Among the “big three” US carriers, American has really been struggling in recent years, in terms of profitability. It used to be that Delta was by far the most profitable, and that American and United were in the same league.
Now United has pulled ahead (though it’s still well behind Delta in terms of profitability), but it has left American in the dust. It basically seems that all of United’s gains have come at American’s expense. For years, American pursued a failed strategy whereby it was overly focused on costs, only to backtrack as of early 2025, and once again focus on being premium.
The issue is, American CEO Robert Isom hasn’t laid out a cohesive plan for actually turning things around. His narrative all along has been along the lines of “oh, everything is fine, this is just a blip, things will improve.” So that brings us to an interesting update…
In this post:
Robert Isom’s plan: premium, premium, premium
The brilliant Leslie Josephs from CNBC has a story sharing Isom’s vision for turning around American, and closing the profitability gap, which in 2025, was about $3 billion with United, and $5 billion with Delta. American is by far the world’s largest airline in terms of the number of daily flights operated.
Let me just cut to the chase here. I think Isom’s vision shared here is more than we’ve seen in the past, but not enough. Let me hit on some of the highlights, as I see them:
- Isom wants American and its employees “to be the best at everything that we do,” and the “long-range plan is certainly making up the margin gap” with competitors, but there’s no timeline for accomplishing that
- Isom views American as “a premium global airline with the largest footprint in North America”
- American’s goal is to continue growing the loyalty program, improving the customer experience, expanding the network, and increasing higher-end revenue
- In addition to initiatives that have already been announced, we’ve also learned that American plans to retrofit its Boeing 787-8 cabins, and to open a 37,000 square foot Admirals Club in Terminal C at Dallas, which will be the carrier’s biggest to date, plus a Provisions by Admirals Club in Terminal F at Dallas
- American’s commercial team is “working on technical changes that aim to offer customers more opportunities to buy pricier seats”
- American’s flying split right now is 80% domestic and 20% international, with Isom claiming the carrier’s network breadth is a major strong suit for the airline, and will continue to be
- 62-year-old Isom says he has “never been deterred, no matter what the challenges that we face,” and that he’s “clear-eyed about the challenges in this business”
- We know American is planning a new wide body aircraft order, and it remains to be seen what that entails, but it’ll play a major role in how American evolves
The key things that are missing from Isom’s turnaround plan
I have to say, this overall plan at least seems more cohesive than what we’ve seen in the past from American. But perhaps credit to that goes to Josephs for her story, and how she lays it out, rather than how American management lays it out.
While there are a few new revelations here, there’s nothing that’s earth shattering. Essentially the idea is to just keep investing in the passenger experience, and becoming more premium. Is that enough, though, when competitors are doing the same?
The thing is, as much as us consumers like when airlines invest in the passenger experience, it’s not like that’s a solution to everything, and a guarantee to be more profitable. That’s especially true when competitors have such a big head start, and are doing the same. Maybe it helps with stopping the loss of premium customers, but it’s unlikely to lead to a big gain in customers.
What’s most telling to me is what isn’t mentioned once in Isom’s vision, which is to turn around the culture of the airline. To me that’s the single biggest issue American has, which is that there are so many frontline employees who are just demoralized and indifferent.
I’ve said it before, and I’ll say it again — American can’t have a successful turnaround without a culture change, and Isom has lost the respect of employees, and simply isn’t able to execute that. I’ll also repeat this — I don’t recall an airline ever having a culture change among employees without a change in management. Seriously, can anyone give me an example? Every time I’ve put that question out there, no one has been able to answer. That leaves us with one of two conclusions:
- American doesn’t need a culture change
- Isom will be the first guy in the history of the airline industry to create a culture change as an existing CEO of an airline, while objectively not having the respect of frontline employees (that’s not my opinion, that’s what employees are putting out there)
I think the second biggest issue is American’s hubs. They’re efficient hubs for domestic travel, which is the area where American excels, in terms of having by far the biggest network of the “big three” US carriers.
