American Air Took 'Substantial' Hit From Shutdown, CEO Says

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Watch American Air Took 'Substantial' Hit From Shutdown, CEO Says - Bloomberg on Dailymotion

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00:00So let's start with the holiday season. Everyone is getting ready to fly, sometimes with family,

00:05sometimes to family, sometimes to avoid family. What do the bookings look like so far?

00:10We're really pleased with how we see the Christmas and New Year holidays shaping up,

00:13and even more so as we take a look out into the first quarter of 2026. You know, the government

00:20shutdown, it had a dampening effect on demand, but I really like what I've seen in terms of

00:24bookings post that, and we're ready. You know, an airline is a big, complex operation,

00:31and it takes people and equipment and systems to all be working. We've double, triple checked,

00:37and I'm so proud of our team. They're ready. So we've heard from Delta, we've heard from United,

00:41we've heard from a number of other airlines about the hit to revenues in the fourth quarter as a

00:47result of the government shutdown. I don't believe that American has come out with anything like

00:50that. Do you have some sort of estimate of what type of revenue was lost due to the cancellations

00:56during the government shutdown? Well, it's just been a month ago that we were talking about

01:00our third quarter earnings and talking about what we were envisioning for the fourth quarter,

01:05and really optimistic about bookings that had happened. And at the time, we were, you know,

01:10in the midst of government shutdown, but the impact was fairly light. You know, at the time,

01:16we were saying less than a million dollars, you know, per day. But as things developed and then

01:20we got to the mandated pullbacks, look, there was an impact and it was substantial. And it not only was

01:27it for the day of travel and the cancellations that might've happened or the disruptions, but it was

01:32also for the bookings that would have happened during that period. And so there was a dampening effect

01:37during the period. Again, the good news is that as soon as we get out of that disruption,

01:42as soon as we get to really having an airline system that people have confidence in, they come

01:50back to travel. And so that's what gives me great optimism for the holidays. And as we look into the

01:56into the first quarter, I have to be honest, when I talk to people in the industry, the sense of

02:00palpable frustration that this is sort of the hot potato in any kind of negotiation is really notable,

02:06especially heading into potentially another government shutdown in January. Is there anything you

02:10can do to get ahead of it? Well, I don't like that. Aviation is critical infrastructure to the

02:15country. And I think everybody in the administration, everybody in the House and Senate realized that

02:21we have to do the things to keep critical infrastructure running. And while it's commercial

02:25aviation, I'd also say, you know, other, you know, really important industries, drones and

02:31EVITALs and anything that depends, that's taking into account air mobility depends on air traffic

02:36control. And we can't use it, you know, really as a battleground. So I'm confident that our

02:44politicians will get together and figure out a way. It starts with protecting our air traffic

02:49controllers. Nobody should be asked to come to work and not be paid. And nobody should be used as a

02:54pawn in a political negotiation. So I'm really hopeful that by the time we get into January, this will be

03:00long behind us. In the meantime, the airline industry is incredibly competitive, as you know.

03:05And we've heard Delta and United talk about their premium offering, talk about increasing their

03:10revenue. United in particular, Scott Kirby has come out and said that United and Delta are kind of

03:15taking off and apart from American Airlines. How are you fighting back, given that that's the

03:21backdrop that you have? Wouldn't they like that to be so? It's absolutely not true. And as a matter of

03:28fact, you take a look at American Airlines history. We're the ones that developed the frequent flyer

03:33programs and airport lounges and the hub and spoke system and global distribution systems. There's just

03:40an ethos of innovation at American Airlines. And really, the investments that we've made over the

03:46last decade are all set to come about and be ready for where customers want to go. So I was flying back

03:53from London over the weekend in our new flagship suite on our 7879P. And I can tell you that hands

04:00down, that is the best product among any of the network carriers in terms of experience.

04:07This year, we've announced the opening of the new Philadelphia flagship lounge. We've got a Miami

04:13flagship and a Charlotte flagship coming. Nobody has more premium quality lounges than American

04:18Airlines. We're going to do a better job of packaging this all together. We have an extreme

04:23focus on customer experience. We've got a new organization that's just totally dedicated to that.

