American Airlines Made Just $111 Million — Top Officers And Board Got $50 Million

I read the total combined 343 pages of the American Airlines SEC 10-K and the proxy materials for its board meeting over coffee. There’s one headline that’s going to be the biggest one – the CEO’s compensation package – but it’s not actually the most interesting story on its own.

People are going to pay attention to CEO Robert Isom’s $14 million pay package. That’s a lot, but it’s not a lot for the CEO of what by some measures is still the largest airline in the world. What’s notable is how executives have been largely shielded by the collapse in financial performance of the airline. Good CEO performance would be worth much more! An outsized portion of profit is being paid out as executive compensation at American Airlines. That’s the real story.

Financial Problems At American Airlines

By now it’s well-known that American generated $54.6 billion of operating revenue in 2025, up only 0.8%, while net income was down 87% – they made just $111 million while Delta and United earned billions.

Their capacity grew 2.2%, but passenger revenue was flat at $49.6 billion. Their flying was earning them less – Load factor fell 1.3 points, yield fell 0.5%, and passenger revener per available seat mile fell 2%.

And that $111 million net income?

• They received $6.2 billion in cash payments from their cobrand credit card. They’ve previously reported a 53% margin on the AAdvantage program. So if there’s about $3 billion in profit on the card, then everything else (flying) lost $3 billion.

• Costs are way up for labor. Salaries, wages, and benefits rose $1.5 billion (9.6%). That ate up prior year profits. They had 139,100 active full-time equivalent employees at the start of the year. That’s more than other airlines, because their union contracts allow them to outsource less (86% of employees are covered by union contracts).

American Makes Money And Pays It To Top Executives – And The Board

American Airlines produced record revenue but almost no profit, while executive pay barely moved down. Management was insulated from the collapse in shareholder returns.

• The company’s five executive officers and 12 directors received $50.53 million in combined compensation, equal to 45.5% of the company’s entire annual profit.

• Robert Isom’s compensation alone was $13.87 million, equal to 12.5% of American’s full-year GAAP net income.

• Profit fell 87%, but Isom’s pay fell only 11%.

The CEO earned in one year what the median American Airlines employee at $89,429 would earn in 155 years. That will outrage some but a CEO who converted $55 billion in revenue into $8 billion in profit would be worth multiples of that.

Isom gave up his bonus, and the company tells that story in these documents, but if the CEO recognized the company missed its targets so badly, why was the rest of the compensation structure still so protected from an 87% profit collapse?

And previous year baseline profit was low. At the airline’s Media and Investor Day in 2017, then-CEO Doug Parker famously declared that the airline would ‘never lose money again.’ His presentation described the airline as being like an annuity. They were, effectively, on autopilot to earn $3 billion to $7 billion per year and would average $5 billion annually into the future. There’s been 20% inflation since then – just staying even should mean $6 billion!

The board’s pay may be normal by peer standards, but it’s absurd against American’s results. Directors received about $3.8 million, equal to 3.4% of full-year GAAP profit. A good board would be worth much more. The problem is not that directors were paid. The problem is paying millions to a board overseeing collapsed margins and weak shareholder returns but that’s done little about it.

The best rebuttal American has is that Chief Legal Officer Anthony Richmond’s $9.86 million compensation included an $8.73 million new hire make-whole equity grant which inflates compensation numbers slightly, but even excluding him executive pay remains enormous relative to profit.

If United Bought American Airlines, CEO Isom Pockets $40 Million

Ten years ago top executives at American Airlines didn’t have contracts with non-compete clauses. The board at American fired Scott Kirby in order to retain Robert Isom. And Kirby immediately became President, now CEO, of United Airlines. That was a bad deal. Now, the airline has non-competes and the board made an even worse deal.

If American Airlines is taken over by another carrier, Robert Isom gets $33 million. If they’re taken over and he’s terminated (the likely outcome), he takes home $41 million. If he’s just fired for performance, he gets about $32 million. Other top executives are similarly-situated.

The irony, of course, is that that the best financial outcomes for the CEO are either massive outperformance of the industry (which seems unlikely) or performance that’s bad enough to finally get fired, although the the Board has never shown an inclination to hold management at the company accountable.

And paying out $32 million for poor performance – to keep him from running another airline right away – seems completely unnecessary. Delta, United, Alaska and others won’t be chomping at the bit.

The Board Wants To Reward Executives Non-Financially

Proxy materials include details on a vote to amend the certificate of incorporation to limit officer liability to the fullest extent permitted by Delaware law.

Shielding themselves from responsibility is exactly the problem – and a bad look precisely when they’re underperforming.

There are incredible shades of Teldar Paper’s annual meeting where Gordon Gekko makes his ‘Greed Is Good’ speech. It was a speech about accountability, and how management lacks a real stake in the company’s outcomes. “You are all being royally screwed over by these bureaucrats with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.”

Interesting Things I Learned

American’s fuel financing facility is secured on a second-priority basis by intellectual property including the “American Airlines” trademark and aa.com, with a maximum outstanding balance of $1.0 billion, at an interest rate of SOFR plus 3.75%. Fuel financing obligations rose from $74 million at year-end 2024 to $914 million at year-end 2025.

They most recently report debt paid down to $35 billion. But they’re going to need to do quite a bit of refinancing:

• $3.6 billion due in 2026
  
• $4.5 billion in 2027
  
• $7.3 billion in 2028
  
• $4.0 billion in 2029

It’s tough to pay this down and off without earning profits. They can do this only by tightening their belts on capital spending, when there’s a real capital spend deficit with lack of widebody aircraft orders and a real need to invest in aircraft interiors and airport clubs.

The stock performance table shows that $100 invested in AAL at year-end 2020 was worth $97 at year-end 2025, while the S&P 500 equivalent was $182.

Here’s the extent that the American Airlines brand is actually outsourced to other carriers (including wholly-owned ones like Envoy Air, Piedmont, and PSA): 57 million passengers boarded regional flights in 2025, and about 42% connected to or from mainline flights.