The problem is, places like Charlotte and Dallas and Philadelphia and Phoenix are great for domestic connectivity, but they’re not the few most important international markets in the country. This story notes how American Chief Commercial Officer Nat Pieper says the airline needs to win in jump-ball markets, like Chicago, Los Angeles, and Washington. That’s great, though I question how much upside there is:
- American can increasingly compete with United in Chicago, but it’ll almost certainly stay in the number two spot, and you want fortress hubs where you actually have more pricing power, rather than competing fiercely
- American has largely abandoned Los Angeles in terms of international flying, and it’s a market where Delta is now wanting to grow massively, so I don’t see that ending well for American
- American has great market share at Washington National, so that’s a market where the airline is doing well, but that only gets you so far, and I’m not sure there’s much upside there for American beyond what it’s doing now
But this is the issue for American’s international network. The most lucrative markets are those with strong origin & destination demand, since you have more pricing power. Growth out of places like Charlotte and Philadelphia can only get you so far, when competitors are growing out of markets like Newark and San Francisco.
Bottom line
We know that American wants to turn itself around and narrow the profitability gap it has with Delta and United. Of course that has been the goal for quite some time, and the strategy seems to be all about becoming more premium. That’s obvious, and frankly, easier said than done.
Yes, American is investing in its product, but will that meaningfully change results when competitors are doing the same, and arguably, at a faster pace? I still think the two biggest issues are culture and international network, and neither of those are particularly easy problems to solve.
A culture change requires a management change, while international network changes require a bold new strategy, not to mention, a bigger long haul fleet (which isn’t going to happen overnight).
What do you make of Isom’s vision for closing the profitability gap with Delta and United?
“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the...
“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.” — Theodore Roosevelt
“working on technical changes that aim to offer customers more opportunities to buy pricier seats”
Read that: "ways to nickel & dime the hell out of you, on products that you currently get included in any ticket purchase."
I agree with so many of the comments made here. I HAD to fly AA from the late 80's into the mid-90s out of SFO (yes UA fortress hub) I watched the service level go from "nice" to OK. I usually flew First. Meals..so so, FA's where actually quite pleasant. Fast forward into the post 9-11 and AA shot down hill like a rocket.
Isom needs to reach the customer facing employees and make...
I agree with so many of the comments made here. I HAD to fly AA from the late 80's into the mid-90s out of SFO (yes UA fortress hub) I watched the service level go from "nice" to OK. I usually flew First. Meals..so so, FA's where actually quite pleasant. Fast forward into the post 9-11 and AA shot down hill like a rocket.
Isom needs to reach the customer facing employees and make them understand that they need and to and must be Brand Ambassadors. Change and stand by policies must be customer friendly and helpful.
They have got to have serrious culture change and quick.
Isom and all of his ideas/vision just need to go. We're close to the point of no return for American
You are spot on about their number one issue being their front line employees. I moved to United a year ago and love it. Their employees are generally happy, and are welcoming when you fly them. On AA, every single time I’ve flown them over the past three years I not only found the vast majority of their front line employees treat you indifferently, they actually treat you as the enemy. Why pay a premium...
You are spot on about their number one issue being their front line employees. I moved to United a year ago and love it. Their employees are generally happy, and are welcoming when you fly them. On AA, every single time I’ve flown them over the past three years I not only found the vast majority of their front line employees treat you indifferently, they actually treat you as the enemy. Why pay a premium price for truly awful treatment? Heck, why pay for awful treatment at all?
Explain how getting on a 737 after a long day for a 6 hour flight and not finding a single screen is "premium". It's so visibly cheap, no wonder people seek out UA (with its gorgeous Bluetooth enabled screens) or DL (who unlike AA never ripped out a single screen).
The halo effect is real, even for the minority of passengers who don't even turn on the flight map (let alone watch new movies, and...
