American Airlines Is Still Righting The Ship After Distribution Strategy Fail

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American Airlines
has continued to amend its relationships and contracts with corporate customers and distributors on indirect sales channels following the disastrous attempt to shift bookings to its direct channels.

Fighting back for market share

Robert Isom, the chief executive officer (CEO) of American Airlines, shared during the company’s earnings call on January 23 that momentum to recover revenue from indirect channel sales has continued in Q4 2024. Isom added that the airline remains on track to restore its revenue share from indirect channels fully.

“As we exit this year, our indirect flown revenue share improvement was driven by sequential gains in corporate revenue share, which has been the primary focus of our recovery efforts.”

Isom pointed out that forward bookings have continued to be strong in Q1, with the executive once again reiterating that during 2025, it was in the position to continue recovering revenue share and indirect channel sales.

“We have completed new contracts with all of our agency partners that serve our corporate customers and agreed to new agreements with the leisure agencies that serve our most profitable leisure customers.”

American Airlines Airbus A321

Photo: Wenjie Zheng | Shutterstock

The CEO also added that the company has also reviewed and reworked agreements with its corporate customers that were the most affected by the strategy shift, mainly restoring the share of those travelers in its hub markets.

These steps will be a strong foundation for the airline to compete for that business and restore its share in these important distribution channels, Isom stated. The executive also admitted that while clawing back that market share, including bringing back the sales team, has impacted the company, it will be highly beneficial to American Airlines.

The strategy shift occurred in 2023, shortly after American Airlines signed agreements with Amadeus, Sabre, and Travelport to sell tickets directly to customers through the New Distribution Capability (NDC) in October 2022.

However, as evidenced by the decision to make a U-turn in its sales strategy, it did not pan out, and as a result, Vasu Raja, the former chief commercial officer (CCO), left the company in June 2024.

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Six-month progress

Following a question from an analyst, Isom said that the airline was on track to recover what it had lost in the process, feeling good about the progress American Airlines had made in the past six months.

American Airlines Airbus A319 taxiing shutterstock_1757634101

Photo: Alejandro Gonzalez M | Shutterstock

“I have great confidence that we are going to recover fully as we move through the year. From a revenue performance perspective, even outside of indirect channels, we think that we are poised to perform and outperform what you saw in our fourth quarter results.”

Steve Johnson, the chief strategy officer (CSO) of American Airlines, said that there is a good chance that the company could restore its sales and distribution revenue by the end of 2025. Isom credited Johnson and his team with the “enormous amount of work” that had to be put in to put the airline back on track during the earnings call.

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Bearing the fruits

The CEO said that he spent considerable time making sure that he was up to speed with the process, talking with corporate and travel agency customers. While that work is paying off, Isom warned that these contracts are set up over some time, and thus, revenue will not show up right away.

“We are not resting on that. We are learning from, certainly, the issues associated with our past strategy, and that I believe, you know, bodes well for the future.”

Johnson expressed a similar sentiment, saying that this was not a linear process to recover its indirect sales revenues, with the executive noting that sometimes, the process was referred to as “the apology tour.”

“The fourth quarter was lots of work done […], but a little bit different. And maybe that accounts for this, the non-acceleration that you might have been looking for over the course of the last three months.”

American Airlines B787

Photo: Lukas Wunderlich | Shutterstock

The CSO added that contacting each party and negotiating was an arduous task. Johnson detailed that some partners shared “stronger messages during those negotiations,” alluding to potentially damaged relationships following the strategy shift. Ultimately, it was successful, Johnson concluded, adding that the airline now has agreements with the most important travel managers and agencies.

“[…] We have modified the economics for all our significant corporate customers who are impacted by our old strategy.”

American Airlines ended Q4 2024 and 2024 with net revenues of $13.7 billion and $54.2 billion, respectively. While those were records for the company, its net income of $846 million fell very short of its main competitors’ results, namely Delta Air Lines
and United Airlines
.

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