At the quarterly internal ‘State of the Airline’ employee meeting held right after their earnings call on Thursday (a recording of which was reviewed by View From The Wing), American CEO Robert Isom addressed potential mergers with United Airlines, Alaska Airlines and Spirit.
- Merging with United is a non-starter. It would never be allowed, and it’s so anticompetitive consumers would lose.
- They’re looking to deepen their partnership with Alaska.
- They’re not buying Spirit, they are just too incompatible. But they will help stranded passengers if Spirit folds.
Isom addressed these as a “few elephants in the room.” They’re the kind of things employees talk about at the water cooler, like they were earlier in the year speculating that Isom would be fired by the board after poor 2025 financial performance and an operational meltdown at the airline that had flight attendants sleeping in airports (and senior executives disagreeing with each other whether it happened, and whether it was okay). So it was important for Isom to address head-on:
Isom attacked United’s efforts to acquire them as a “distraction” meant to make American less competitive:
You might have read that there was some news about one of our competitors wanting to merge with us. I think it is tied to one of our competitors and what they were interested in doing in Chicago. We all know the motivation in Chicago: to try to run us out of town. They were very vocal about it.
Fortunately, from a Chicago perspective, I believe we are in a really good position. Nat will talk more about this, but nobody is going to run us out of town. We are going to be able to fly our schedule. I think this idea of merging is probably the same thing: create a distraction and knock American off its game a little bit.
He said that there’s no way American Airlines and United would be allowed to merger, and this would be bad for customers and “for the industry and bad for us.”
But the idea of the world’s two largest airlines getting together and merging is going to be viewed by everybody as anti-competitive. It is not going to be viewed as good for customers. Ultimately, that is bad for the industry and bad for us. What you need to know about the idea of merging with United is that it is a nonstarter. It is not going to happen, and there is absolutely no support for it. We are focused on our business.
Alaska, though, is a “fantastic partner.” The airline reportedly explored a merger with Alaska but has been focusing on a revenue-sharing joint venture. Isom said that working with Alaska is “very positive for our customers and our companies.” Comments like that suggest a confidence that something will come to fruition.
The second item that has come up is the nature of our relationship with Alaska Airlines. I will reiterate what I have said: Alaska has been a fantastic partner. You need partners in this world to do things you cannot do alone and to provide more customer benefit together. We have had a long relationship. I was part of the discussions with Ben Minicucci from Alaska to bring Alaska into the oneworld partnership. We established the West Coast International Alliance. That has been very positive for our customers and our companies. We are always looking at ways to expand relationships and do more. That will continue.
On the other hand Spirit Airlines isn’t something they would buy outright – “We are a global premium airline; Spirit is an ultra-low-cost airline.” That’s just not a fit (Spirit loses too much money, their assets in New York aren’t worth enough to American, and they’d never be allowed to buy Spirit’s Fort Lauderdale hub given their own dominance in Miami).
The last point is that there has been some discussion about Spirit. It is a tough business right now. It is very hard in the airline business when oil prices have run up, and even harder when you are in bankruptcy and oil prices have run up. I want people to know that our business models are not compatible. We are a global premium airline; Spirit is an ultra-low-cost airline.
American would buy Spirit assets – I broke the news in the fall that they were acquiring two Spirit gates at O’Hare – and they have committed to passenger assistance of some kind if Spirit goes under.
If there were ever an ask for help, of course we would be interested in assets if they were helpful to our system. I have also made it known to the administration that if passengers were ever stranded and needed help, we would be willing to help. Given our hiring needs in the future, if there were ever a need to look at helping employees, we would do that too.
Bottom-line, Robert Isom addressed the airline deal rumors employees were already talking about internally: United, Alaska and Spirit. United is a hard no, Alaska is the partnership American wants to expand, and Spirit is not a fit — though American would consider assets and stranded passengers.
Well, he is likely right about the antitrust anvil waiting on any United deal. But this still sounds like surrender, not strategy.
Airlines are increasingly saying they aren’t interested in any deal with NK to make it clear that the government will be left holding the bag if they bail NK out.
