After each American Airlines quarterly earnings call, the CEO and several top executives gather with employees to present a “State Of The Airline” message and take questions. The carrier’s third quarter earnings call was on Thursday, but this time they held the company meeting the next day. A recording of this meeting was reviewed by View From The Wing.

I already shared a tidbit about changes to upgrades coming next year that was leaked at the event. There are a few other items that stood out to as well, during the discussion and ensuing Q&A.

1. American Airlines CEO Robert Isom still doubles down on all they need to do is operate reliably, calling it the “best way we can improve our financial results? Run a solid airline.”

   Running a solid airline is absolutely the most efficient way. It’s the way to keep the most revenue. It’s the way to keep our customers the happiest. So it all works together.

   The problem is that this is table stakes.

   • They’ll perform poorly if they don’t run a solid airline
     
   • Doing this may keep customers from actively avoiding American
     
   • But it doesn’t lead customers to prefer them over Delta (which is generally even more reliable, too)
     
   • With American’s relatively high costs, they need to earn a revenue premium – customers need to be willing to pay American more to stick with them
     
   • And that means making the travel experience pleasant – from good seats, to a quality soft product, to friendly employees.

   

   American keeps repeating that they have been operating reliably and yet they haven’t been making money.

   If all an airline wants to do is operate reliably, they’d better offer the lowest prices. For that they need the lowest costs. American Airlines is too large and complex an operation, and generally pays unionized work groups at the top of the industry. So it’s an insight American paid $31.4 million for but it’s wrong.

2. Boeing delivery problems aren’t really hurting American. Remember that American actually deferred delivery of some 787-9 aircraft. They don’t want more widebodies, or to do very much long haul flying – they fly to joint venture partner hubs and their partners fly beyond to other destinations – plus they fly seasonally to Europe but they need to fly those planes somewhere in the winter and only so many widebodies can head down to Cancun.

   Isom offered,

   Our fleet right now is about 50% Boeing, 50% Airbus… a little bit more Boeing? A little bit more Airbus? I should know this stuff. But I’m also taking into account Embraer… Embraer does a wonderful job delivering aircraft on-time the way they should be spec’d out, with seats, with engines…

   Despite Boeing’s problems and delays “We’re fine in the short- and medium-term. Our positions are going to be protected. We can fly everything that we think we want to. But over the long run we need Boeing to get there.”

   The airline’s Director of Fleet Planning added, “It’s not like we are worried about having to pull back on markets…we are not that concentrated on Boeing deliveries for the next year or so…we’re in a much better spot than some of our peers.”

   

3. A single gate in New York costs $400 million to build. That’s surely part of what’s wrong with America.

   An LAX Airbus A320 first officer asked about saving the ’employee cafeteria’ restaurant space, allowing crewmembers to purchase “quality food, good prices, half the price of what’s upstairs in the concourse” but that has to vacate. He wanted to know if Isom would support providing space in American’s facility, and Isom said he couldn’t subsidize the rent.

   Airport real estate is the most expensive real estate in the world. When we talk about what’s going on at JFK right now. Not just our terminal but construction at JFK Terminal One. One gate at JFK Terminal One will cost $400 million. $400 million. People are going to say ‘it’s just one gate’ no, it’s the gate and everything that goes behind it.

   

4. LAX is miserable. Talking about modernization of American’s facility at LAX (related to the loss of the employee cafeteria there),

   If anybody’s been out there over the years, LAX has not been one of the airports and facilities we’ve been the most proud of. It’s a difficult operation. Difficult for passengers. Difficult to get aircraft in and out of. By 2028 we’re going to have new facilities throughout. We just opened up in T4 the South end of T4, which will give you an idea what things are going to look like.

   

American Airlines’ post-earnings employee meeting, held right after their quarterly call, underscored CEO Robert Isom’s emphasis on reliability as the sole key to success, insights on Boeing delivery issues, and the costly challenges of airport real estate, especially in high-demand locations like JFK.