Despite Bankruptcy AA Making Luxurious Plane Upgrades
FORT WORTH (CBSDFW.COM) - In the midst of often bitter bankruptcy proceedings, Fort Worth-based American Airlines (AA) plans to spend hundreds of millions of dollars to accommodate business travelers in a more luxurious fashion.
The move is a combination of upgrades on its 777-200 and 767-300 ER widebody aircrafts, which include a number of onboard amenities.
“We’ve developed a quilted bed topper for use in our First Class cabins and also a pair of pajamas for all of our customers traveling internationally in the First Class cabin,” described AA Vice President Rob Friedman.
According to Friedman, 70-percent of AA revenue comes from business travelers and they’re adding upgrades to compete for that lucrative business.
The changes also include the redesign and “refresh” of all AA international widebody aircraft.
Immediate changes will include chef-inspired meals and enhanced amenities kits in First Class.
Ultimately, Business Class seats on the widebody planes will have everything from newer seats that convert into beds, to international Wi-Fi and in-seat entertainment that features on-demand audio and video.
“Twenty-five percent of our customers approximately bring almost 70 percent of our revenue, and that’s an astonishing number when you think about it, because it’s obviusly directed to our profitability,” said the airline’s Chief Commercial Officer, Virasb Vahidi
Friedman said the move was made, “Just to keep the customers onboard our flights comfortable and relaxed while they enjoy a fine meal [and] fine wine.”
All of the pricey changes come as AA and its parent, AMR Corp., operate under bankruptcy protection, while making cutbacks and asking employees for concessions. AA officials answered by saying that money wasn’t available for the changes until the company came up with a reorganization plan.
“Part of our restructuring business plan is to invest hundreds of millions of dollars, each year, in our products and services and to win a greater share, particularly those high value customers,” Friedman said. “That’s our bread and butter.”
While customers in 1st Class will be fully lying down to rest and Business Class customers will have access to a walk-up bar stocked with refreshments, there are some main cabin improvements planned for the casual traveler on AA Boeing 777-200ERs and Boeing 767-300ERs.
Improvements in the main cabin range from seats with extra knee and legroom, to seats with power outlets and USB jacks and seats with Wi-Fi capability.
“Our customers, in particularly our Premium customers, expect us to provide a world-class product and that’s our intention,” Friedman said.
In March, US Airways made a filing with the U.S. Securities and Exchange Commission (SEC) to begin the process of an American Airlines takeover. Weeks later the major unions for the airlines backed the hostile takeover.
While Friedman said the changes and upgrades would cost “hundreds of millions of dollars, each year” the company isn’t disclosing the exact price tag for the improvements.
Tom Hoban and Gregg Overman of the Allied Pilots Association say American has lost its premium corporate customers to the larger United and Delta airlines, which, in previous years, went through bankruptcy and mergers with other carriers.
Hoban and Overman say American’s plans to invest in new planes and passenger services will certainly help, but they say the airline is a decade behind its competition. Besides, in its attempts to increase revenues, American is trying to slash labor and other costs.
“It is difficult and challenging because it’s impacting the lives of our people, but the fact remains this is something we have to do,” said Vahidi.
The unions have aligned themselves with U.S. Air, which has said it would like to merge with American. But Vahidi says the airline can survive without a merger. He believes any discussion of a merger should take place after American is out of bankruptcy.
The aircraft retrofits are scheduled to begin sometime in early 2014.
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