AAG(AAL) Forbes·2025-01-24 16:23Earnings Performance - American Airlines beat earnings estimates but projected a loss of 20 to 40 cents per share in the current quarter, compared to the expected four cents loss [2] - The company's shares fell 9%, reducing its year-to-date share price gain to near zero, while Delta shares were up 14% and United shares were up 8% [2] - In the fourth quarter, American reported a 5.9% adjusted pre-tax margin, compared to United's 9.7% and Delta's 10.8% [8] - For the full year, American's adjusted pre-tax margin was 3.4%, while United reported 8.1% and Delta reported 9.1% [8] Market Share and Operational Challenges - Analysts focused on American's efforts to recoup corporate market share lost in a failed 2024 effort to reduce distribution costs [3] - CEO Robert Isom highlighted improvements in key hubs like Charlotte, Dallas, Miami, and DCA, but acknowledged challenges in New York, Los Angeles, Philadelphia, and Chicago [6][7] - The company plans to boost regional flying to strengthen weaker points in its network, including partnerships with Alaska Airlines at LAX [6][7] Profit Sharing and Employee Compensation - American Airlines will pay out 1.5% of each pilot's 2024 earnings in profit sharing, compared to Delta's 713 million [9][10] - Allied Pilots Association President Nick Silva criticized the disparity, noting that American's total income of $1.37 billion is less than Delta's profit-sharing payout [10] - Silva emphasized that American's pilots perform the same essential service for the same rates of pay as their peers at Delta and United, but their total compensation trails due to the company's lagging financial performance [11] Competitive Landscape - United CEO Scott Kirby declared United as the best airline in the history of aviation and criticized carriers that "chase load factor," indirectly targeting American [4] - Kirby noted that all seven United hubs are profitable, contrasting with American's lagging hubs [4] - The rivalry between American and United is further highlighted by the history between Kirby and Isom, with Kirby having been asked to leave American in 2016 due to executive tensions [5] Analyst Reactions - Analysts questioned the 9% sell-off of American's shares, with Deutsche Bank's Michael Linenberg calling it an attractive opportunity to own AAL [7] - Barclays analyst Brandon Oglenski noted that the negative market reaction likely reflects concerns about higher-than-expected cost inflation but sees a brighter outlook [7] - The potential for an improved credit card deal, restoration of lost corporate business, and increased regional flying could help American catch up to its peers [7]