B6 just reported its financials and they just said that FLL is doing well for them and they will commit more resources to S. Florida which means there is little basis for thinking the end of NK will hurt consumers or result in a loss of service.
B6 also has enough liquidity that they can make it through the fall and into 2027. by then the insanity in the Middle East will be resolved one way or another.
On the other hand Spirit Airlines isn’t something they would buy outright – “We are a global premium airline; Spirit is an ultra-low-cost airline.”
Sorry Bob Isom, much of your potential customer base sees AA as stepping down from the real global premium airlines and becoming closer to being an ultra-low-cost airline.
“Helping their passengers” would mean going on a standby list and being at the very bottom of that list. In other words, sitting in an airport anywhere from 1 to 4 days hoping for a seat. The entire standby list rarely ever clears. And they’d probably be behind commuting airline crew and non revers.
No other airline wants the turd that is Spirit Airline. Yes, a few individual assets which could be picked up in a bankruptcy sale.
“(a recording of which was reviewed by View From The Wing)” … an exclusive! LOL.
If NK saves B6, that’s a story I could live with as a consumer; however, that’s a lot of jobs lost, especially in FL, where there are hardly any worker protections. Sure, pilots and mechanics may find work sooner than the rest, but that does become a problem for the state/country. Oh, and the specific consumers (with tickets in-hand), who would soon become unsecured creditors.
Jim 6555
You are so right.
AA is no more a global premium airline than Aeroflot is.
Ok maybe an exaggeration. but AA is closer to Aeroflot than it is to Emirates.
@Jim @Steve – while I totally get and agree with the snark, if Isom wants to finally articulate a vision statement, and that vision statement is “global premium airline” – fantastic. We all know they are not there yet. But the airline needs to know what it is they are trying to be. Just saying those three words out loud, in this context, actually is meaningful, I think.
Frankly, Isom looks and sounds reasonable with this speech and gets to say to his board – you want me or someone more like that blowhard we compete with? Kirby’s antics keep buying guys like Isom more time, which is what is actually bad for AA! They need a new leader who can pick up the “global premium airline” mantra and run with it.
@George Romey I think their willingness to help Spirit passengers comes down to what will happen to that specific route now that Spirit is not flying it. If American can pick up a few routes in crowded airports for the cost of just picking up the cost of a couple of passengers flights they may do that. As the long-term profits of having those new routes would cover the assistance.
The AA flight attendants union already voted no confidence in Robert Isom. Why was he not fired? Why do employees still listen to his continuing excuses for AA poor performance?
Tim at this point Johanna can say whatever she wants but not addressing the big Elephant on her C Suite the incredible Debt they have and the “Jetjew Forward isn’t working Numbers never lie we do and those are facts B6 needs to clear their books that’s what Bankruptcy Protection offers and they are not taking advantage of it
Alaska needs to find a gateway city near the Mississippi to capitalize on an American JV, to connect, and expand to the rest of the nation profitably in its own way as the chairs of the low cost and ULCC deck chairs are reshuffled. Bentonville and Branson seem to be a booming communities but i don’t think it offers the advantages of maybe some other places denser and closer to the population centers of the US.
This boom location, i just don’t know where it could actually be though.
Rico
AA’s debt percentages are similar to B6 and AA has been operating like that for years. AA proves that B6 is not at the end of the line as much as some want to believe.
Both have high levels of debt that will weigh on those airlines or anyone that acquires them.
Most of that debt is secured by airplanes so the only real way to reduce it is to shrink the airline or pay down the debt.
AA and B6 can pay down their debt if they stop losing money. AA is closer to being able to do that than B6 but I suspect that if NK is left to die, B6 will be much stronger because of it. and B6 will focus less on NYC and BOS where they have proven they can’t win against DL and more on markets like FLL and Florida as a whole where the market is larger and they can dominate FLL, something they have not been able to do in the NE.
and it is possible that FLL as dominated by B6 including to Latin America but w/ a smaller footprint in the NE could be attractive to UA or perhaps even DL or AS.
Companies evolve and AA and B6 are both in that position as DL was over a decade ago and UA more recently.
Too many people are too quick to write off underperforming companies without giving new strategies enough time
@Rico Suave — What in blatant antisemitism was that?