American Airlines is pursuing a new wide-body aircraft order and a major lounge expansion as CEO Robert Isom works to close a profit gap that has widened against rivals Delta Air Lines and United Airlines, according to CNBC.
CEO Robert Isom outlined plans for a 37,000-square-foot lounge and a new wide-body aircraft order as American trails Delta and United by billions in annual profit
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American Airlines is pursuing a new wide-body aircraft order and a major lounge expansion as CEO Robert Isom works to close a profit gap that has widened against rivals Delta Air Lines and United Airlines, according to CNBC.
The profit disparity is stark: United outearned American by approximately $3 billion last year, and Delta's advantage over American ran to nearly $5 billion. Despite operating around 6,500 daily flights — a schedule that dwarfs what its nearest rival puts in the air — American has not translated that volume into comparable profits.
Robert Isom, speaking to CNBC in an interview conducted late last month, described the carrier's goal as "a premium global airline with the largest footprint in North America" and said the long-range plan is "certainly making up the margin gap," without specifying a timeline. American's chief financial officer, Devon May, said the measure of success will be whether the airline is closing the revenue and unit revenue gaps with competitors.
On the premium side, Chief Customer Officer Heather Garboden said that American plans to build a 37,000-square-foot Admirals Club lounge — its largest — at Dallas Fort Worth International Airport's Terminal C. The airline is also planning a grab-and-go lounge and a Flagship check-in area at the same hub, which is undergoing a $12 billion makeover.
Isom said American is also refreshing cabins across its fleet. The overhauled interiors for the 777-300ERs are expected to enter service within the coming weeks, with the 787-8 Dreamliner cabin upgrades to follow. On certain long-haul international flights, a single business-class lie-flat seat can command nearly $10,000 in revenue, while economy passengers may pay $2,000 or considerably less.
The flight attendant union raised concerns about service levels as a 70-seat business class configuration comes online. "Now, as American introduces 70 Business Suites and markets a premium international experience, they're expecting a reduced number of Flight Attendants to deliver significantly more personalized service," Julie Hedrick, president of the Association of Professional Flight Attendants, said in a statement. American reduced flight attendant staffing on those aircraft from 13 to 11 in 2020.
Isom said American expects to place a new wide-body order before year's end, and both Boeing $BA and Airbus are being evaluated as potential suppliers. He suggested Airbus "could play a big role" in the order — notable given that every wide-body currently in American's fleet carries a Boeing nameplate. Any jets from the deal would not enter service until sometime in the early-to-mid 2030s.
American's broad push to attract higher-spending travelers also includes a deal to bring SpaceX's Starlink satellite Wi-Fi to its Airbus narrowbody fleet starting in early 2027, covering more than 500 aircraft. Free in-flight connectivity has been available to AAdvantage loyalty members since January.
The carrier is forecast to report second-quarter earnings on Thursday. American carries $35 billion in debt, a burden that continues to weigh on its financial performance, though the figure represents a significant reduction from the approximately $54 billion the airline owed at its post-pandemic high.
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