American Airlines
has become the only of the big four airlines in the United States to post a net loss in Q3, with its main competitors, Delta Air Lines
, United Airlines, and Southwest Airlines, being profitable during the quarter.

Repairing bridges

Robert Isom, the chief executive officer (CEO) of American Airlines, said that its team has continued to focus on running a reliable operation and managing its costs.

Isom also said that the carrier has been taking aggressive action to reset its sales and distribution strategy, which had resulted in Vasu Raja, a long-time American Airlines executive and the then-chief commercial officer (CCO) of the airline, leaving in June.

The push to distribute its tickets more directly to consumers has backfired, and while Isom has believed it will be the future of airline distribution, that day might be further than the airline previously imagined it to be.

American Airlines Boeing 737-800 (N337PJ) blasting out of Los Angeles International Airport.

Photo: Minh K Tran | Shutterstock

Nevertheless, the CEO added that in addition to resetting its sales strategy, the airline has attempted to reengage the business travel community. Isom was confident that American Airlines would improve its revenue performance over time.

“We have heard great feedback from travel agencies and corporate customers as we work to rebuild the foundation of our commercial strategy and make it easy for customers to do business with American.”

For what it is worth, the airline has put a lot of emphasis on the sales strategy reset, with its opening Q3 earnings statements providing some insight into the status of its sales and distribution strategy.

“In the third quarter, the airline renegotiated competitive contracts with a majority of the largest travel agencies and many of its top corporate customers, reintroduced Corporate Experience benefits for corporate travelers, and increased support for corporate and agency customers by adding sales account managers and sales support staff.”

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Raja joined American in 2004.

Operational profitability

Nevertheless, American Airlines increased its revenue by 1.2% in Q3, ending the period with $13.6 billion in revenue. Operational expenses were reduced by 1.1%, enabling the airline to end the three-month period with an operational profit of $89 million.

During the first nine months of 2024, American Airlines’ operating profit plummeted to $1.4 billion, or -37.8% year-on-year (YoY). Still, its net income so far in 2024 was $256 million, despite Q3 being loss-making, with the airline ending the period with a net loss of $149 million.

American Airlines Boeing 737-800 (N929NN) at Phoenix Sky Harbor International Airport.

Photo: Nate Hovee | Shutterstock

However, American Airlines highlighted that during the quarter, it recognized $354 million of net special items, including one-time charges that resulted from its mainline flight attendants, represented by the Association of Professional Flight Attendants (APFA), ratifying a new contract.

“[…] one-time charges resulting from the ratification of a new collective bargaining agreement with American’s mainline flight attendants, including a one-time payment of $514 million […].”

In comparison, Delta Air Lines, United Airlines
, and Southwest Airlines ended Q3 with a net profit of $1.2 billion, $1 billion, and $67 million, respectively.

Like other airlines, American Airlines quarterly average yield dropped to 19.12 cents (5.2% YoY). The carrier noted that its financial performance and revenues were ahead of its previous guidance.

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Year-end outlook

When American Airlines announced its Q2 results, the company outlined that its full-year capacity, measured in available seat miles (ASM), would grow by around 5% to 6% while its total revenue per ASM (TRASM) would be 3% to 5% lower YoY.

Lastly, the airline predicted that its 2024 adjusted operating margin would be 3.5% to 5.5% higher than in 2023.

Tails of American Airlines planes

Photo: CaseyMartin | Shutterstock

Now, the carrier estimated that while its capacity estimates will remain the same, TRASM would be between -3% to 4% lower, while the adjusted operating margin would grow 4.5% to 5.5% YoY.

The starkest difference in outlook was the adjusted earnings per diluted share (EPS). By the end of Q2, it was between $0.70 and $1.30, while the latest outlook estimated adjusted EPS to be between $1.35 and $1.60.

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