American Airlines Inc., which became the No. 1 domestic carrier this year, is taking advantage of sales by competitors and expected industry weakness next year to push its international expansion and become more than an American airline.
The moves are necessary, analysts say, if American is to become a "player" internationally. It currently has 5 percent of the European market.Fast and furious dealmaking could also have the pleasant side effect of making parent AMR Corp. less attractive to a corporate raider by decreasing cash and depressing earnings.
"We have developed at American Airlines a very wide-ranging growth plan that we have been pursuing for five years that is long range in nature and will carry us into the next century," said company spokesman Al Becker.
"One piece of it is international expansion. That includes Europe, the Pacific Rim and eventually Latin America." American also has talked to Aeroflot about gaining entrance to the Soviet Union, Becker said.
"These are good long-term moves and if they affect earnings in the short term, they can deal with that," said analyst Mark Daugherty at Dean Witter Reynolds in New York.
American, based in Fort Worth, took the Latin American plunge in one move Tuesday, saying it would pay Eastern Airlines $471 million for its 20 Central and South American routes, plus the rights to some other European cities and some domestic facilities.
Just Monday, American announced a $195 million deal with Trans World Airlines Inc. for its Chicago-London route, plus four gates and a maintenance hangar at Chicago O'Hare International Airport. Also a bankruptcy court judge approved American's $400,000 purchase of Braniff landing rights at Chicago and New York.
By the middle of next year, American will have about 165 flights weekly to 18 European cities. Six years ago, it flew to none.
American has been expanding vigorously this year, spending billions on new airplanes to fly its newly acquired, or sought-after routes; beginning work on a $400 million maintenance facility to service the jets; expanding its operations at domestic hubs; and fighting off billionaire Donald Trump, aided in large degree by the collapse of another airline buyout.
This year alone, American has begun service to Stockholm, Sweden; Lyon, France, Brussels, Belgium; Hamburg, Dusseldorf and Stuttgart, West Germany; and Zurich, Switzerland. In addition, next year, American will add service to Barcelona, Spain; Helsinki, Finland; Warsaw, Poland; and Glasgow, Scotland.
In the Pacific, American next year will begin flying to Sydney, Australia and Auckland, New Zealand. Also, independent of any deal with Eastern, American has announced increased service to Monterrey, Cancun and Cozumel, Mexico.
The airline also is trying to add a second Tokyo flight, and is investigating flights to Seoul, Korea; Taipei, Taiwan; Hong Kong; Singapore; and Manila.
Additionally, American is considering expanding service in Canada, which it does not consider among its international destinations.
The growth has been financed through record profits, although Chairman Robert Crandall has warned the performance won't continue this quarter or next year.
But the company has plenty of cash, and an appetite for spending.
"There's a good deal of expansion we still want to do in Europe," Becker said. "Our basic feeling is that some of the opportunities that are out there may not be as readily available in 1992" when many interior European trade barriers fall.
"Part of our strategy is to build as much of our route system before 1992 as we can," he said because of fears outsiders will have difficulty competing in a unified European market.