After each quarterly earnings call, American Airlines top executives assemble in a conference room to give a ‘State of the Airline’ message to employees and answer questions. This is streamed to employees who aren’t there in person, and recorded for later viewing. For several years I’ve had an opportunity to review recordings of these events.
The State of the Airline following last week’s fourth quarter earnings call was interesting in a number of ways. I separately shared CEO Robert Isom’s comments about rededicating and renewing a “focus on the customer experience” and on premium products at the airline.
Robert Isom spoke, and then brought in other executives to cover current topics from airline schedule planning to the Trump administration.
- Executives will no longer take live employee questions after earnings calls. The airline will still do its ‘State of the Airline’ session but all questions have to be submitted in advance in writing, and selected. I’m told Isom would spend a lot of time prepping for these sessions to have answers canned for whatever came up.
This manages uncertainty, saves him time, and takes the mic away from employees who frequently complain and raise challenges. These sessions date back to Doug Parker and Elise Eberwein, who saw the live feedback as valuable. Live questions can be asked of executives after the session, so not in front of the whole audience and not recorded for other employees (or me) to watch.
- Isom actually threw his predecessor Doug Parker under the bus in his prepared remarks. Talking about the paydown of debt since the pandemic, he suggests that ‘going into the pandemic the balance sheet could’ve used some work to begin with’ of course American Airlines had been borrowing money and buying back stock (bought high and then sold shares low during the pandemic). On the other hand, though, the airlines was also more profitable then than it is now – the balance sheet would be better if Isom were running the airline better and it performed as well as its largest competitors.
- They’ll lose money in the first quarter which we knew from 2025 guidance provided with their earnings release last week. They expect margins to be flat for the year, and the $2 billion free cash flow they expect to generate is earmarked to paying down debt.
- New Citi co-brand card benefits won’t wait until the new agreement kicks in in 2026. American and Citibank signed a 10-year deal that makes Citi the exclusive issuer of AAdvantage credit cards in the United States starting in 2026. Anmol Bhargava, Vice President Global Alliances & Partnerships, said that this brings “new products, marketing capabilities, new marketing channels” that they weren’t able to do in the previous deal and that they have started to work with Citi to roll out benefits “in the coming months,” even though deal doesn’t start until 2026.
- American still wants to make culture a competitive advantage or something. Isom says “I always like to put an asterisk not just a registered trademark” next to this, and notes that “to live out that purpose you gotta make money. We have to find a way to live that purpose and deliver profitability to shareholders.”
‘Making culture a competitive advantage’ was always about employees and not shareholders. I hadn’t seen it mentioned in a long time. It was a Doug Parker staple, but here Isom glosses over it, saying American is in a people business and has more people (130,000) than any other airline (because they are so heavily unionized, and their scope contracts limit outsourcing). He doesn’t talk about the idea as ‘taking care of our people so our people take care of our customers’ in the way that Parker used to.
- Profit sharing is lower than at Delta and United because they earn less profit, and because they have more employees to split that profit share across and outsource less. Cole Brown begins with excitement about checks that are underwhelming employees “This is the third year in a row that we’ve been able to deliver a profit sharing payment” and leaves it to Isom to explain the disappointment.
- They’re excited for the Trump administration. Nate Gatten flattered President Trump’s first term for the first two payroll support packages of subsidies during the pandemic, and criticized the outgoing administration for being “enforcement and regulation-minded” for refunds, rewards, and family seating “where we felt like we were doing an exceptional job taking care of our customers.”
American did express concern over tariffs, which are bad for aircraft supply chain (not to mention cargo and inbound travel and the economy as a whole). And they offered confidence in Kristi Noem at the Department of Homeland Security and Sean Duffy as head of the Department of Transportation.
- “Boeing has let us down once more” with 787 deliveries, according to Senior Vice President of Network Planning Brian Znotins. As a result, they are cutting four plane’s worth of flying out of the summer network – cutting Philadelphia – Rome one frequency; DFW – Honolulu #2; Miami – Paris won’t return until winter.
Nobody is more disappointed in Boeing at this airline than I am. We continue to want to build our network and make it better and add destinations but Boeing is making that really tough for us.
