American Airlines Case Notes
Strategic Elements of American Airlines
Sabre (Semi-Automatic Business Research Environment) is a primary subsidiary of AMR Corporation, which American Airlines is also a part of. They developed the computer reservation system that American Airlines uses in their day-to-day airline operations; though it is not exclusive to American Airlines or American Eagle. Sabre has contracts with U.S. Air, Southwest Airlines, and Canadian Airlines International to manage their respective information technology structure. Their technology is also used by the London Underground, the French National Railway, Dollar Rent-a-Car, Thrifty Rent-a-Car, and by travel agents spanning 70 countries. Sabre also implements their computer reservation system on Travelocity.com.
Sabre’s technology might very well be useful in other industries that need a computer reservation system. A couple of examples would be in the hotel, freight, and cruise liner industries. They can also expand their business in the industries that Sabre is already in. They can try to secure contracts with more airliners and car rental businesses. Also, with the big push for major rail expansion here in the U.S., which was outlined in President Obama’s stimulus, it would be a great opportunity for Sabre to be more involved in this industry in the near future. With the possible growth in Sabre’s profits, AMR Corporation can then shift these assets and then use it to help American Airlines stave off the negative swing that the airline industry is in.
Two-tier Wage System
Though the two-tier wage system resulted in substantial labor cost savings for American Airlines between 1984 and 1989, its ramifications were also very substantial in the years following that. By the 1990’s, the majority of American Airlines’ employees were B-scalers; and over the years, these lower paid employees had grown to resent the pay system that management had in place. It resulted in...