American Airlines President Talks Coronavirus, and Making Things Run Smoother at PHL
When American Airlines president Robert Isom was getting ready to visit Philadelphia last week, his meetings with employees and corporate customers were supposed to focus on airport investments, new routes, and recent improvements in such metrics as on-time departures.
And then the fast-moving developments around coronavirus crowded onto the schedule.
“It changes quickly,” Isom said Friday afternoon. “We thought we’d be talking about a different set of topics when we set this trip up.”
American is the world’s largest air carrier, serving 600,000 passengers a day, and it is Philadelphia International Airport’s dominant airline, responsible for about 70% of the traffic. Company executives are also in the midst of negotiating a new 15-year lease with the city, and hope to strike a deal this spring.
“We stay very close with the U.S. government," Isom said. "We have to find a reliable source of truth with regard to the situation. So whether it’s the State Department, Health and Human Services, DOT or even DHS [homeland security], we’re staying very close to identify what it is that we should be paying attention to and how we should adjust our business.”
So far, American has suspended flights to mainland China and Hong Kong through April 24. On Saturday, the airline announced it would cancel flights to Milan, Italy, out of New York and Miami. American said all the flight suspensions were the result of a reduction in demand.
From Philadelphia, American operates seasonal flights to Rome and Venice. Those routes haven’t been affected by any scheduling changes. Still, a spokesperson said, the airline remains “in close coordination with government and health officials as we continue to evaluate based on customer and team member safety and travel demand.”
American has also made available a host of fee waivers for changes to trips to Italy and South Korea, along with China and Hong Kong.
Travelers who’ve been to China or Iran in the last 14 days are being directed through 11 U.S. airports, and PHL isn’t one of them.
Although the Centers for Disease Control and Prevention operates a standing quarantine station at PHL, the agency is not actively screening for coronavirus there, unless passengers “are believed to exhibit symptoms,” a spokesperson for American said.
Last month, the International Air Transport Association estimated that coronavirus could cost the global airline industry nearly $30 billion in revenue this year. Asia-Pacific airlines would bear the bulk of the loss, while carriers outside the region “would lose $1.5 billion in revenue if the fall in demand is limited to markets linked to China,” the trade group said.
American’s stock has dropped by about 40% since mid-February. It closed at $17.85 on Tuesday, down $1.01 (5.36%).
On Friday, Isom had just come from a meeting with travel managers, some of American’s biggest customers. “Certainly there is an impact to Asia travel,” Isom said. "There is certainly impact to some European cities as well, now, because of some of the things we’re seeing in Italy.”
But, he added: “As we told the team earlier today, travel is part of the lifeblood of commerce. ... So we know that travel demand will rebound, and we have been through situations in the past, with H1N1 [flu] most recently, and we know how to handle situations like this.”
Isom also expressed confidence in how American’s operational performance has been getting better, “after arguably a difficult summer.”
“We’re seeing better results than we ever have in our company’s history, at having aircraft ready to go first thing in the morning, and that just translates to performance throughout the rest of the day,” he said.
The Philadelphia hub had its best January on record for such performance indicators, according to the company: 78.8% of flights departed on time (a one-point improvement from the year prior), 140 fewer mainline and regional flights were canceled (a 55.8% improvement from the previous January), and 135 fewer flights were delayed (a 6.3% improvement).
In February, the company said, the hub had its best on-time departure rate of any month on record in Philadelphia.
American has extended seasonal travel routes this year from Philadelphia to Lisbon and Prague (both will run from the spring until early January 2021). And it is making more frequent flights to Berlin and Dubrovnik, Croatia, with daily service this summer.
The airline is also launching new flights from Philadelphia this summer — to Reykjavik, Iceland, and to Morocco, American’s first-ever service to Africa.
Isom said American is “primed” to offer new destinations and recently announced network partnerships — with Alaska Airlines, and Brazil’s GOL, for instance — as it nears the final stages of integrating systems from its 2013 merger with US Airways.
“Having the airline really set to run, as you want it, and to optimize from there," he said, "gives you the flexibility and freedom to go now and make sure that you’re serving all the points that customers want to go.”
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