American Airlines, which merged with US Airways in December 2013, is set to phase out US Airways’ reservations system and move toward integrated bookings in American’s system to streamline the overall customer experience.
During a Q&A session at the end of the second-quarter earnings conference call on July 27, American Airlines President Scott Kirby addressed the following questions regarding unlocking remaining synergies following the reservation system integration: What are the key opportunities to continue to optimize the airline and capture the remaining revenue and cost synergies? And can you just remind us where you think that remaining synergy number is?
“So there’s two big ones,” Kirby said, according to Seeking Alpha. “One is just improved connectivity between the network and selling as a single code. If you go out and look usairways.com and american.com, just as a simple example, you will often find different prices. That’s because of the inherent challenges with running a codeshare as opposed to having a seamless single system. And so all that goes away once we are on a single reservation system. And the second one is being able to essentially optimize the fleet, put the right-sized aircraft in the right market. At the time of the merger, we said each of those was worth about $300 million. The first one, the connectivity we’ve probably gotten half of it, and there is another half yet to come. And the optimizing the fleet we haven’t really done anything on yet. It won’t happen right away. When we do the transition to single res system, but we will be able to start that process, and it will probably take us 12 months to 18 months just to get through the first big wave of that, and then continue to continue to optimize over time.”
Kirby said there are “all kinds of things that we want to do that will drive better revenue performance, that will drive better operations performance, that will drive better customer service. And we have been really limited in being able to do that, because all of our business teams and IT resources have been focused on getting the integration done. And also we couldn’t work on those, interfere with those systems while we were in the middle of the integration. So we will be able to start a whole long backlog of projects that we haven’t been able to do. That is not technically synergy, but it’s incremental value that will also be created once we are through the system migration. So we are, as a company, really looking forward to it. We are really quite confident. I am sure it won’t be perfect, but our teams have done just a fantastic job so far in every piece of the integration. So we are confident we will get through this and be able to really hit the accelerator on moving things forward.”
American Airlines registered a record second-quarter performance with earnings of $1.9 billion.
CEO Doug Parker said it’s the highest earnings American has ever had in one quarter.
“We think it’s the highest quarterly earnings that any commercial airlines ever reported in a quarter,” parker noted. “So we are quite proud of that, and given the fact that this company was in bankruptcy about 18 months ago, to be producing the highest earnings any airlines ever produced is a testament to the amazing team we have and their great work.”