American Airlines – US Airways Merger
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Case Code: BSTR493 Case Length: 16 Pages Period: 1929-2016 Pub Date: 2016 Teaching Note: Available |
Price: Rs.500 Organization: American, US Airways Industry: Airline Countries: US Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
In 1929, The Aviation Corporation (AVCO) was formed in the US with the consolidation of several small and newly launched aviation companies. In 1930, when AVCO's airline subsidiaries were incorporated into American Airways, it was formed as a conglomeration of 85 small airlines.
Errett Lobban Cord purchased American Airways in 1934 and renamed it as American Air Lines, Inc. Cyrus Rowlett Smith (Smith), a Texas-based businessman, was hired as the first president of the company. He managed the airline for 34 years. During his tenure, Smith helped shape not only the company but the entire airline industry with numerous bold steps and industry firsts. Under Smith’s leadership, American provided both passenger and mail services through multiple route systems. American's routes, which had been disorganized earlier, were combined into a smooth and sensible network. Smith was influential in the design of the Douglas DC-3, which was developed after American asked for a larger version of the Douglas to carry more passengers. American, the first airlines to introduce the DC-3 into commercial service in 1944 and operate it, standardized its assorted collection of airplanes with the new fleet. The airline also started a non-stop transcontinental service with Douglas DC-7 on its New York-Los Angeles route in 1953.
In 1959, American started coast to coast service for which Boeing 707 aircraft were used. Smith led American Airlines into the jet age with the introduction of the first transcontinental jet service. In the same year, American tied up with IBM 13 to introduce the Semi-Automated Business Research Environment (SABRE). In 1975, the airline began marketing SABRE to other travel agencies in the US....
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