(Reuters) - Bankrupt American Airlines AAMRQ.PK aims to boost revenue by $1 billion annually by beefing up its international routes and fleet to lure more well-heeled business travelers, the company said on Tuesday.
Lower costs achieved through bankruptcy will enable the airline’s corporate parent, AMR Corp, “to create the premier airline for high-value customers, who choose airlines based on network, alliances, products and services,” Chief Commercial Officer Virasb Vahidi said in a letter to employees.
“While the number of these customers is small, they provide a disproportionate amount of revenue and are critical to our success,” Vahidi said.
AMR and American Airlines filed for Chapter 11 bankruptcy protection on November 29, citing high costs, including for labor.
The company said this month that it wants to trim $2 billion a year from its costs, including $1.25 billion in employee-related expenses, and generate $1 billion per year in new revenue.
The company, which has long targeted business travelers, said that by cutting costs and easing restrictive contracts, it can focus on network, fleet and partnerships to generate the revenue improvements.
About two-thirds of the revenue boost will come from “right-gauging our fleet,” Vahidi said. The remainder will come from bolstering existing partnerships with foreign airlines like British Airways (ICAG.L), Iberia, Japan Airlines and Qantas(QAN.AX), he said.
Vahidi said AMR wants to move ahead with last year’s order for 460 narrow-body airplanes and earlier plans to acquire wide-body Boeing (BA.N) 787 and 777 aircraft.
He said the airline also intends to invest in products and services like lie-flat seats and in-flight wi-fi that high-end customers who pay the most for tickets will find attractive.
“Our disadvantaged cost structure and balance sheet have greatly limited our ability to invest in products or match our competitors’ actions in some cases,” Vahidi said.
Reporting By Kyle Peterson; editing by John Wallace