One of the three largest airlines in the world, alongside Delta Air Lines
and United Airlines
. American was founded in the 1920's from a merger
of several smaller airline companies: at the time, the air system in the United States
was underdeveloped in comparison to Europe
's, and airlines existed as shoestring operations primarily devoted to air mail
, from which they received significant government subsidies.
In its early years, American was run by E. L. Cord, the maker of the Cord automobile. In the mid-1920's, command was passed on to C. R. Smith, who later became Secretary of Commerce under President Lyndon Johnson. Smith became a major figure in aviation history. He is credited by historians for pushing Donald Douglas to build the DC-3 airliner, which went on to become the best-selling aircraft in history. He also worked with New York mayor Fiorello LaGuardia to build New York's first airport, and in doing so received the terminal space to open the world's first airline lounge there, the Admirals Club.
During World War II, a large portion of American's fleet was reapportioned to the Air Transport Command of the Army Air Corps, and was used in major airlift operations including the Hump route over the Himalayas from British India to the Republic of China. Following the war, American continued to expand. It ran a short-lived trans-Atlantic operation in the late 1940's under the name American Overseas Airways: AOA was eventually driven out of business by Pan Am and TWA. American rebounded from the loss and began operating scheduled flights to Mexico. Until the airline deregulation of 1978, American's only other international route award was to serve Fiji, Samoa, and Australia, routes that it found to be unprofitable.
Despite a scandal in the 1970's involving the publisher of its inflight magazine, American Way, the airline managed to rebound under CEO Bob Crandall (now a director of Halliburton). Crandall created several special programs that were copied by virtually every other airline in the world, including the concept of frequent flyer miles, the hub and spoke route system, and the SABRE reservations network. American continued to expand, absorbing Air Cal and portions of Pan Am and Eastern Airlines in the late 1980's. Following these purchases, American had a huge international route system that included several cities in Western Europe, Tokyo, and most of Latin America. It also opened hubs in San Jose, Raleigh Durham, and Miami: the San Jose and Raleigh operations were later sold off to Reno Air and Midway Airlines respectively.
American is now a subsidiary of the AMR Corporation, based in Fort Worth, Texas. It operates hubs in Dallas, Chicago, Miami, St. Louis, and New York City. The airline merged with its regional counterpart American Eagle in 1999 and with failing TWA in 2001: it now has the largest fleet in the world, totalling over six hundred aircraft ranging from ATR turboprops to 777 widebodies. It is the largest U.S. carrier in Latin America and in Britain, and the largest airline in the oneworld airline alliance that includes British Airways, Cathay Pacific, Qantas, Finnair, Iberia, LanChile, and Aer Lingus.
Following the September 11th terrorist attacks, which claimed some of American's own aircraft, the airline has operated at a reduced capacity and with massive financial losses. (Before the attacks, however, it was the highest-netting airline operation in the world.)
Early in 2003, after posting quarterly losses of over $1 billion, AMR made a deal with its labor unions to significantly cut wages in order to save the company. Then, just as the deal was being signed, it was revealed that AMR had set up massive executive compensation packages for its top managers, totalling millions and millions of dollars. The unions immediately bailed, and the only thing that kept AA out of Chapter 11 bankruptcy was the resignation of CEO Donald Carty. The future of American Airlines remains very murky indeed.