American Airlines Has Been More Like American’t Airlines — It’s Looking To Turn That Around With Quality Improvements

As its planes sat idle in parking during the mania of the COVID-19 pandemic, many analysts were worrying that American AirlinesAAL

was doomed to repeat the past. Only seven years earlier, it had emerged from bankruptcy. And in the early aughts of 2020, as it warned that it would burn some $70M per day, some saw it hurtling towards another collapse. Alas, the airline emerged on the other end with government rescue, but its stock — and more importantly, its credibility — did not.

American dreams that it Ameri-can:AAL

is ~67% below its pre-pandemic levels and trading at an anemic 7.5x price-to-earnings, effectively priced for death. Still, American’s management is hoping it can pull off a relative Hail Mary — convincing its customers to come back. But as it tries to play catch-up, it’s hard to tell whether the airline can balance its cost-cutting efforts with quality enhancements.

• According to View from the Wing, American is cracking down on “dirty cabins, missing meals, and poor service” this summer, looking to improve the overall quality of its product.
• At the same time, the company plans to make Wi-Fi free on most of its cabins by next year and improve its boarding procedures to reduce stress.

Don’t Call It a Comeback

Beyond doing the bare minimum, American needs to follow United and Delta’s lead by leaning into premium seating to be successful. And to do that, it needs to win over its high-value flyers — that means undoing a strategy that blew up its business travel success and offering sweeteners to its most ardent flyers.

• American did not make it more difficult to qualify for status this year, but introduced a number of new benefits and perks for its travelers, including new ways to spend AA miles.
• It also added new lifetime status levels for its most aggressive travelers, and is pushing to retain its top travelers by offering its ultra-exclusive ConciergeKey service for cash or miles.

But are these changes worth it for avid travelers? American’s changes, or the lack thereof, are a relative rarity among US airlines. In recent years, competitors United, Delta, and Southwest have only made it harder to accrue status. However, as the airline looks to cut costs, it might be more compelling to pursue status on an easier oneworld partner — like Alaska/Hawaiian — where your status would still extend to American and a broad global network.