How American Airlines Was Founded By Merging 82 Small Airlines

This decade will mark a century since the initial inspirations of what would become American Airlines first began. For the legacy carrier to be formed, there was a series of acquisitions of 82 smaller airlines during the 1920s.

Douglas DC-3
The DC-3 was integral to the growth of American Airlines in the 1930s, but the company’s operations can be traced to earlier periods. Photo: Getty Images

The preliminary motives

American Airlines has roots in numerous US aviation firms. One of these companies was the Robertson Aircraft Corporation, which started mail flights in April 1926 with the famed de Havilland DH-4 biplane.

“On April 15, 1926, Charles Lindbergh flew the first American Airlines flight – carrying U.S. mail from St. Louis, Missouri, to Chicago, Illinois. After 8 years of mail routes, the airline began to form into what it is today.” – American Airlines.

However, the spark that started it all goes back further. The U.S. Centennial Of Flight Commission shares that airmail service business, the Embry-Riddle Company, was formed in Cincinnati, Ohio, in 1925. Two years later, it agreed to a contract to transport mail from its base to Chicago. Thus, before the end of 1927, the airline was flying with 10 Waco aircraft.

American aerospace powerhouse Fairchild Aircraft Corporation had its eyes on the progress of Embry-Riddle. Moreover, the Ohioan outfit needed a cash injection to expand across the United States. However, businessman Clement Melville Keys was planning on purchasing the company and taking on Curtiss planes rather than Fairchild’s.

Subsequently, on March 3rd, 1929, Fairchild had set up the Aviation Corporation (AVCO) to acquire not only Embry-Riddle but a series of other humble aviation companies.

Significant transformations

In total, 70 directors were on the board of AVCO. These figures included names from the most influential segments of US commerce. Some of its early acquisitions included Robertson Aircraft Corporation, Colonial Airways Corporation, and Universal Aviation Corporation. Another key name to join the fold was Texas’ Southern Air Transport, which would fall under AVCO at the turn of the 1930s.

Wright J-5 Travelair airplane
The Robertson Aircraft Corporation was one of the early forms of what became American Airlines. Photo: IMLS Digital Collections & Content Follow via Flickr

AVCO was a dominator in the industry. However, despite its stronghold across the country, its structure wasn’t the best. With dozens of companies of different shapes and sizes around the nation, a change was needed. Therefore, the business launched American Airways on January 25th, 1930. This formation would also have operating subsidiaries under it, making operations easier to handle.

Stay informed: Sign up for our daily and weekly aviation news digests.

A twist of fate

As a result of this transition, American Airways went on to join TWA, Eastern Air Transport, and United Air Lines as one of the ‘big four’ passenger and mail carriers in the US. However, AVCO’s successful ventures would go through a significant challenge in 1934.

In February 1934, Franklin D. Roosevelt ordered the cancellation of all airmail contracts and requested The War Department to help with these jobs. This move would prove to be a disaster as the national mail service was approximately halved, and over 60 accidents occurred in just five months. So, in response, the Air Mail Act was implemented in June 1934.

The law meant that many aviation holding companies had to dissolve. Notably, AVCO broke up and sold off a significant share of American Airways.

On the back of this change, American Airways switched its name to American Airlines on April 11th, 1934. This move marked a new beginning for American, and its new president, the legendary  Cyrus R. Smith, helped the carrier go on to become a mainstay in global aviation.

“American founder C.R. Smith worked with Donald Douglas to create the DC-3; a plane that changed the entire airline industry, switching revenue sources from mail to passengers.” – American Airlines.

American Airlines Douglas DC-3 Getty
American Airlines made the most of its independence. Photo: Getty Images

A series of events

Altogether, the early days of aviation saw many startup airlines trying to get off the mark and reach new heights. However, due to the lack of funds, in many cases, the only way to expand would be following a cash injection or a merger with another business. So, AVCO’s determination to dominate across the US and snap up over 80 airlines shook up the industry and eventually led to the formation of American Airlines.

What are your thoughts about American Airlines’ early days? What do you make of the carrier’s journey over the years? Let us know what you think in the comment section.