American Airlines Increases Premium Segment Upgrades to Recover Ground Against Delta and United
American Airlines has decided to change course. After years focused on cost-cutting and volume, the U.S. carrier is driving a transformation centered on the market’s highest-value segment: the premium passenger. Lie-flat seats, suites with doors, Bollinger champagne, Lavazza coffee, and ultra-fast Wi-Fi are all part of a strategy aimed at closing the gap that currently separates it from Delta Air Lines and United Airlines.
The initiative, internally defined as a “customer reimagining” plan, aims to enhance the onboard experience and loyalty benefits at a time when financial, operational, and labor pressures have intensified.
A Context Marked by Financial Urgency
This move does not come by chance. American lags behind its main competitors in profitability and customer satisfaction. While the company’s stock has fallen 11% year-to-date, Delta’s shares have risen 18% and United’s 14%. Furthermore, short interest in American is significantly higher than that of its rivals.
The results reinforce this disparity. In the third quarter, traditionally the industry’s most lucrative, American posted losses, while Delta and United reported solid profits. In the first nine months of the year, the airline barely earned $12 million, compared to Delta’s $3.8 billion and United’s $2.3 billion.
In an environment where high-spending travelers drive sector margins, improving cabins and services has become a strategic necessity, not an option.
“We believe investing in the customer experience will help us increase revenue,” stated Nat Piper, American’s new Chief Commercial Officer, in remarks to Reuters.
Key Aircraft for the Premium Push
The plan relies decisively on the fleet. American is counting on the new Boeing 787-9 and Airbus A321XLR to open routes and capture higher-yielding revenue.
The 787-9, equipped with 51 lie-flat seats and privacy doors, has become the company’s most profitable widebody aircraft. It currently operates highly competitive transatlantic routes, such as Chicago-London, a market where United maintains a strong presence.
→ American Airlines Announces First International Route to be Operated with Airbus A321XLR
Meanwhile, the A321XLR will debut on the New York-Los Angeles route, one of the most contested domestic corridors in the country and historically dominated by Delta. Recently showcased at John F. Kennedy Airport, this model features lie-flat suites and marks American’s first three-class configuration on a single-aisle aircraft. Later, it will also cover secondary transatlantic routes, such as Edinburgh, leveraging its fuel efficiency to make lower-demand markets viable.
Chief Strategy Officer Steve Johnson called the renewal the most profound in decades and anticipated a significant revenue improvement starting in 2026. “As these changes are introduced and have time to bed in, they will begin to create value.”
Operational Obstacles and Execution Delays
The path, however, is not without difficulties. Analysts warn that the recovery will be slow and costly. Supply chain bottlenecks have delayed key deliveries, including the A321XLR, initially slated for 2023.
Adding to this is the delay in modernizing the older Boeing 777s. A shortage of seats and interior components has stalled the program. The first 777-300 just entered the conversion process in Hong Kong, confirmed Brian Znotins, Senior Vice President of Network Planning. To accelerate progress, the airline has opted for an already-certified seat design, instead of introducing new modifications.
Operational reliability remains another weak point. American continues to trail Delta and United in on-time performance and ranked near the bottom in the latest J.D. Power customer satisfaction survey.
Financially, analysts forecast the EBITDA margin to reach around 9% in 2026, compared to the 7.3% estimated for this year. Even so, it would remain far from the 15% projected for Delta and the 14% for United, according to LSEG data.
“American Airlines is not going to reinvent itself overnight,” warned Henry Harteveldt, founder of the Atmosphere Research Group consultancy.
Past Mistakes and Internal Pressure
Management attributes part of the underperformance to higher costs from new labor agreements and heavy exposure to the weakened U.S. domestic market. Johnson mentioned other factors that slowed the post-pandemic recovery, such as delays in long-range aircraft, the inability to expand in New York, and a pilot shortage.
Externally, analysts point to deeper failures: distancing from travel agencies, neglecting the premium product in the race against low-cost carriers, and poorly synchronized fleet retirements that left the company with fewer widebody aircraft. Share buybacks during former CEO Doug Parker’s tenure increased debt, while reducing operations in hubs like New York and Los Angeles weakened the network.
“American’s problems are of American’s own making,” stated Harteveldt.
An Attempt to Correct Course
To right the ship, the airline has reinstated competitive fares for agencies, intensified contact with corporate clients, and invested in technology aimed at reducing operational disruptions. The arrival of a new Chief Customer Experience Officer and the creation of an advisory board with hotel industry veterans aim to bring coherence to the process.
Furthermore, an exclusive credit card partnership with Citi, starting next year, promises a stable source of high-margin revenue through miles sales. Capital expenditure on new aircraft, cabin refurbishments, and VIP lounges will increase in the coming fiscal year.
Meanwhile, labor tension is rising. Unions have formed a coalition and accuse management of poor stewardship and deteriorating internal morale. Following the third-quarter results, they demanded “accountability at the highest level.”
Frustration has been heightened by the impact on profit-sharing. American pilots would receive just 0.6% this year, compared to 10% at Delta and 7.6% at United, according to a union memo.
During an internal meeting in October, CEO Robert Isom acknowledged the scale of the challenge. “If we don’t make money doing it, it’s not something I’m going to be able to keep doing for very long, nor any of you,” he said, according to a recording reviewed by Reuters.
The premium bet is underway. Now, the market, employees, and customers await results.
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