In the 1990s, American was the airline that set the pace. Then came two bad mergers, creating a reluctance to pursue a third; regulators who wouldn't grant American the same trans-Atlantic partnership privileges they bestowed on its rivals and the decision, motivated by morality, to avoid bankruptcy. Unfortunately, this effectively put employees through two rounds of major concessions. The first came in 2003, when nearly every other airline filed bankruptcy. The second came in 2011, when the other airlines were already reaping the benefits of their bankruptcies. It does not seem that the strategy, virtuous as it was, succeeded.
Sometimes it seems that American executives, believing they still ran the greatest airline, devised their cornerstone strategy of growth in contested gateway airports like Kennedy and Los Angeles and San Francisco because they believed that given the choice, passengers would prefer to fly American. Having been in Miami when American rescued the city from its reliance on failing carriers, I still find it hard sometimes to shake that same belief. Unfortunately, many other airline passengers find it increasingly easy.
When you really think about it, the most appropriate comparison for American is not with Eastern, but with Pan Am. It too was the greatest airline in the world and its sense of superiority survived long past the time that was justified, just as American's sense of superiority did. The new Kennedy terminal certainly makes the case that American views itself as the nation's flag carrier, just as JFK-focused Pan Am was earlier.
Like American, Pan Am pursued a failed merger strategy, acquiring National which brought culture clashes but no real assets. Also, like American, it was disadvantaged by regulators who wouldn't let it do the same thing its competitors did. But American, structurally, is nothing like Pan Am or Eastern. It has far too many valuable assets to fail. The only question is who will run it after bankruptcy.American CEO Tom Horton is not Frank Lorenzo, not by any means. I think he is more like David Siegel, the CEO at US Airways (LCC) and now CEO at Frontier. Siegel led US Airways into bankruptcy. He imposed cuts, although it turned out they were not enough. Then he was forced out, largely at labor's behest.
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