Boeing 787-8Between Boeing delays and Airbus A321XLR delays they’re down 50 planes relative to their original expectation. Of course, American has actually deferred some of their 787 deliveries too.
- Management screwed up and put too many coach seats in planes. Znotins complained about lack of premium cabin seats on planes, and their inability to generate revenue as a result. Their new Boeing 787-9 and Airbus A321XLR planes will be premium heavy, along with reconfigured Boeing 777-300ERs.
Of course their existing planes used to be more premium than they are today. This management team removed business class seats from Boeing 777s and 787-8s and ordered their 787-9s without sufficient premium seats. Vasu Raja was complaining about the lack of premium seats to sell back in 2018 right as they were pulling business seats out of 787-8s.
- Regional flying continues to grow. American’s Embraer 175s aren’t bad aircraft, and they’re getting high speed wifi this year. The single-class 50-seaters, however, will remain cramped and dark. American’s wholly-owned regional carriers are flying 70% of the airline’s regional capacity today. They’re growing 20% this quarter vs 2024 and 40% vs 2023. They continue to benefit from changes to the pilot contract scope clause in bankruptcy.
Admitting mistakes? How ‘woke’ of them. They’re supposed to ‘double-down’ indefinitely. You know, say it’s ‘alternative facts,’ then claim reality has a ‘liberal’ bias. Happy year of the snake, everyone!
2025 Priorities, bullet point 4: “Enhance AAdvantage…”
Calling it now, they will roll out new Citi CC’s with large AAdvantage SUBs in the next few months, then towards the end of the year will devalue AAdvantage awards moderately (some minor economy decreases, some popular bigger First/Business increases, Asia awards will be massacred). This will all be conveyed as “enhancements due to customer feedback”.
Everyone I read one of these I have to LOL that the BOD dumped Kirby for Isom.
Most of this is MBA corporate bullshit blabbered by MBA types that have no clue as to what to do. Notice no specifics. No concrete changes or milestones. Just feel good language. AA will continue to be Frontier Plus.
Well said, Geroge N. Looks like Ipsom is in lock step with “it’s someone else’s fault.” The way I interpret is the employees don’t really matter. That just solidifies his point. The ultimate tell all is he does not take questions from the floor in annual employee meetings. BTW – that tradition was stated way before Parker back when AA was a true leading airline under Bob Crandall. At them he would take virtually any question and always had a straightforward and honest answer. The current message is the complete opposite to the most important members of the team – the front-line employees!
The moment Parker left, Isom set about to transform American into a combination of Northwest/America West, and installed a leadership team around him in line with that vision. NW/HP had reputations for a marginal “at best” product on the ground and in the air, and deplorable employee relations. A previous comment referenced American as “Frontier+” and that pretty much sums it up. Hard to believe the old AA routinely was at the top of the industry for product, service, and profitability.
“Of course their existing planes used to be more premium than they are today. This management team removed business class seats from Boeing 777s and 787-8s and ordered their 787-9s without sufficient premium seats.”
To be fair, the LOPAs for these aircraft were analyzed and approved by Scott Kirby, Ankit Gupta, and Patrick Quayle before they left AA. As were the Oasis mods, PTVs excluded. They wanted the PTVs on Oasis. Premium Economy LOPA across all widebody aircraft was a Patrick Quayle project.
Perhaps the decision would’ve been the same, but Robert was in ops, certainly not much involvement with LOPAs or retrofits at the time these changes and decisions were made.
The new High-J 787-9s are all the new management team though, that’s true.
And Nocella, obviously
A.A.s Management team (AKA, UsAir) loves to play the ruptured duck. There is always an answer to why the current management isn’t at any fault for the Airlines underperforming, and yet always accept “awards and praise” when the company makes a profit.
The continued major Outsourcing at American ( yes they outsource with the best of the other airlines including “by their figures 50% of maintenance”) has decreased their bottom line costs, with God ole Mexico being the majority player in their new Airbus Maintenance and other widebody jets, when ALL Maintenance used to be done in the US at its Tulsa OK facility.
