More often than not, struggling organizations tend to resort to cosmetic or superficial moves in an attempt to gain some positive momentum. Often, the results are less than satisfactory. Latest example: American Airlines.
“We thought it was time to update the look — it’s been 40 years,” Thomas Horton, chief executive of American’s parent, AMR Corp., said in an interview yesterday, as he announced they’d be changing their fleet’s livery.
Horton is relatively new to the organization, having assumed the CEO position the same day the company let go former CEO Gerald Arpey and filed for bankruptcy, Nov. 29, 2011.
When American’s parent, AMR, filed for bankruptcy, it had $24.7 billion in assets, $29.6 billion in debt, and $4.1 billion in cash. Its stated intention in the filing was to lower labor costs – just as the pilots’ union was threatening a strike.
American has also been in the news lately as US Airways is seeking to merge. And amid this turmoil and uncertainty, the big announcement yesterday from CEO Horton was they’re changing their planes’ paint job.
A ballpark figure on the cost of repainting a fleet the size of American’s is a bit shy of $100 million. Honest. A new paint job for a Boeing 737, a typical mid-size airliner, costs about $150,000. American’s fleet numbers 608 planes.
On top of that, American ran full-page four-color ads today in the national editions of the Wall Street Journal (approximately $55,000) and the New York Times (approximately $24,000), bearing a soaring Boeing 777 with sparse copy in the clouds: “There is a change in the air. Introducing the new look of American, inspired by the past, but driven by the future. As we continue our journey forward, we are proud to bear the name American.”
The visual image change is likely a signal for new operating policies aimed at improving the customer experience, building on the history of this nearly 80-year-old carrier.
But these are assumptions. Unless you’re on the inside, you can’t know for sure what’s actually going on within American Airlines as its leadership strives to get its house in order and the business back on firmer footing. Certainly they are working with creditors and the bankruptcy court to revise AMR’s debt obligations, and dealing with related matters.
But my interest in this situation lies with the people side of the equation, because that’s what will ultimately determine the company’s future course. To that point, I pose a few open-ended questions:
- In what ways are CEO Horton and his team mending fences with the unions?
- What kinds of solutions are they proposing so that they can move forward productively with the unions? How are they communicating those solutions?
- Are they listening to union leadership’s ideas and responding appropriately? Are they actively seeking to create and sustain an on-going dialogue with union leadership to achieve long-lasting labor peace?
- Are they engaging their employees in the challenges and opportunities the organization faces? How?
- What are they doing to create an internal environment of dialogue, a constructive atmosphere where leadership listens to and considers other ideas?
American Airlines is an organization with a long, proud history. We’ve seen other historical carriers fade away in similar circumstances: Pan Am, Eastern, TWA, to name just three. It would be a shame if AMR executives failed to adapt to changing times with novel approaches to their bigger challenges.
But the best thing they can do at this point is use the image change as an avenue to improve dialogue with their employees. Leadership should strive to help employees gain clearer awareness and understanding of the company’s challenges and opportunities, and their respective roles in addressing them. That will be the key to American emerging as a strong player once again.