Explain how getting on a 737 after a long day for a 6 hour flight and not finding a single screen is "premium". It's so visibly cheap, no wonder people seek out UA (with its gorgeous Bluetooth enabled screens) or DL (who unlike AA never ripped out a single screen).
The halo effect is real, even for the minority of passengers who don't even turn on the flight map (let alone watch new movies, and airplanes is where most business travelers see theirs).
This plan will go nowhere in increasing profits. They chose visibility cheap, they'll continue to attract cheap passengers (and captive ones, which are located in cities with ho-hum income).
The US merger did not help AA culture as the culture was broken even before Chapter 11. Crappy old MD80s (at least with comfortable coach seats) and ratty old A300s. MIA was a real mess. JFK split between two terminals. Not the best FA around.
During bankruptcy the airline was trying to pivot to premium thus IFE in newer 738s and all Airbus narrow bodies. But then Parker thought Spirit Airlines was the future. And that other dolt they bought in thought so too.
I fly on AA business class regularly from LAX to JFK. Some flights are now on the Airbus A321XLR, with business-class airfares comparable to First Class. However, I am not allowed entry to JFK's Soho or Chelsea lounges when flying in business class on the Airbus A321XLR.
Furthermore, AA provided me with two Flagship Lounge Single Visit Passes this year, but these passes do not permit entry to JFK's Soho or Chelsea lounges either....
I fly on AA business class regularly from LAX to JFK. Some flights are now on the Airbus A321XLR, with business-class airfares comparable to First Class. However, I am not allowed entry to JFK's Soho or Chelsea lounges when flying in business class on the Airbus A321XLR.
Furthermore, AA provided me with two Flagship Lounge Single Visit Passes this year, but these passes do not permit entry to JFK's Soho or Chelsea lounges either.
I have been an Executive Platinum member for the past 20 years but have not been appreciated as one. AA's management has talked a lot over the years about treating premium passengers as important, but in-flight services have not really improved in first class and business class. Actually, in-flight services have slowly deteriorated over the years. Now, I am just content to be seated in business or first class.
I still find it laughable that any US airline claims to be "premium". Maybe JSX fits the bill, but none of the rest do.
When the US3 can meet or exceed the level of service provided by EK, EY, QR, SQ, LH, AF, then they can call themselves premium. Until then, they're just another airline.
Is Terminal F only getting a provisions?
I flew back to PHL from LHR in their Flagship Business seat. Honestly, better food, better seat, better mattress, better IFE than any of the IAG carriers, and LH. I would book that experience any time.
Ben is dead on in his understanding of the industry and Leslie Joseph has it right.
Lack of service focus and financial strength cost them their presence in NYC, CHI and LA. There is very little evidence that US airlines can go back and regain share they once lost to other carriers so it is a big lift to think they can do that. They can be viable as a strong #2 in those 3...
Ben is dead on in his understanding of the industry and Leslie Joseph has it right.
Lack of service focus and financial strength cost them their presence in NYC, CHI and LA. There is very little evidence that US airlines can go back and regain share they once lost to other carriers so it is a big lift to think they can do that. They can be viable as a strong #2 in those 3 markets but they have alot of very competitive route additions to make it work and it is doubtful they can do it in 3 major markets; they lost NYC 15 years ago, Chicago after that and LAX more recently - those won't come back together or easily.
Not discussed is that AA is overhubbed in the eastern US which has led them to be overreliant on RJs. Half of AA's domestic network is flown on RJs - heavily large RJs in contrast to UA but still far more small inefficient aircraft competing w/ larger gauge and more efficient DL aircraft.
Adding intnernational will be harder given that many of AA’s hubs are much markets than DL and UA’s; AA's network is good at volume in 2nd and 3rd tier markets but their lack of presence in the largest markets and the lack of local international markets in their hubs makes international growth much more challenging.
AA does have an advantage with credit card revenue over UA because of a larger domestic system but they, like UA, will be chasing DL's revenue from Amex; and AA and UA have nothing like DL Tech Ops for growing maintenance insourcing revenue.