04:28And just about every week, there's a new announcement with Lavazza Coffee, our champagne

04:32boulanger, or Raven and Lily amenity kits. I'm really excited about that all being packaged.

04:39And us, certainly talking about that in a fashion that people understand. We've got the best loyalty

04:45program, we've got the best product, and it's where people should be flying. One thing that American

04:50Airlines has for it is it's more focused on the domestic regime than some of the other competitors.

04:55And I'm just wondering if there's an effort to sort of expand the international network as that does

05:00become a higher margin offering for so many airlines. Well, that's right. And this year, that exposure to the

05:06domestic region, it had an adverse impact on us. We didn't have as much international exposure.

05:12International did very well over the course of the year, domestic not so much so. We had uncertainty,

05:17the accident with 5342. So there was a lot of things that we had to overcome, and we've done that.

05:23But I feel really good about where we're headed. And when it comes to international, we're ready.

05:30So not only are the 7879Ps delivering, but tomorrow, we've got a big announcement on our 321XLR

05:36aircraft. And those are those are coming out as well. So you'll see us open up more secondary cities in

05:42Europe. You'll just see us do more flying into the hubs of our some of our partner carriers and international

05:48probably outgrow what we do from a domestic perspective. But the two are connected. And, you know, I'm really pleased with our

05:54domestic operation. We're going to always have the best domestic network. And, you know, you go back, you know, a number of years and

06:01domestic, you know, outperformed international. And we're going to be ready for domestic doing well and

06:07international doing well, premium doing well, and really pleased with where we're at.

06:12You've been working on upgrading the entire fleet. And that's something that's been really important for you,

06:15especially as you get some of these premium offerings in place. How much have some of the

06:19slowdowns, supply chain issues at Boeing and Airbus hampered that ability to really retrofit some of the fleet?

06:25Well, where we stand today, we have the youngest fleet in the industry. We made a tremendous investment

06:30from about 2014 to about 2020. And we bought on well over 30 billion dollars of new aircraft. So we have

06:39the youngest fleet in the business right now. But on top of, you know, new deliveries that we're taking,

06:43we don't have any retirements planned. So we're reconfiguring our 777-300s and our 777-200s.

06:50We're putting flagship suites on those. Even domestically, we're doing work on our 320s and

06:55319s. But we still depend on new deliveries. And from that perspective, you know, we have a lot of

07:02dependence on Airbus to deliver the 321XLRs, Boeing to continue to deliver the MAX 8s, and hopefully be

07:09ready to deliver the MAX 10s that we have on order in 2028. Right now, my only push to the OEMs is

07:18deliver on time. Deliver a quality product. Stick to it before you ramp up. Let's make sure we can do

07:24what, you know, you're on the books to deliver now. Just taking a step back, in the airline industry

07:30more broadly, there's been this huge focus on the supreme product, the luxury product. And I wonder

07:38what you see in terms of bookings next year, whether it really is the premium product that's continuing to

07:43lead and the robustness that you see there while other things fall off. Is it bifurcated in terms

07:48of the bookings and the demand? Or do you see a wholesale sort of rejuvenation in the interest in

07:53travel and ability to spend and pay the prices that actually are there? Well, I'll just start with

07:58this. Demand has been, you know, resilient, right? Every time there's cold water poured on

08:05the environment, it seems like, you know, travelers want to come back, as evidenced by,

08:10you know, bookings for the holiday season as we take a look into the first quarter of next year.

08:16I have confidence, though, that, you know, overall, people want to travel. And in that,

08:22in people wanting to travel, I also think that, you know, whether you're more economy-focused and

08:28budget-minded or you are premium services, everybody wants more. Everybody wants better control.

08:34Everybody wants more comfort. So I don't think that there is going to be any going back

08:38in terms of offering product at any level of the spectrum of offerings. But for us,

08:45as we go forward, you'll see us with our lie-flat seat offering, that's going to grow by 50%

08:50over the next few years. Premium seating, 20% over the next few years. Whether you're a business

08:56traveler, who's always wanted, you know, more of that, you know, comfort and ease of touch,

09:02or you're a leisure traveler, there's much more of a demand to really have a better experience.

09:09And we're going to meet them there, no matter how you take it.

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