A Strategic Miscalculation
a deeper dive into American Airlines - a response
Lately, there have been a number of negative responses to my analysis, American Airlines: The Fall of a Titan. I want to clear up a few things. Yes, American Airlines is failing. However, it is not entirely their fault.
Boeing’s persistent delays with the 777X aircraft—an aircraft American Airlines was counting on to help sustain its long-haul service—have been severe. Boeing has now slated the first delivery of the 777X for early 2027. This announcement pushed American to make rash decisions that ultimately condemned roughly 30% of its entire fleet to the consignment bin of history in the wake of the pandemic.
In essence, while United and Delta “trimmed the fat,” so to speak—placing their long-haul aircraft into long-term storage in the desert, notably in Roswell, New Mexico, and Victorville, California—American chose a different path. Instead of storing aircraft, they sold or scrapped their 757 fleet, 767 fleet, and Airbus A330 fleet.
American Airlines fans often point out that the 757s and 767s were aging aircraft that were already nearing retirement. That is a fair point. However, United has since brought refurbished 767s and 757s back into service following the pandemic. While United still plans to retire these fleets eventually and replace them with Airbus A321XLR narrow-body aircraft, American Airlines simply cannot follow the same strategy. They do not have the capital to do so. In fact, some leading economists question whether they ever did.
American is replacing older aircraft with newer 787 Dreamliner sub-fleets, but many of these aircraft orders have been deferred.
The airline also struggles with its soft product and service offerings. As of this summer, despite debuting new Flagship Suites (pictured above), its hard product still lags significantly behind competitors. Delta’s Delta One suites and United’s Polaris and Polaris Next cabins remain stronger offerings in comparison.
Codeshared international routes were also canceled, compounding issues for American Airlines. One example was the planned expansion into the Far East through their Pacific partner, Alaska Airlines, from Seattle (SEA) to destinations such as Bangkok, Thailand (BKK). This route never saw the light of day before it was canceled. It was just one of four planned routes erased by the closure of airspace over the Russian Federation and Ukraine in 2022.
American also attempted to establish a stronger presence on the East Coast through the Northeast Alliance (NEA) with JetBlue. That effort ultimately failed when the partnership was struck down by a federal court. JetBlue has since established a strong partnership with United Airlines through the BlueSky partnership.
American Airlines also tried to solidify Los Angeles (LAX) as a dominant hub. However, that effort faltered because LAX is already a hub for American, Delta, and United. When every major airline has a hub in the same location, none of them truly dominate it.
There are, of course, additional factors behind American’s struggles, but these are the primary ones.
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