American aircraft crowd in at Charlotte Douglas International airport in December 2024. (Photo by Peter Zay/Anadolu)
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Once again, American Airlines executives will have to defend themselves on an earnings call. The familiar charge is that American is a distant third in the competition between the three global U.S. airlines.
On Delta’s Oct. 9 earnings call, CEO Ed Bastian said, “We expect 60% of the overall industry profits to be driven by Delta Air Lines. Expect the rest of it probably to be driven by United, largely. And then you have everybody else, and this is not a new phenomenon.”
Then on United’s Oct. 16 call, CFO Mike Leskinen said, “The industry now has two brand loyal, structurally profitable and revenue diverse airlines, which together will represent about 100% of industry profits in 2025.”
The thesis leaves little space for American to report a profit when it releases earnings on Thursday, Oct. 23. The Zack’s consensus estimate is for the carrier to post a per share loss of 27 cents.
American Seems Trapped in Bronze Metal Syndrome
As for pre-tax margin, closely watched in the big three comparisons, in the third quarter Delta reported 9.8% and United reported 7.8%. American is expected to continue to trail both. In the second quarter, its pre-tax margin was 5.8%, compared with 11.6% at Delta and 11% at United.
In fact, American has long been trapped in bronze metal syndrome. Year to date, as of Thursday’s close, United shares were up 3%, Delta shares were up 2% and American shares were down 30%, with the S&P 500 Index up 13%.
American also trailed in 2024, as United shares rose 135%, while Delta rose 50% and American rose 27%, while the S&P 500 Index gained 23%.
Airlines Are Focused on Premium Seating
For now, the guiding principle in airline management is to enhance revenue from premium seating, particularly premium leisure seating, as rich people keep flying, often to more exotic destinations. “We’ve seen the growth of premium leisure and the yield quality accelerate really fast,” said Andrew Nocella, United chief commercial officer, said on the carrier’s third quarter earnings call. “And when we look at it across our domestic system, we find, in fact, the quality of premium leisure business often exceeds that of traditional co