I suspect that AA is seeing significant revenue improvements - and we will find out Thursday when they and WN report their earnings. Both underperformed for so long that they can shoot up fairly quickly by doing some of the same things that DL showed the industry made financial sense 20 years ago and UA has copied over the last decade.
Finally, it is worth noting that B6 won the bid for NK's LGA slots so AA's challenge for NYC gets a whole lot more interesting. the feds want the big 3 to not grow larger in NYC - and that will be proven not just with shooting down the NEA but also as UA will be very limited with what it can do with B6.
Still, B6 is certain to add service in markets that AA - and esp. DL already serves even as B6 has even less financial strength than AA.
I am optimistic that AA is on the right course but it will take more than a few CNBC articles to prove they are up to the task.
B6 LGA slots
This is why AA needs to find a way to get the Jetblue slots at JFK to get themselves to the same competing level as UA/DL. PHL is not cutting it.
If AA were able to find a way to transform JFK into a 350-400 slot operation (still less than DL) they can truly build a robust TATL with a strong O/D base supported by true east coast connectivity. JFK as the TATL hub, DCA/LGA...
This is why AA needs to find a way to get the Jetblue slots at JFK to get themselves to the same competing level as UA/DL. PHL is not cutting it.
If AA were able to find a way to transform JFK into a 350-400 slot operation (still less than DL) they can truly build a robust TATL with a strong O/D base supported by true east coast connectivity. JFK as the TATL hub, DCA/LGA stalwart O/D hubs with efficient NE connecting flow, CLT the main domestic east coast connecting hub + high volume TATL routes, and a slightly stronger BOS along with a pulled back PHL both settling at a strong ~150 daily departures focus cities.
If AA can somehow truly double their position in NYC they will be set up well across the board especially if you lump their AS partnership and the strength that AS provides on the west coast. That will set AA up well with strong positions in all corners of the country.
Unfortunately, Isom is too risk adverse and is not willing to make bold moves and the current Northeast set up is severely defragmented with no true clear leading hub and a lot of network "duplication".
yes, figuring out how to get the B6 JFK operation (and ideally Boston too) is and has always been the answer. Golden time to do so under Trump. That said, I actually think the regulatory case to *allow* it is real: turning NYC into a genuine three-airline market rather than a de facto two-airline market.
AA underutilizes its gates at BOS - most carriers other than DL do.
The connector between DL's terminal and the B terminal at BOS is underway and it is very likely that DL will succeed at getting more gates in concourse B as the rest of the airlines are shifted counterclockwise. B6 is still cutting at BOS so someone could take their space but AA is still far too small compared to DL at BOS;...
AA underutilizes its gates at BOS - most carriers other than DL do.
The connector between DL's terminal and the B terminal at BOS is underway and it is very likely that DL will succeed at getting more gates in concourse B as the rest of the airlines are shifted counterclockwise. B6 is still cutting at BOS so someone could take their space but AA is still far too small compared to DL at BOS; they have to strategically decide what they want to focus on but BOS is probably far less important than NYC, Chicago and LA and they will struggle to claw their way back in those 3 markets. BOS is just not likely to happen.
I wrote a great reply but this website always seems to glitch out when I hit post.
Something needs to happen in Boston. It’s my home airport and it’s really limited with flights. JetBlue, American, and Delta all seem to fall short. Even though Delta calls Boston a hub much of the time you still need to connect via another hub. Their network here is limited. AA isn’t a hub but they fly places...
I wrote a great reply but this website always seems to glitch out when I hit post.
Something needs to happen in Boston. It’s my home airport and it’s really limited with flights. JetBlue, American, and Delta all seem to fall short. Even though Delta calls Boston a hub much of the time you still need to connect via another hub. Their network here is limited. AA isn’t a hub but they fly places other than a hub. It’s like they are sticking their toe in the water. JetBlue is fine for a family going to Florida but if you fly for business they can’t get you Tulsa or Columbus.
