American woos big spenders to get out of bankruptcy

AA upgrades

Credit: WFAA

American Airlines announced a series of planned upgrades targeting business and first class passengers.




Posted on May 9, 2012 at 5:10 PM

Updated Thursday, May 10 at 7:37 AM

FORT WORTH — With pending protests and votes of "no confidence," unions for American Airlines say the company's business plan to emerge from bankruptcy is too vague.

On Wednesday, American rolled out fine dining and amenity upgrades to show the skeptics its new business is all about the big spenders.

In the first class cabin aboard a Boeing 777, company executives displayed personal pajamas, turn down service and halibut with truffle oil. The Fort Worth-based carrier is pushing for a bigger share of "high value" customers who fly frequently in first class or business class.

American said 25 percent of its customers already generate 70 percent of its revenue. "It's not necessarily defined by where they sit," said AA chief commercial officer Virasb Vahidi. "It's defined by the business they bring to our company."

In addition to the softer touches, American is upgrading the hardware. Its fleet of Boeing 777 and 767 jets will add business class seats that fully recline, international Wi-Fi service, and upgraded in-flight entertainment.

The retrofitted cabins are expected to roll out in 2014.

American Airlines is also adding narrow-body jets to its fleet. It expects delivery of new Boeing 737  models along with Airbus A319 and A321 jets in the coming years.

The airline says it doesn't know the total cost of the upgrades; executives only referred to "hundreds of millions of dollars" each year. They are still analyzing the numbers.

American VP of Marketing Rob Friedman did say filing bankruptcy would make the improvements more affordable. "Our financial situation over the last few years hasn't allowed us to invest at the level we hoped to invest in," he said. "Now we have that opportunity."

American says it's still working toward consensual agreements with unions as it goes through bankruptcy restructuring. Executives point out that technology upgrades will help employees do more with less.

Chief information officer Maya Leibman said mechanics will have tablets equipped with schematics to get planes repaired and in flight faster. Flight attendants will have mobile devices that have updated information on passenger preferences, itinerary and connecting flight status.

Executives never used the word "bankruptcy" while they showed off the new amenities. They clearly don't want flyers to think "budget" when they think American Airlines.