The other decisions with the cabin shuffle, seats in, less room , amenities in, amenities out because some corporate “team” thinks passengers want this or that, different every 6 months , costs huge amounts. They just bought almost an entire new fleet of aircraft, and are still spending like drunk sailors on new aircraft, that already have manufacturer issues that need tending.
Not once in any meeting (besides the ones directly pandering to employees) does the management team accept that the workers are the company ,making the money for the company, as far as corporate meetings and shareholders, the employees are a huge costly union of waste, we are dealing with the best they can.
At least Bob Crandall called it like it was, god or bad, and didn’t pander to anyone.
This Management team… Professional Management straight out of greed school, but not very Brite as far as an Airline goes !
This America West team could screw up a wet dream. Constantly amazed that the BOD allows these less than stellar decisions every single year. Thank goodness UA is doing a mileage match!
Personally, I can it wait to hear unsolicited financial analysis and thoughts on the new Citi card from a FA who puts more effort into that than doing their actual job.
So basically it can all be summarized in the words of Bart Simpson – “It wasn’t me”
Accountability?!? From Isom? If the guy had the least shred of accountability he would fire every senior executive, personally pay for a NYT full page ad explaining how the Board needs to be completely replaced, himself resign in disgrace, then commit suicide to expiate his incompetence.
Thanks for showing that, Gary. I spit out my coffee but it was worth it.
they wouldn’t be short airframes if they hadn’t parked the 757,767, and a330 fleets. AAL Alone parked their paid-for fleets.
Will it take a generation to overcone Parker?
Isom threw Parker under the Airbus.
The problem with American Airlines is the America West influenced Management Team.Regional Mindset, lack of vision and no clear understanding of the Global Aviation Market. Under Parker they did execute a huge Merger/Integration with minimum disruption but it has been one stumble after the next like a drunk leaviing one bar and heading to the one down the street to see if they could get another drink. Ask the Employees…..they will Tell You, providing they do not come from the AW side of the operation. The Legacy US Employees never cared for Team Tempe and what constituted the make up of the AA/US Merger was really three very different airlines attempting to Operate as one Entity. I have never had a bad experience fortunately and usually engage with the Employees but you can clearly see many do not care for The Management Team or their version of the Airline.
Wonder if with the new Citi contract, they will continue to ban using Google Pay with their Citi credit cards?
They better be getting some massive kickbacks from Apple.
Two things in this article say it all. That Isom abandoned taking care of the employees so that they’ll take care of the customers, and that Cole Brown said anything at all. She’s still there? She is the one responsible for all the DEI hires at American and should have been gone a long time ago (along with Isom and the BOD.) All this goes to show that American has no plan and has no plans to have a plan.
I remember a long time ago. They used to put up these big expensive signs that said “Vision 2020” I guess that meant the start of the dumpster fire! I really feel bad for this company because I thought I was working for a premier airline that was a leader and not a follower and I’ve watched it’s demise over the 35 years being reduced down to Frontieresque. This airline has managed to screw up so many times. It amazes me how they’re still in business. They’re lucky that Elliot Corp isn’t the major stakeholder otherwise this airline would be just ripped apart and sold. Isom is an idiot he needs to go…and anybody in the USAIR org needs to go with him. American should have never filed bankruptcy and with a 5.7 billion in cash that they had on them, would of guaranteed that. They were just looking for an out to get rid of the unions or break contracts and that terribly backfired on them. And now they’ve taken all this money that they supposedly saved and invested it into new glass buildings and taken the spirit away from AA legacy employees, And further deteriorated the legacy employees of USair as well, with the work tactics previously held at US Air… and not of AA’s practice. I myself, I am glad I am happily retired and away from this s*** show.
Well, looks like DL & UA have nothing to worry about for 2025 & 2026 as long as Isom continues to steady the helm at AA.
Kinda reminds me of when McDonnell-Douglas’ Harry Stonecipher took over Boeing. He was going to turn Boeing into a profit making company rather than an engineering company. So, Harry….how’s that going for ya, huh? He took Jim McDonnell’s company (known for really good fighters…the F4 maybe) and merged it with Donald Douglas’ good company and screwed up two companies. Then took over Bill Boeing’s fantastic company and look what ya got…three great aviation companies now one big crap hole. American’s management is slowly making a once proud company that merged with UScare with America Worst only to make American another big crap hole. Tsk tsk.
