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AMR CORPORATION

AMR CORPORATION. AMR Corporation, headquartered in Fort Worth, was established in 1982 when American Airlines stockholders, interested in increased flexibility for financing and investment, voted to approve a reorganization plan and establish a holding company. The new firm serves as the parent company of American Airlines (its principal component) and a number of other subsidiaries: AMR Eagle owns American Eagle carriers; American Airlines Decision Technologies provides decision-support systems for industry worldwide; AMR Information Services offers information-management services; AMR Investment Services provides investment management; AMR Services Corporation provided aircraft handling services, cargo handling, warehousing, and distribution services; and the AMR Training and Consulting Group offers consulting services in airline-related businesses. American Airlines divisions include AA Cargo, which provides freight and mail service; SABRE (Semi-Automated Business Research Environment) Travel Information Network and SABRE Computer Services, which provides travel information services from the world's largest privately owned real-time computer network; and SABRE Development Services, which offers information and computer services, including risk assessment. An additional unit, American Airlines Television or AATV, provides video-production services at the airline's television facilities.

American Airlines was founded as a domestic airline after the Aviation Corporation, a New York City-based holding company, was organized in 1929 and began to acquire young aviation firms along with bus lines, radio stations, and airport construction companies. Among the firm's initial acquisitions were some eighty-five small airlines, including Colonial Airways, the Embry-Riddle Company, Interstate Air Lines, Southern Air Transport, Universal Air Lines System, and one of Universal's holdings, Robertson Aircraft of Missouri, for which Charles A. Lindbergh had once served as chief pilot. The consolidation gave the new company a system of partially interconnected routes, a fleet of various types of airplanes, and a variety of local managements. In 1930 routes were redrawn, managements reorganized, and the pieces incorporated to form American Airways. Three years later the company introduced flight attendants and Curtiss Condor airplanes. A further reorganization followed the reapportioning of airmail contracts by the government, and in 1934 American Airways became American Airlines. Credited with the firm's early success was Cyrus Rowlett Smith, a former Texas Air Transport and Southern Air Transport executive, who served as president of American Airlines from 1934 until 1968, when he was named secretary of commerce by President Lyndon B. Johnson.

The first innovation of the new company was an air-traffic-control system administered by the government and later adopted by all airlines. Between 1936 and 1942 the airline inaugurated flights between Chicago and New York, became the nation's major domestic carrier in revenue passenger miles (a revenue passenger mile equals one passenger flown one mile), and established service to Mexico. Domestic freight service began in 1944, and in 1945 European service began with a trans-Atlantic division called American Overseas Airlines. All services declined during World War II, however, after the company turned over almost half its fleet to the Air Transport Command. After the war, the company pioneered nonstop transcontinental and cargo service, and in 1959 began its first jet service with the use of Boeing 707 aircraft. American's computerized reservation system, known as SABRE, was established in 1959, and by the 1990s it served 25,000 travel agencies.

By the 1960s fears of airline deregulation had scared off investors, and conditions worsened as airlines faced rising labor costs and fuel prices, declining profits, and a growing recession. George Spater, who headed the firm in 1967, was forced to resign in 1973 after confessing to illegal contribution of corporate funds to the Committee to Re-Elect the President in the 1972 national presidential campaign. Another executive was convicted on embezzlement charges, leaving the company with a leadership vacuum that Smith in 1973 returned temporarily to fill as chairman and chief executive officer. Boston resident Albert V. Casey, former president of the Times Mirror Company, became president and chief executive officer in 1974 and served until 1985. By the end of the 1970s, American Airlines had moved its headquarters from the New York metropolitan area to Dallas-Fort Worth, where it also established training facilities and a southern reservations office.

Robert L. Crandall became president and chief operating officer in 1980, and chairman and chief executive officer in 1985. He had worked at Eastman Kodak, Hallmark Cards, Trans World Airlines, and Bloomingdale's before moving to American, and was known for his use of computers and advanced technology to achieve efficiency and cost control. Crandall, who assumed the management of American Airlines after passage of the Airline Deregulation Act of 1978, which removed government control of airline routes and prices, opened markets, and encouraged the formation of new airlines, began to invent new strategies for adapting the airline to a new economic environment. Among the innovations that he helped develop were Super-Saver fares, frequent-flyer programs, loyalty fares, participatory employee-relations policies, and the establishment of a system of hubs in Dallas-Fort Worth, Chicago, Miami, Nashville, Raleigh-Durham, and San Juan. This system began with the opening of the Dallas-Fort Worth hub in 1981. The hub system enabled the airline to increase its daily flights from 100 to 300 and, despite the strike of air-traffic controllers, to report profits for that year of $47 million.

In the 1980s American Airlines reduced its labor costs but faced Federal Aviation Administration violations and ongoing deregulation. In 1984 Crandall started the American Eagle system, a network of regional airlines that linked hubs to smaller communities as a fully integrated part of the American Airlines domestic route system. The American Eagle system was originally a network of independent airlines; later eight carriers were reduced to four to become AMR Eagle, Incorporated, a wholly owned subsidiary of AMR Corporation. In 1987 the airline completed underground facilities to house its computer equipment and software in Tulsa, Oklahoma, and merged with a West Coast airline known as Air Cal. In 1988 the airline earned $477 million in net profits and $806 million in operating profit and had developed its first profit-sharing plan. A buyout attempt by Donald Trump failed in 1989, and that year American established its first route from San Francisco to Japan. By 1992, however, though American had revenues of more than $14 billion, it showed a net loss of $935 million, as conditions for the nation's airlines continued to present significant challenges. By the early 1990s the airline employed over 96,000 workers, with more than 58,000 represented by three labor unions: the Allied Pilots Association, the Association of Professional Flight Attendants, and the Transport Workers Union. In the early 1990s ground-breaking ceremonies were held for a major expansion of American facilities at Dallas-Fort Worth International Airportqv, a western reservations office opened in Tucson, and the American Airlines C. R. Smith Museum opened. By 1994 the company was operating a fleet of 681 aircraft, which flew a daily average of more than 269,000,000 revenue passenger miles and provided air service to 201 cities worldwide. The company served 361 cities through its American Eagle domestic service.

BIBLIOGRAPHY: 

Dan Reed, American Eagle (New York: St. Martin's Press, 1993).

Diana J. Kleiner

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Diana J. Kleiner, "AMR CORPORATION," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/epa03), accessed April 16, 2014. Uploaded on June 9, 2010. Published by the Texas State Historical Association.