American Airlines Says It Can Close Margin Gap With Delta And United

Core Viewpoint - American Airlines is optimistic about closing the profit margin gap with competitors Delta and United, with executives expressing confidence in improving both revenue and cost management strategies [4][5]. Financial Performance - In the second quarter, American Airlines reported a pre-tax margin of 5.8%, significantly lower than Delta's 11.6% and United's 11% [3]. - The focus on EBITDAR margin, which excludes certain costs, was emphasized by American's CFO, suggesting a similar position to United before the pandemic [10]. Revenue Growth Strategies - A key driver for revenue growth is the new credit card deal with Citibank, set to take effect in 2026, which will allow American to compete more effectively in the credit card market [6][7]. - The airline is also implementing improvements such as a new app, free Wi-Fi, new aircraft, and enhanced food offerings to boost revenue [8]. Market Position and Competition - American Airlines is focusing on strengthening its presence in key markets like Chicago and New York, where it currently lags behind competitors [13]. - The airline's domestic performance is improving, but it has less international presence compared to Delta and United [12]. Challenges and Criticism - There are concerns regarding American's reliance on certain hubs, with competitors questioning the sustainability of its business model in those areas [14]. - Despite management's positive outlook, there are criticisms regarding the actual performance and the significant gap that remains in profit margins compared to rivals [15].