AMR, the parent company of American Airlines, filed for bankruptcy this week. They are the last of the major carriers to file. When we step back and look at the overall airline industry, there are some interesting differences between the largest airlines and the rest of the leading companies around the world.
From The Global 5000 database, we took the 25 largest airline companies and compared them to the top 25 companies in each region around the globe for a total of 125 leading companies.
- Airlines had a growth rate of 6% between 2007 and 2010 compared to the overall leaders growth of 4.8% — so they showed better than average growth
- Airlines have a heavier employee cost component in their cost structure which has contributed to their financial issues. Top airlines employees are 4.3% of the leading company employee count — but the revenue comparison is only 2.6%. Their employee count (and related costs) are more than 1 1/2 times the leading companies and at a lower proportion of revenue.
- They spend more on training. The top 25 airlines spend 12.3% of the top 125 on training which is understandable given the nature of the business
- And we know they have to deal with cost of fuel
- If we look at revenue per employee, the top airlines have a $314,000 ratio. When we look at the Top 125 leading companies, their figure is over $497,000.
When adding up all these facts and looking at the data from the airlines and then examine the basic data from leading Global 5000 companies, it is no wonder there is yet another bankruptcy in the airline industry.