AUSTRALIA’S largest airlines have had to do a lot to attract passengers.
A record 6.7 million passengers were on board American Airlines in 2016, but it’s not just the number that matters.
Its also the company’s ability to keep its profits up.
The airline’s CEO, American Airlines Group (AAL), is facing an intense battle with the board of directors to keep the airline afloat.
The board is seeking a reduction in AAL’s operating profit from $12 billion to $8.5 billion in a bid to improve its stock value.
In 2017, AAL will also face another tough battle in its battle to keep American’s share price.
This week, AAMC will hold its annual meeting in Dallas.
The stock has fallen by more than 40 per cent since the company launched in 2009, and the board is worried that the company could fall into a recession.
“AAMC’s board believes it is the right decision for AAL to reduce operating profits and seek a more appropriate valuation of the company,” the company said in a statement.
But it’s still not clear how much the board will support AAL.
AAML’s shares are trading at just under $2 a share.
As the company prepares to cut the $4.6 billion in annual operating profit, its CEO, Scott Geller, has been in the spotlight.
A major shareholder in American Airlines, Geller has become a vocal critic of the board’s decision.
“The board is going to have to consider whether the current operating model can continue to be maintained,” he said in August.
“The board has made the right choice by taking on the debt, and they have not acted in bad faith.
They have acted responsibly.”
But AAM is far from the only one to face tough decisions as the airline’s stock price declines.
Last year, US Airways said it would close about 300 of its aircraft in 2019.
Meanwhile, JetBlue Airways, America’s largest carrier, is also cutting jobs and is facing a tough battle to remain profitable.
In the last quarter, American’s profit fell by more that $7.2 billion to about $1.6bn.
But JetBlue’s financial position has not been so strong.
It had a net loss of $1 billion for the year, and revenue fell by $6.7 billion to nearly $2.2bn.
JetBlue has been struggling to stay afloat and is looking for a new financing source to stay competitive.
American’s stock has also suffered in recent months, as AAMA has had to spend more money on advertising and marketing.
There are fears that AAMB’s advertising budget could be reduced as well.