Altered states: rebranding American Airlines

During the post 9/11 crisis, American Airlines was the only US legacy carrier not to collapse into insolvency. Burdened with operational difficulties, poor staff relations and an increasingly outdated fleet, the airline struggled on for over a decade, through the worst of the financial meltdown, while its competition used the time to regroup. Finally, on 29 November 2011, American filed for Chapter 11 bankruptcy.

Things were not as bleak as they seemed, however. Though American was undoubtedly in dire economic straits, declaring bankruptcy was still a calculated decision made with the hope of emerging as a leaner, stronger airline. Central to this aspiration was the planned implementation of a major rebranding strategy, one that would regain American its place in the public consciousness as a market-leading, innovative and stylish carrier.

Upgrading the passenger experience, with a particular emphasis on modernisation, formed an integral strand of the airline's new approach. Alice Liu, American's managing director of onboard products, outlines the thinking behind the policy.

"There was a strong sense that we needed to take a different tack," she says. "We hadn't updated the look and feel of our aircraft for years. As we build the new American Airlines, we're putting the customer at the centre of everything we do; from fleet and network concepts, right through to interior designs and in-flight services. We're modernising our fleet and product offerings to match the values of our customers."

Investment in the Boeing 777-300ER

This strategy is epitomised in American's purchase of 20 Boeing 777-300ERs; the first order was placed in January of 2011, before the airline filed for bankruptcy. The B-market version of Boeing's 777-300, the 300ER's key strength is fuel efficiency; it has more storage space and a higher maximum take-off weight than the 300, and is able to fly approximately 34% further with a full cargo and passenger load.

"Fuel efficiency is an increasingly significant factor for airlines and their passengers," Liu says. "In addition to the obvious environmental benefits, it brings greater network flexibility, as well as better financial returns through improved seat mile economics and enhanced performance characteristics."

Although American is currently only using the 777-300ER to fly pre-existing routes (London Heathrow from Dallas/Fort Worth, New York JFK and Los Angeles; and New York to São Paulo), the company's senior vice-president and chief commercial officer Virasb Vahidi has said the aircraft will play an important role in expanding American's international network over the next five years - a promise no doubt predicated on the greater distances possible and economic savings mentioned by Liu. The new destinations, along with American's planned merger with US Airways, potentially creating the world's largest airline by capacity, will play an integral role in revitalising American's image. They will also, no doubt, generate new passenger markets and much-needed revenue.

Better by design

American's rebranding strategy also extends to the interior design of its latest aircraft. Focusing on luxury and the latest technology, the airline has transformed the 300ER into a new benchmark for high-class international air travel, targeting an affluent customer demographic.

"We've put a huge amount of effort into the interior design of the 777-300ER," says Liu. "Our overarching goal was to adapt the in-flight environment to suit our customers. They shouldn't have to 'put up' with being on a plane. Rather, the experience should be seamless, no different to what they might find when not in the air. Part of making that happen involves anticipating their every need. It also means paying attention to even the smallest levels of detail."

Every seat on the 777-300ER features at least a 9in screen, along with a USB port and power outlet to support all the tablets, phones, laptops and other gadgets passengers might wish to use. Colour is also important, with subtle mood lighting stretching throughout the cabin and a red stripe running across the headrests tying the different shades of material together.

"The 300ER is also our first international aircraft to provide customers with Wi-Fi through the duration of their flight," adds Liu. "This is a huge advancement; just a few years ago, it was unimaginable for passengers to have remote internet access while in the air. It's provided by a number of satellites - on a flight from the US to Brazil we'd probably touch as many as three or four of them.

American has also implemented a radical new livery change, after featuring the same, largely uncovered aluminium fuselage for 46 years; a longstanding tradition descending from company founder CR Smith's hatred of full liveries. The planes are being covered with a coat of silver paint, with the word 'American' printed in large letters along the aircraft's front half, along with a modified eagle logo. The tail sports a US flag design; 11 red and white stripes, accompanied by seven smaller blue bars.

The new look has generated mixed reactions. Speaking in Business Weekly, the Italian designer of the outgoing livery, Massimo Vignelli, commented, "the paint adds so much weight. That brings an incredible amount of fuel consumption." This is a tough criticism to swallow for a plane so lauded for its fuel efficiency. Lui, however, considers the redesign a step in the right direction.

"It's a very clean look. The silver mica paint reflects the heritage of the original American Airlines aircraft, and the stripes flying proudly on the tail symbolise how we see ourselves as the flagship carrier of this country. It's an exterior change that reflects the developments that have taken place in the plane's interior.

"The overriding aim of the redesign, both inside and outside, is to create a sense of timeless class," she continues. "We're not trying to make something that's incredibly trendy now but will look out of fashion in two years' time - it has to have real longevity.

"Five years down the road, we want this plane to still look like a modern environment."

Merging with US Airways

So far, American's rebranding strategy appears to have worked well. In 2012, the company enjoyed operating profits of $494 million, though these were reduced to $107 million following severance-related charges and the write-off of leasehold improvements on aircraft and airport facilities totalling $386m (related to the previous year's bankruptcy). Whether or not the rebrand is a success in the longer term, however, will largely depend on two things: passenger reaction to American's new emphasis on luxury and fuel efficiency, and the outcome of the company's merger with US Airways, expected to be completed in September 2013.

Among American's passengers, there is little reason to doubt the airline's new image will be popular. Rising fuel costs, growing environmental concerns and the ever-present desire for higher-quality travel experiences will all play in American's favour. This hypothesis is already supported by the small amount of feedback currently available.

"So far we've had tremendously upbeat comments from both employees and customers," says Liu. "There have been a number of instances, many reported in the media, where American Airlines and our 777-300ER products have been compared to premier international global carriers."

The merger with US Airways should also serve American well. In addition to resolving the firm's financial difficulties, it will broaden the airline's coverage of North America, allowing it to tap into lucrative new markets, particularly in the eastern US where it is currently losing out to rivals Delta and United. The union will also see a radical corporate restructuring; Doug Parker, current CEO of US Airways, will head the newly merged company.

For an airline that declared bankruptcy less than two years ago, American's future looks remarkably bright. As a whole, the US legacy carrier market is expected to become more profitable, as the industry emerges from the financial crisis leaner and better adapted to fend off competition from budget airlines. Entering this encouraging new environment, with a forward-looking focus on fuel efficiency and luxury combined with the business benefits of merging with US Airways, American Airlines and its shareholders have good reason to view the years to come with a sense of optimism.