Why American Airlines Stopped Making Money

About this video

• Video Title: Why American Airlines Stopped Making Money
• Channel: Wendover Productions
• Speakers: [None explicitly named in the transcript]
• Duration: 21:30

Overview

This video examines why American Airlines, despite being the largest airline in the US and the world by operational metrics, is the least financially effective among the major US carriers (Delta, United, American). It analyzes a series of strategic decisions made by American Airlines' management, particularly during and after the COVID-19 pandemic, that have led to its financial underperformance compared to its competitors.

Key takeaways

• Strategic Missteps During the Pandemic: American Airlines made several poor decisions early in the pandemic regarding its long-haul fleet, retiring a significant portion of its aircraft based on a pessimistic demand recovery outlook, which it later regretted when travel demand surged.
• Aircraft Delivery Delays and Fleet Composition: Delays in Boeing 787 deliveries, compounded by an over-reliance on newer, more expensive aircraft, hindered American Airlines' ability to meet demand, particularly for profitable long-haul routes.
• Failed Hub and Alliance Strategies: Attempts to build new hubs in Seattle and Austin, as well as a "Northeast Alliance" with JetBlue, ultimately failed due to market miscalculations, operational constraints, and regulatory challenges, resulting in wasted resources.
• Conflict with Travel Agencies: A costly attempt to force travel agencies to adopt a new booking system (NDC) instead of the traditional GDS led to significant revenue loss and damaged relationships with corporate customers and agencies.
• Neglect of Core Hubs and Business Class: While pursuing new ventures, American Airlines neglected its Chicago hub, allowing competitors to gain market share, and remained under-indexed in highly profitable business class seats compared to rivals.