American Airlines and the Business Environment: COVID-19 Impact Report

This report examines the impact of COVID-19 on American Airlines, analyzing the challenges and forces affecting the company. It delves into political, economic, technological, global, and societal factors, highlighting issues such as travel restrictions, economic decline, and changing passenger behaviors. The report also provides recommendations for American Airlines, including cost reduction, strategic partnerships, and brand image enhancement through CSR activities. Furthermore, it discusses ethical implications and recent updates, such as government aid and employee benefits. The analysis underscores the need for American Airlines to adapt to the evolving business environment and navigate the complexities of the pandemic to ensure long-term sustainability and brand reputation.

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Introduction
This report is based in the impact of COVID 19 on the businesses. In order to know the
impact of this issue an organization has been selected that is “American airlines”. According to
WHO, Coronavirus is a disease spread through interaction between people and close contact
(WHO,2020). This disease is spreading at the global level and affecting each and every aspect of
human life. This disease has infected more than 110,000 people in 110 countries. Coronavirus
become the biggest threats to businesses and for the growth of the economy at global level. With
this context this report consists of challenges and forces that American airlines face and
strategies that the company can use in order to overcome this situation.
Organization
American Airlines is one of the oldest airlines that were founded in 1926 in the US. The
company operates in aviation industry and offers services related to logistics and passenger
carrying. The company has presence at the global and domestic platform with 6,800 flights in
350 destinations (Koonin,2020).
Problem: Decrease in number of passengers in flights leads to flight cuts and affecting airline
operations
Challenges and Forces
Due to Coronavirus, the aviation industry get affected to the greater extent as travelling is not
safe for people and is the option to stop the spread of this virus. Many countries decided for lock
down and restricted the travelling of people between two countries. Travelling restricted to
China, Australia, Canada, European countries, Asian countries and in the US.
Political: The political factors arises because of Corona Virus for American airlines are;
government imposed restriction on cross border, passed laws for quarantining large portions of
their population, and travel restriction at the domestic level also. Trump also announced travel
restrictions and closed boarder that the country shares with Canada. All these political
interference impacted the growth of aviation industry but on the other side the government of
different countries is providing aid to airline industry that collectively accounted for $200bn

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(Chinazzi, Davis & Marco,2020). This might help in to stable the aviation industry at the global
level. With the government order, the company reduced its international flights capacity by 75%
that includes reduction in number of flights for Asia, Europe, Australia, and South America.
Economic: The growth of aviation industry gets hampered to the greater extent because of
Corona virus. Due to this stock market prices of American airlines have declined. Revenues of
American airlines are falling because of slow growth of the aviation industry at the global level.
Further, because of this unemployment rate at the global level is increasing. American Airlines
facing issues related to providing paid leaves to employees and shortage of flight attendants.
Hence, due to Corona virus growth of American Airlines gets hampered. As the revenue for the
company in March is lowered by $1.5 billion.
Technological: The technological forces that airline industry is facing include use of testing
equipment, high checks by flight attendants for passengers and use of tracking and tracing
devices and focusing on storing of proper data of passengers. All these precautions are taken by
American airlines for continuing its operations. Hence, technological forces also impact on
operation of American airlines and the company need to invest on these equipment and
technological tools in order to ensure safety of passengers.
Global: Due to COVID 19, aviation industry till now experienced loss of 19% of revenues or
total of $63 billion at the global level. American Airlines share prices reduced by 25%, all these
factors already made airline companies into shock. On the other side, government of different
countries providing help to the industry by relaxing companies from tax and other charges. This
might improve the condition of Airlines at the global platform in upcoming months.
Societal: COVID19 presented a global epidemic threat and the social forces are the main that
impacted the business. The mindset of people shifted and they start quarantining, and reduce the
travel related work. Due to that number of passengers in airlines reduced. On the other side,
people who are travelling expecting high level of precautions and care from the side of airlines.
Due to that American airline at present is focusing on providing best quality services to
customers who are travelling at this stage (McKibbin & Fernando,2020). Hence, social factors
are major force and challenge for airline industry to overcome. Any problem at this stage from
the side of American airlines might impact the brand image of the company for longer run.

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Source: (Ruiz Estrada, 2020)
Recommendations
American airlines should focus on reducing its cost that related to maintenance cost of
flights and other carrying cost. Further, the solution of this situation is to support each other so
the company should tie up with other airline partners in order to manage the burden collectively.
This phase can be utilized by American Airlines to improve its brand image in the market by
providing services to needy customers at low cost and on the emergency basis. This image
development by the company in this situation helps in to get competitive advantage for the long
run.
CSR and Ethical implication of problem
Corporate social responsibility activities should be performed by American Airlines that
includes helping passengers who are immigrants. The company can provide free services to
passengers and support government to rescue people from other countries. Further, American
airlines can boost its cargo business by delivering equipment and doctors to other countries. The
role of airline industry is wider in controlling this virus, with the support of airlines this problem
can be reduced and can be overcome quickly ( Koonin ,2020).

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Recent Updates
Countries provided benefits to employees that include paid sick leaves, free testing and
food and medical facilities to employees in order to ensure productivity. Further, most of the
cases of Corona viruses are recovered that is a good indicator for businesses because sooner the
disease cure soon will be the balance at the global level.

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References
Chinazzi, M., Davis, J. T., Ajelli, M., Gioannini, C., Litvinova, M., Merler, S., ... & Viboud, C.
(2020). The effect of travel restrictions on the spread of the 2019 novel coronavirus
(COVID-19) outbreak. Science
Koonin, L. M. (2020). Novel coronavirus disease (COVID-19) outbreak: Now is the time to
refresh pandemic plans. Journal of Business Continuity & Emergency Planning, 13(4), 1-
15.
McKibbin, W. J., & Fernando, R. (2020). The global macroeconomic impacts of COVID-19:
Seven scenarios..
Ruiz Estrada, M. A. (2020). Economic Waves: The Effect of the Wuhan COVID-19 On the
World Economy (2019-2020). Available at SSRN 3545758.
World Health Organization. (2020). Coronavirus disease 2019 (COVID-19): situation report, 46.