Can’t be premium or drive loyalty when your million miler program is woefully uncompetitive. No recognition of long term loyalty - 2 million and 3 million milers get same treatment which is well below the offerings at DL and UA . 3 million should be lifetime Platinum Pro . Can’t say you are premium or trying to drive loyalty while giving the 3 million miler a slap in the face .
AA used to be a premium airline before us airways took over. Up until recently they cut every corner, which really made employees indifferent and even hostile because they are not happy. I would say their merger really failed ...
Can’t masquerade as premium with a substandard economy product. Most people who fly will not be in business / first but if they know paying $20-100 more per trip is going to be a slightly better economy product, they will pledge allegiance to that airline. That is what delta did and what United is working towards with reinstalling screens. I honestly believe American has a better physical product in business than delta / United but...
Can’t masquerade as premium with a substandard economy product. Most people who fly will not be in business / first but if they know paying $20-100 more per trip is going to be a slightly better economy product, they will pledge allegiance to that airline. That is what delta did and what United is working towards with reinstalling screens. I honestly believe American has a better physical product in business than delta / United but that’s where the buck stops as why would someone who traditionally flies in a crap 737 max take a gamble on their business?
Spot-on analysis, Ben. Sounds like more half-measures. AA saying “We will double down on our small-city hubs ex-ORD, we have nothing to announce regarding IFE, nothing to announce on motivating employees, don’t expect us to fly you internationally from the big cities unless you’re going to London, but hey we’re refurbishing lounges and > 20-year-old planes that would’ve needed it anyway. We are the sunbelt airline, and we aren’t going to do anything, say anything,...
Spot-on analysis, Ben. Sounds like more half-measures. AA saying “We will double down on our small-city hubs ex-ORD, we have nothing to announce regarding IFE, nothing to announce on motivating employees, don’t expect us to fly you internationally from the big cities unless you’re going to London, but hey we’re refurbishing lounges and > 20-year-old planes that would’ve needed it anyway. We are the sunbelt airline, and we aren’t going to do anything, say anything, plan anything that gets in the way of United’s upward trajectory.”
Refurbishing planes for higher J and adding lounges is not a strategy when everybody else is doing it.
I won’t believe that American is serious about a turnaround until they replace COO Dave Seymour. No amount of continued product improvements (it’s already pretty solid) and network growth (no one wants to fly them with operational reliability this bad) is going to solve that glaring problem.
It is too bad!!! I cannot imagine someone on a business trip would be able to fly AA, it is slightly better this year. But over the past several years, every flight of mine delayed or cancelled, I have to plan 6 hrs long layover for AA’s connections and though they did delay still more than 6 hrs frequently. I am speechless.
In order for AA to "win" against Delta and United they need to expand their international network outside of... LHR.. Winning the domestic market only gets you so far.
Either way the gap will close a bit with their corporate relationships returning to normal, however with a piss poor international route network and honestly nothing truly differentiating them domestically (people that fly Delta/United/SWA/ASA etc.. will continue to fly those airlines), they'll remain where they...
In order for AA to "win" against Delta and United they need to expand their international network outside of... LHR.. Winning the domestic market only gets you so far.
Either way the gap will close a bit with their corporate relationships returning to normal, however with a piss poor international route network and honestly nothing truly differentiating them domestically (people that fly Delta/United/SWA/ASA etc.. will continue to fly those airlines), they'll remain where they are for years to come.
As a passenger, I care about quality and timeliness of service, and the value per dollar/point paid.
AA doesn’t care about customer service experience. And I don’t any plans seriously address that.
American has the best domestic route map by far. If you need to travel between two small or medium sized cities chances are American can get you there, United might be able to get you there but probably not the time you want to go, and delta not so much.
American still feels very America West. They are a budget carrier with a bigger route map. As such, no one wants to pay more for an America West experience.
