American Airlines Faces Challenges in Competing with Rivals for Top Spot

As American Airlines prepares to announce its second quarter earnings on Thursday, the company faces a difficult battle in overcoming the perception that it will always be the third-place airline among the three major U. S. carriers.

United CEO Scott Kirby’s Negative Commentary Adds to Pressure on American

American’s potential for success has been downplayed by harsh commentary from United Air Lines CEO Scott Kirby. During a call on July 17th, Kirby stated that the U. S. aviation industry can be divided into two categories: the “brand loyal airlines” consisting of Delta and United, and then “everyone else.

Kirby went on to describe his belief that “the strength of the two brand loyal airlines really winning and everyone else losing. ” He also pointed out that every non-Delta or United airline has a significant portion of their route network that is not profitable, and that these airlines would need to stop flying to those destinations in order to see any significant earnings.

During the United call, Chief Operating Officer Andrew Nocella also highlighted the airline’s success in gaining market share in each of its hubs, particularly in the battle against American for share in Chicago O’Hare. Kirby further emphasized United’s recent return to JFK, declaring that the airline has now become the “premier flag carrier of the United States. ” This is a title that American has held for quite some time, especially since the opening of its new JFK terminal in 2005.

Dennis Tajer, spokesperson for the Allied Pilots Association, which represents American pilots, expressed concern over the growing gap between Delta, United, and American. He stated in an interview that “so many past network and product decisions have cemented American’s place as the third-place carrier.

American Must Prove Its Competitiveness on Thursday

During its upcoming earnings call, American management will have to work hard to convince the public that they are doing well, despite the strong competition from Delta and United. Tajer believes that “compared with Delta and United, the results scream otherwise. ” He stresses that this needs to change if American wants to remain a major player in the industry.

In the second quarter, Delta reported pre-tax income of $1. 8 billion with a margin of 11. 6%, while United reported adjusted pre-tax income of $1. 7 billion and a margin of 11. 0%. Experts expect American to report lower numbers in comparison.

Meredith Dixon, Senior Analyst at Octus, believes that American is facing an uphill battle due to its smaller size and lack of an effective strategy to regain competitiveness. She also points out that Kirby has made it clear that he believes there is only room for two successful premium airlines, with Delta and United currently dominating key markets such as New York, Los Angeles, and Chicago.

American Striving to Be Seen as a Premium Carrier

In an effort to compete with its rivals, American has been focusing on enhancing its premium offerings.