AA has only one interest: quarterly profits. The rest is BS. And anything that they announce as some benefit to customers, employees, etc. is only spin on an action that will make things worse in order to enhance profit. We, the flying public, are not that stupid. So cut the *rap and just be honest for once!
@ Win Whitmire. I’d say a very fair summary of those six companies. How does Lockheed shake out in your judgement?
I used to fly American regularly between LAX and DCA. There were no premium seats on those planes. The only advantage AA has over Delta is the time of their flight and that usually visiting the website in the days leading up to the flight you could score a window seat with an empty middle seat. AA feels like it used to used to be like Delta but aspires to be like Spirit.
AA mgt does not care a damned bit about the customer experience. 80+% of their customers fly coach, which they have made so unbearable that people sit in misery & count the seconds until the flight is over. The experience is horrible and they aim to keep it that way. Hell, they’re cramming more seats into an already dangerously unsafe configuration in order to satisfy shareholders instead of customers. Selling more premium seats may look pretty on a balance sheet, but it ignores the hateful misery of 80% of their customer base. AA overpays its bloated C level & Sr VP management but so severely underpays it’s customer-facing staff that the misery is compounded in every part of the AA experience. AA Mgt aims to make the experience much worse, not any better. It shows how little they care about the flying public. I am over 2 million miles on AA and continue to watch their product get worse & worse. Isom is a pathelogical liar & “bender of the truth” to say a single syllable otherwise.
Remember (and the article touches on it) that while Boeing has many significant issues, AA deferred delivery of a dozen Dreamliners after retiring it’s 2 sub-fleets of mid-sized long haul aircraft. Isom is responsible for fouling up the schedules, not Boeing. AA could have kept some 767s or A330s without grounding & selling the entire fleets. Every part of his statements are lies intended to shift blame & cover up AA Leaderships non-stop failings. No wonder Kirby ran off to run United, which is now stronger than ever. Don’t fall for AAs lies.
I just cancelled my Citi AA World Elite MC yesterday (changed it to Citi Double Cash card) before it renewed next month and would bet I’m not the only one. Good luck with the Citi deal. Longtime EP (and qualified for 2025 year through CC spend and flying) that is going free agent as I’m not getting value out of the program. I’ll revisit AA if they increase value (ability to use SWU’s, which are mostly worthless now) and rely on my EP status this year and Lifetime PLT status afterward if I fly them. I figure voting with my wallet is the best way to proceed, rather than continuing to complain but also continuing to reward them.
@1990
Wokieds never admit mistakes that’s the problem with them.
@AndyS
In real life, I’ve found plenty of folks both willing and unwilling to admit mistakes on all sides of the political spectrum. On here, I think you often conflate ‘woke’ and ‘DEI’ with anyone who isn’t white, male, straight, wealthy, Christian, conservative, and ALSO supportive of the current administration. In fact, I knew plenty of reasonable, competent, successful Americans who are all the above, but for the last thing–they just don’t like the guy, or what he stands for, or what he’s done in the past, and plans to do in the future. Still, since I’m a proud citizen of the country (the USA), you’d better believe I want whoever’s in charge to do well for all of us. At times though, it doesn’t seem like they’re actually working for ‘all’ of us, more-so just for the wealthiest among us, and that’s concerning, since I doubt you or I qualify, unless you are a centi-millionaire, and if so, why are you at VFTW commenting like pleb. Have a good, Andy. See you around again soon.
For me its simple, I am 6’3″. Above average height but nothing crazy and I don’t fit in American Airlines seats. With my back straight and flat against the seatback my knee is jammed into the seat in front of me. AA is just not an option for anybody above average height.
Parker deserves to be thrown under the bus….
If they are excited to work with the Trump administration, then re-start the Joint Venture with Jet Blue pronto and get rid of all aspects of DEI and reflect your Texas base!
One bright spot — maybe — is that BA made changes to its status-earning scheme which makes that much harder, and that might make some people jump ship to AA.