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American Airlines Foreign Direct Investment in China

In: Business and Management

Submitted By boehmsims
Words 2483
Pages 10
American Airlines

Foreign Direct Investment Plan

University of Phoenix

June 8, 2009

American Airlines Foreign Direct Investment Plan

American Airlines has decided to expand operations into the greater China market. A thorough analysis of the marketplace has taken place and the final remaining detail that needs to be defined is the airlines strategy for the foreign direct investment (FDI) that will be required to service successfully the Chinese travel market. While much of the expansion into the China market will leverage local resources, direct investment in the Chinese infrastructure will be needed. As such, the FDI analysis will focus on the expansion of airport facilities, airport and city ticket offices and a reservation center. The structure of the FDI analysis will include an executive summary of American Airlines overall China strategy, modes of entry and associated risks, funding of the initiative and contingency plan should the airline need to change strategies mid implementation.

Executive Summary

American Airlines and American Eagle (firms owned by AMR) serve some 250 destinations in approximately 40 countries including destinations in Europe, the Americas, and Asia-Pacific. The combined aircraft of both carriers comprise of 900 airplanes with 625 of those being jets. On any given day the airline transports 270,000 passengers on approximately 3,300 flights to over 170 destinations worldwide. Additionally, American Airlines is part of the Oneworld global alliance of airlines which expands AA’s reach with an additional 10 world leading airlines servicing 650 destinations. American Airlines has made the decision to expand into the Chinese market. Part of that expansion will leverage the airlines Oneworld alliance which includes Asian carriers Cathay Pacific and Japan Airlines. The expansion will initially focus on inbound

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