The carrier has a few fires to put out at the momentAmerican Airlines is facing a number of challenges right now. Business-class flyers are upset with it. Its flight attendants are inching closer to a strike. Its stock is down nearly 18% for the year.
“Where we stand right now, we know we dug ourselves a hole,” CEO Robert Isom said at a recent investment conference. Though American remains one of the most-liked airlines in the country, it has some work ahead of itself.Frequent flyers are the lifeblood of any airline, and business-class flyers are one of the industry’s steadiest clientele groups. In a bid to capture more of their dollars, American tweaked its AAdvantage rewards program to favor customers who purchased flights from the airline directly.
The change left so many business-class flyers upset that a company-commissioned Bain report detailing their displeasure that the airline has urgently kicked off…Vasu Raja initiated the move away the previous points arrangement, and when it started to affect the overall business he had to take responsibility — and the fall. The company said that he has been relieved of his duties. For now, chief strategy officer Stephen Johnson is temporarily taking over the position, but an actual search is underway for someone to set things right. But that will be a lot harder if the carrier doesn’t find a way to end…American’s flight attendants haven’t gotten a collective raise since 2019, when their last union contract expired. Five years later, some of them are sleeping in their cars and new flight attendants are being offered wages that could qualify them for food stamps.
Were it not for a special set of labor laws that govern airline unions, the flight attendants would likely be on strike already. Representatives from their union, the Association of Professional Flight Attendants, said last week that federally mediated negotiations have yet to yield an agreement. If the government releases them from that mediation, they could possibly implement a work stoppage by Labor Day. And passengers upset that their American flights got cancelled wouldn’t be good for…Michael Linenberg, an airlines analyst at Deutsche Bank, pointed out in a recent research note that one of the factors weighing on American’s bottom line is how many of its routes are competing with low-cost carriers in an era where larger, more expensive airlines are trying to get a bigger slice of that pie.
“American has historically had the most exposure to low fare carriers given its larger domestic network than its peers,” he wrote. “However, more recently we have observed low fare carriers make numerous route changes, many of which are targeting American’s hubs. For example, for the September quarter, American’s capacity overlap with Frontier [Airlines] and Spirit [Airlines] will be approximately 22% and 19%, respectively, on an available seat mile basis, whereas for Delta and United, the overlap will be roughly 10 percentage points lower.”
Fighting with cheaper airlines for passengers surely won’t be good for