Start treating customer like you care if they come back.
I’ve worked at three of the Big 4 and can say that AA’s biggest problem is the leadership up top. There are tons of smart and passionate people supporting the airline and the operations but unfortunately, there has been inconsistent vision and mission from leadership. They are also too protective of the airline and see no faults in it. I know airline executives won’t publicly say anything negative about the airline but I truly think...
I’ve worked at three of the Big 4 and can say that AA’s biggest problem is the leadership up top. There are tons of smart and passionate people supporting the airline and the operations but unfortunately, there has been inconsistent vision and mission from leadership. They are also too protective of the airline and see no faults in it. I know airline executives won’t publicly say anything negative about the airline but I truly think they even think this in internal meetings. I remember the day United announced United Next, a sweeping investment in all aspects of the airline, leaders were quick to defend AA, bad mouth Kirby at a personal level (how he still flies AA), and stick to the strategy that hasn’t worked for years. I loved my time at AA and I want them to succeed. I agree with Ben, there simply needs to be a leadership shake up. An airline has never turned around without bringing in a fresh leader.
They need to invest into technology to benefit the customer and they need to reward employees based upon flyer satisfaction. Essentially what CO did back in the 1980s.
In addition, they need to focus on the premium customers. That means bigger lounges at certain stations and better in flight standards. They're moving in that direction but have a ways to go.
This! They need to put customers and employees first. They should start by going through every anti-customer policy and eliminating/revising them. Empower your front line employees to make customers happy, not angry. Rewards employees for implementing this program. In other words, stop making everyone dislike you. That singular cultural change would go far. This is why Delta succeeded.
While you are getting your customers and employees to stop disliking doing business with your company, invest...
This! They need to put customers and employees first. They should start by going through every anti-customer policy and eliminating/revising them. Empower your front line employees to make customers happy, not angry. Rewards employees for implementing this program. In other words, stop making everyone dislike you. That singular cultural change would go far. This is why Delta succeeded.
While you are getting your customers and employees to stop disliking doing business with your company, invest in better lounges, better connecting times, cleaner aircraft, better technology to help customers and employees. Finally, get better airplanes and shine.
This all takes alot of time and hard work. Isom is too old and too disliked to handle the task. Hire a younger, future-thinking, inspiring CEO to replace the cardboard Isom who is thinking about one thing -- jeeping his job with fat bonuses until retirement in a few years.
I’ve always enjoyed Americans Business class on international flights. But their employees continue to be their weakest link, but that’s a general issue with North American carriers.
D
Unless a person is a shareholder, who cares? As a passenger, I'll care about quality of service, timeliness of service, and value per dollar/point paid.
^This guy gets it.
and yet financially strength or weakness ALWAYS shows up in the operation.
It is a fantasy to think that AA can offer the products and service levels of DL without the profits that DL has - or at least in proportion.
I still suspect that AA is moving in this direction because they are seeing results from their premium investments so far and their fuel increases are not as bad as some carriers - so...
and yet financially strength or weakness ALWAYS shows up in the operation.
It is a fantasy to think that AA can offer the products and service levels of DL without the profits that DL has - or at least in proportion.
I still suspect that AA is moving in this direction because they are seeing results from their premium investments so far and their fuel increases are not as bad as some carriers - so this is a good time to invest as they pay down debt.
The US needs 3 strong global carriers and I suspect WN will join them in a few years; all will succeed only because of and in proportion to their financial strength
Tim, you're supposed to say, 'the US needs just 1 strong global and domestic carrier, and it's DELTA AIR LINES.' What is Ed even paying you for if you're gonna forget to say the daily talking-points! C'mon!
except I have never said that....
there has to be at least 3 airlines in order for DL to be able to say it is the best. :-) /s
Tim, don't admit to the error! Ya gotta deflect! Then, eliminate the competition. #1 by default is still #1. ;-)
How about... start with the service gap, then, miraculously, the profit gap will follow. Think about it.