American Airlines cuts growth after sales strategy backfires

[Pelican Press 0]

********* Airlines cuts growth after sales strategy backfires

********* Airlines planes sit at the gate at Los Angeles International Airport (LAX) in Los Angeles, California, on July 26, 2023.

Daniel Slim | AFP | Getty Images

********* Airlines will slash its capacity growth in the second half of the year and consider a host of other changes, CEO Robert Isom said Wednesday, a day after the carrier cut its revenue and profit forecast and said it is parting ways with its Chief Commercial Officer, Vasu *****.

***** led a plan to drive direct bookings at the airline in lieu of third-party sites and travel agencies, a strategy that included gutting the airline’s sales department. ***** will leave the company next month.

“We’re going to make some changes very quick,” CEO Isom said at the Bernstein Strategic Decision conference on Wednesday.

********* will grow capacity about 3.5% in the second half of the year compared with the year earlier, down from roughly 8% year-over-year growth in the first six months of 2024.

Shares of ********* Airlines were down about 13% in early trading Wednesday.

Pressure has been mounting on *********’s leadership team after more upbeat results and comments from rivals Delta and ******* about corporate, international and premium travel — trends Isom said his airline needs to better capitalize on.

After the market closed on Tuesday, ********* said its unit revenues could fall as much as 6% in the second quarter from a year earlier, down from a forecast last month of no more than a 3% decline. Airlines make the bulk of their money during the second and third quarters, but some areas have fared better than others.

“A significant miss driven in part by close in bookings puts AAL’s ability to reap the full value of a robust summer flying season in greater doubt,” Bernstein airline analyst David Vernon said in a note.

The carrier said corporate bookings were up mid-to-high single-digit percentage points in the first quarter compared with increases of around 14% touted by Delta and *******.

*******, minutes after *********’s forecast adjustment Tuesday, reiterated its second-quarter earnings estimates, though it didn’t provide a revenue

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. Its chief executive, Scott Kirby, an ********* Airlines alumnus, is also scheduled to speak at Bernstein’s conference.

“*********’s diminished guide speaks far more to its flawed initial forecast than any broad-based shift in passenger demand,” JPMorgan airline analyst Jamie Baker said in a note Wednesday, adding *******’s reiterated forecast was an encouraging sign for Delta.

********* has also been prioritizing Sun Belt cities and its large hubs in Texas and North Carolina over coastal markets.

U.S. air travel hit a record over Memorial Day weekend and executives from ******* and Delta have predicted a record summer, with very strong trans-Atlantic bookings. There have also been weak spots as carriers increased capacity, such as ****** America.

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Breaking News: Markets,********* Airlines Group Inc,Breaking News: Business,Life,Business,Aerospace and defense industry,Transportation,Travel,Airlines,Markets,Delta Air Lines Inc,******* Airlines Holdings Inc,Robert Isom,Earnings,Manchester ******* PLC,business news
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