American Airline Still Recovering from 9/11 Terror Attacks

American Airlines was flying high in 2001. Its parent company had averaged $1 billion in annual profit for four years, it had just scooped up iconic TWA to become the world´s largest airline, and its stock price was at an all-time high.

Then on September 11, 2001, the unimaginable happened, when two of American´s planes were seized by terrorists and crashed, one into the World Trade Center and the other into the Pentagon. The attacks plunged the airline industry into a long and deep slump.

American has lost about $7 billion since 9/11, and it´s easy to see a simple cause-and-effect. But analysts who follow the company say the truth is more complicated.

“September 11 and its aftermath is probably the largest single cause” of American´s struggles, “but not the only one,” said Philip Baggaley of Standard & Poor´s.

American and other major carriers opened the door to new, low-cost rivals when they cut flight schedules to save money after the attacks. That accelerated a trend toward lower fares and less revenue per passenger for carriers like American, Baggaley said.

As September 11 has receded into the past, high fuel costs have become the leading scourge of the airline industry, sometimes spelling the difference between profit and loss.

American was already struggling with a downturn in lucrative business travel before 9/11. It lost money in the first six months of 2001.

Ray Neidl, an analyst for Calyon Securities, said parent AMR Corp. was headed for a milder cyclical downturn even without the attacks.

“Trying to separate 9/11 from all of that is pretty much impossible,” Neidl said. “But 9/11 devastated the industry.”

Neidl thinks 9/11 paradoxically could produce long-term benefits for the traditional airlines like American because it forced them to cut costs and improve efficiency, “which they should have been doing all along.”