten the industry to be more mature, the product matters more than it has even in the past because customers have a number of airlines that can take them largely any place around the world and what's gonna matter the most is the product we deliver and we're focused intently on delivering just that. How much longer do we have to wait so that we can use our cell phones while the plane is in the air? I don't know. It's the, I don't think you're gonna see that. Sometimes on the tarmac before a flight some people are just a little. A little louder on their calls than what other would like while they are in their seats. Look, we will follow the FIA's lead on this and we will see happens. Right now it is not something that I foresee happening. [ BLANK_AUDIO ]

As Interest in Travel Grows, American Airlines' Profits Soar

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CEO Doug Parker sees 2018 as a continued year of strong, consistent growth.