Skift Take
When an airline makes billions of dollars in profits, it can afford to keep some unprofitable routes for strategic reasons. But not anymore.
For several years after its merger with US Airways, American Airlines loved to brag of its status as the world's largest airline by revenue and capacity. But beneath that marketing boast, American had a serious problem: It couldn't profitably compete in many big U.S. markets, including New York, Boston, and most of the West Coast.
The airline hid it well. Hubs in Dallas/Fort Worth and Charlotte were profit-making machines, and the rest of the airline's non-coastal hubs made enough money. American accepted below-industry margins in New York, Boston and Los Angeles, because it figured the world's largest airline couldn't cut-and-run from three gigantic business markets. Its customers demanded American stay.
Now, however, the industry is in crisis, and American, which burned $55 million per day in the second quarter, has had enough. It is revamping its West Coast and Northeast strategy, hoping it can stem the bleeding. Longer term, it is hoping decisions it makes now will set it up for future success against United Airlines and Delta Air Lines.
Rather than running away from the Northeast and West Coast, probably a suicidal move for a global airline, even in a pandemic, American is turning to two new domestic alliances. In the past five months, American has announced deals with Alaska A
