At the moment, perhaps the most interesting airline “battle” in the United States is between American and United at Chicago O’Hare Airport (ORD). While both airlines have hubs there, the dynamics have changed. A decade ago, American had the advantage, while United has been growing there considerably ever since, putting American into a distant second place position.
American now wants to reclaim market share in Chicago, so it’s adding a lot of flights, which in turn, is causing United to add flights as well. United CEO Scott Kirby has indicated that he’s “drawing a line in the sand,” and will not allow American to grow its market share percentage at the airport any further. Kirby also insists that United’s growth in Chicago is profitable, while American will likely lose $1 billion in Chicago in 2026.
Along those lines, here are the latest comments about the Chicago situation, from another United executive…
United CFO mocks American’s “temporary” Chicago hub
United CFO Michael Leskinen spoke at the Barclays 43rd Annual Industrial Select Conference this week. In addition to making some interesting comments about airline mergers, he also talked about the battle that’s brewing in Chicago, as flagged by View from the Wing.
He was asked questions by Barclays Analyst Brandon Oglenski about the situation in Chicago:
“Well, Mike, there’s been a little bit of maybe a dust up, if you want to call it that, in hometown Chicago between you and another airline that maybe has a hub there. Can you talk to us about some context of what’s occurred here and…”
Leskinen responded by saying:
“Temporarily, they have a hub.”
So he was asked to speak about United’s perspective on Chicago, and how this is all going to play out. Leskinen responded as follows:
“It’s our hometown. I mean this is where we’re headquartered. This is where a lot of the brand loyal customers were winning corporate customers, my neighborhood, everybody is switching from American to United and they’re doing it because we have a differentiated product, we have differentiated service. And so yes, there’s a lot of capacity being added to Chicago, but not all capacity is created equal. And so not only do we have a better hard product, but we have the schedule and we have the connectivity, we have the clubs.”
“So they can fly around some empty airplanes, and there is some gate calculus around that. And so that puts us in a spot where for the long term, we have to protect our gate positions. It’s going to be a modest impact to our level of profitability. We’ve given you guidance. I gave you an update in guidance today. So you can see that it’s not leaving much of a mark at this time. So I feel really confident in our strategy. We are making money in Chicago. We made a nice profit last year in Chicago. The other guy that’s adding so much capacity is not. There’s pretty good math out there. You can create with public data to get at that. And so really, you should talk to them. It’s an irrational strategy to accelerate their losses.”
United also released a brutal presentation about the relative competitive situation in Chicago, as shared by JonNYC. As you can see, United claims it’ll continue to be profitable in Chicago, while it predicts American will lose $952 million at the airport in 2026.
United management is doing a great job, but…
United’s management team deserves a ton of credit for all the changes they’ve made in recent years. I have huge respect for Kirby, and think he’s one of the all-around best airline CEOs. It’s fantastic to see an airline that’s so focused, with such a clear vision for what it wants to be.
Now, we know that United is trying to increasingly move into Delta’s league financially, and the airline has made good progress. Admittedly the airline still has a long way to go, because when you take out United’s roughly $1 billion annual labor advantage (due to contracts not having been ratified yet), United is basically right between American and Delta when it comes to profitability.
All that being said, I have to say, the extent to which United management talks smack is a little unbecoming, in my opinion. It’s of course great to be able to lay out your vision and strategy (something American management could learn a thing or two about), but you can do that without coming across as a jerk, in my opinion.
For example, calling American’s hub in Chicago “temporary,” really? Even in its second place spot, American very much has a hub in Chicago, and will continue to have a hub in Chicago, even if things stay as they are now. Or to reference how American can “fly around some empty airplanes?” Is that necessary?
United management basically talks as if they’re on a reality TV show, in terms of seeing how much shade they can throw at competitors. Admittedly United management has accomplishments to be proud of, but I think many of us could do without the hubris.
What makes this whole situation so sad is that American management just isn’t able to lay out its vision, so it almost makes United’s narration of what’s going on a bit more pathetic. They’re basically kicking someone while they’re already down, and then bragging about it and calling them names.
Nothing would make me happier than to see American actually putting up a fight again, and being a formidable competitor to United. But that’s simply not happening until there are some major changes.
Anyway, it’ll be a very interesting year in Chicago. United executives claim American will lose $1 billion in Chicago, while American executives insist it won’t be nearly that bad. So let’s see where the numbers actually fall. American’s CEO insists that 2026 will be a better year financially, so if the airline does lose anywhere close to $1 billion in Chicago, that doesn’t have great implications.
Bottom line
2026 is a year where American and United are battling it out in Chicago, as American tries to gain market share, and United tries to defend its position. There’s no denying that United has the upper hand, though it’s anyone’s guess how bad the situation really is for American (in terms of United executives claiming that American will lose $1 billion there this year).
One thing I can’t help but comment on is the endless trash talking from United executives about American. In the latest example of this, United’s CFO has said that Chicago is a “temporary hub” for American, and that American will simply “fly around some empty airplanes.” Of course this is only the latest example of this kind of talk — in the past, United’s CEO has also said that American is totally cooked, and has no chance of succeeding.
What do you make of this Chicago situation, and the comments of United’s CFO?
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