For those who don't want to read the whole thing, the four new destinations are Medellin, Colombia (15Jun02); Santiago, Domincian Republic (15Jun02); Punta Cana, Dominican Republic (15Jun02); and Valencia, Venezuela.
American back to business in Miami
INA PAIVA CORDLE
American Airlines has returned its flights at Miami International Airport to pre-Sept. 11 levels and recalled the vast majority of laid-off employees, strong signs of recovery from the tumultuous effects of the terrorist attacks.
The dominant carrier at MIA, with more than half the airport's passenger traffic, and the largest private employer in Miami-Dade is forging ahead with plans to expand the Miami hub, reaching 188 daily flights.
Despite ongoing financial losses and a worldwide slump in passenger traffic, American is adding service to new destinations in Colombia, Venezuela and the Dominican Republic later this year, said Peter Dolara, American's senior vice president for Miami, Caribbean, Latin America and Mexico. And it's continuing construction on a $1.3 billion terminal to accommodate more growth in the future.
``It's interesting that they are ramping up in Miami, because they will certainly not be back on a systemwide basis to the levels of last year at any major cities,'' said Richard Bittenbender, vice president/senior credit officer for Moody's Investors Service. ``So Miami is experiencing a more strong and powerful recovery than they are finding elsewhere.''
In fact, American said its systemwide service would be down 13 percent this quarter, said Ray Neidl, aviation analyst with ABN Amro.
The Sept. 11 attacks dealt a severe blow to the airline industry, leaving passengers reticent to fly and causing widespread economic fallout.
To cope with lower demand, American -- along with other major carriers with the exception of Southwest Airlines -- cut its systemwide flight schedule by 20 percent.
American also trimmed its workforce, laying off 13,000 employees and giving another 7,000 workers voluntary leaves. It reduced its fleet of about 900 planes by 180 and implemented a steep cost-cutting plan, which remains in effect. It also slashed fares in the fall and again this winter by as much as 35 percent to lure travelers back to the air.
But American pared its flight schedule in Miami less than in other cities, cutting back from 180 daily flights to 162, and eliminating only two of its 82 destinations -- San Jose, Calif., and Seattle.
By year-end, American, which has 9,240 employees in Miami, had already recalled 880 of the 920 employees that it laid off here, including all MIA workers. Forty management staff positions at its Latin American headquarters in Coral Gables were eliminated, and 320 former full-time fleet services workers remain on part-time status. They will be upgraded to full time as flights are added by July 1, Dolara said.
On Thursday, American added six flights -- to Atlanta, Boston, Baltimore, Dallas/Fort Worth, Grand Cayman and Chicago -- and returned to the volume it had Sept. 10. It still has not reinstated service to San Jose or Seattle, however.
``We're already over the mourning period,'' said Dolara, who heads the Latin American region from Miami. ``Now we have to save this company. We have to make this company profitable again.''
Friday, American replaced its Boeing 767 service to Montevideo with a larger Boeing 777, becoming the only airline to offer 777 service in Uruguay.
March 2, American plans to add another flight to Cancun three days a week, and another daily departure to Chicago. April 7, Los Angeles, New York's La Guardia and San Francisco will each get another daily flight.
And on June 15, American plans to launch new daily service to Medellin, Colombia -- subject to government approval -- and to Punta Cana and Santiago, Dominican Republic. And on Nov. 1, it will offer flights to Valencia, Venezuela.
The airline will also launch Fort Lauderdale-Hollywood International Airport's first service to South America, with flights to Caracas scheduled to begin in June.
Overall, Dolara said his region is outperforming every other division in the company in terms of reinstating flights, with 365 daily flights today, compared with 359 on Sept. 10.
The Miami-based division also suffered less financially than other regions last year, when American posted a record loss of $1.8 billion. In the fourth quarter, international revenue declined by 20 percent, with travel to Europe and Asia hurt most as trans-Atlantic traffic fell nearly 34 percent. Latin America revenue slid 14 percent, due to a combination of a 6 percent drop in load factor -- the percentage of occupied seats -- and a 5 percent decline in yield, or revenue per passenger mile.
``What has really hurt in the last 120 days is leisure traffic,'' said Bob Booth, chairman of Aviation Management Services in Miami. ``Latin America is historically businessmen and [U.S. residents] visiting friends and relatives, and Latin Americans who come to the U.S. to visit. Those people are still traveling. They may have postponed some trips, but they are still traveling.''
Nevertheless, American and its parent AMR still face major challenges.
American's commuter affiliate American Eagle has yet to catch up with American's progress. American Eagle, which flies from Miami to destinations in Florida and the Bahamas, is now offering 39 daily flights, compared with 63 on Sept. 10. Travelers are still opting to drive to places like Orlando or Tampa rather than fly, Dolara said.
``It's starting to come back,'' he said. ``We believe it will come back by very early summer or late spring.''
At the same time, American is seeing its traffic fall to Argentina, with planes now running about 45 percent full, Dolara said.
And cost cutting remains in high gear. Flight attendants have been notified that the airline plans to reduce its regular crew staffing on the Boeing 777 to Asia and Europe from 12 to 10, with the option of adding an 11th, said Rick Musica, Miami vice chairman for the Association of Professional Flight Attendants.
Perhaps most significantly, American, which has long dominated Latin American traffic with more than half the market share, faces increasingly stiff competition from other U.S. carriers that base their flights out of other gateways -- particularly Delta in Atlanta and Continental in Houston and Newark. In Miami, American's closest competitor is United, which has cut back from 21 to 17 daily flights -- with five flights to Latin America -- and has yet to reinstate service.
But both Continental and Delta have aggressively expanded Latin American service in recent years. And Dolara is aware that in Atlanta, passengers heading to or from Latin America can choose from a wide range of connections, with an ease of transfer unrivaled in Miami.
That's why he says American's expansion at MIA, where it is building a $1.3 billion new North Terminal, is key to the airline's future.
Now underway, the North Terminal will extend 1.25 miles at the north end of the airport. Scheduled for completion in mid-2006, it will include 47 gates and a people mover.
Meanwhile, Dolara, an intensely focused executive who each day scans reports of passenger and cargo loads from his region's 53 airports, is pumping his staff to find ways to bring back business to Miami.
This month the password he is using to motivate employees is ``renewal.'' (December's: ``sell, sell, sell.'') Sales executives are fanning out across the region, meeting with travel agents, tour and hotel operators, putting together packages to lure travelers.
``You have to create the demand,'' Dolara said. ``You have to price it, promote it, sell it and work with hotels. You put the right value in front of people, people will fly.''
Dolara's January report shows the region's load factors hit 72.1 percent, surpassing his goal of 66 percent.
Still, with fares running an average of 15 percent to 20 percent below normal, American is expected to continue losing money -- at least through the first half of this year.
``We are still sustaining significant losses and will for some time -- $7 million to $8 million a day,'' Dolara said. ``However, American is a strong company. It has always faced adversity with strength and determination, and we are sure we will succeed.''