September 11, 2001 challenged the airline industry. As a result of the terrorist attacks, revenue experienced drastic losses. Companies, with strong financial standings before September 11, survived the devastating blow (14). Other airlines experiencing financial difficulty before the attacks, such as US Airways, are still having difficulty recovering.
US Airways tried different ways to recover from its financial difficulties. The company ordered new modern aircrafts and expanded into international markets to try to increase revenue. In August 2002, to assist with the financial troubles, the company filed for Chapter 11 bankruptcy. This allows US Airways to restructure its operation through debt forgiveness, loans, and corporate reorganization. Currently, US Airways is reorganizing in hopes of financial recovery.
The critical issues addressed in this case are international expansion, industry margin, and Chapter 11 bankruptcy.
US Airways seeks an avenue to generate new revenues. The company examines international expansion as this avenue. However, in a post September 11 world, the economy and public interest do not support travel. There is no room for trial and error in the airline industry. The industry runs on a one to two percent margin and must strategically plan for international expansion. In addition, the company filed for Chapter 11 bankruptcy in August 2002. US Airways hopes to reorganize and recover from bankruptcy by March 31, 2003.
Recommended Courses of Action
US Airways needs to create a plan to solve its current financial troubles. The company is researching how to increase capital to recover from recent declines. A fast, efficient solution would be to sell planes that are leased and to replace the current hub-and-spoke system with point-to-point traveling. Money would be freed through selling leased planes and could be used to pay off debts. A point-to-point system, instead of a hub-and-spoke system, could increase profits and increase customer service because fuel expenses would drop and customers would have the convenience of no layovers.
The Organizational Mission
Research completed through the case and the Internet has revealed that US Airways has no formal mission statement available to the public. Without a mission statement, US Airways will find it hard to form objectives and to answer the question “What is our business?”. An effective mission statement can lead a company, encourage investors, and motivate employees (Mission Statements, BUS 130, 230). To design a mission statement that will be effective, the majority of nine characteristics must be included. Customers, products, markets, technology, profitability, philosophy, self, public image, and employees are all components that should be incorporated into a mission statement (Vision and Mission Statements, BUS 485).
An effective mission statement that US Airways could use follows:
“Our mission is to offer competitive prices to our customers, while using the latest advances in technology to create a quality air travel experience. We strive to be the best in our workplace, our industry, and our community.”
The above statement contains elements, which will help establish future objectives and offer focus to US Airways’ stakeholders.