American Airlines Bets on Premium Travel for Revenue Recovery

American Airlines is expanding premium cabins, onboard services, and loyalty benefits as it seeks to narrow a widening profitability gap with Delta Air Lines and United Airlines, betting that higher-yield travelers will drive revenue recovery beginning in 2026. The strategy centers on new widebody and narrowbody aircraft—including the Boeing 787-9 and Airbus A321XLR—along with upgrades to legacy fleets and customer-facing technology.

The shift follows continued underperformance relative to its largest US competitors. Through the first nine months of the year, American reported net earnings of US$12 million, compared with US$3.8 billion at Delta and US$2.3 billion at United. In the third quarter—typically the industry’s strongest period—American posted a loss, while both rivals reported profits. American shares are down about 6% year to date, compared with gains of 20% at Delta and 18% at United.

“We think investing in customer experience will help us grow the top line,” Nat Piper, American’s chief commercial officer, told Reuters. Executives describe the overhaul as a “customer reimagination” plan focused on premium seating, enhanced food and beverage offerings, faster Wi-Fi, and expanded loyalty benefits.

American is deploying its Boeing 787-9 aircraft with 51 lie-flat seats featuring privacy doors on long-haul routes, including Chicago–London. The airline says the 787-9 is now its most profitable widebody aircraft. It is also preparing to introduce the Airbus A321XLR on the New York–Los Angeles route—one of the most competitive markets in the US and a stronghold for Delta. The single-aisle aircraft features lie-flat suites and represents American’s first international-style, three-class configuration on a narrowbody jet. The carrier also plans to use the A321XLR on secondary transatlantic routes such as Edinburgh, citing fuel efficiency and range.

Chief Strategy Officer Steve Johnson said the initiative represents the most significant product overhaul in decades. “As these changes that we’re making are introduced and have some time to gel, you’re going to see them deliver value to us,” he said.

Analysts caution that the turnaround will take time. Aircraft delivery delays—including late A321XLR handovers originally expected in 2023—have slowed progress. Retrofits of Boeing 777 aircraft have also lagged due to shortages of seats and interior components. The first 777-300 has only recently entered conversion, according to Brian Znotins, senior vice president of network planning.

Since 2019, American has increased its premium economy, business, and first-class seating by 16%, compared with 5% growth in economy seats. Similar trends are evident across the industry. United reported a 40% increase in business and premium economy seats in October compared with October 2019, while economy capacity rose 11%, according to OAG data. Delta’s business-class seating increased 7% over the same period, compared with just 0.1% growth in economy seats. Alaska Air Group said Alaska and Hawaiian Airlines combined expanded first- and business-class seating by 21% versus 2019, even as total seats flown declined 1%.

Operational reliability remains a challenge, with American trailing peers in on-time performance and customer satisfaction surveys. LSEG data show analysts expect American’s EBITDA margin to reach about 9% in 2026, compared with estimated margins of 15% at Delta and 14% at United.

Labor relations add further pressure. American pilots are projected to receive profit-sharing payouts of about 0.6% this year, compared with 10% at Delta and 7.6% at United, according to union data. CEO Robert Isom acknowledged the stakes during an internal town hall. “If we don’t make money doing it, it’s not going to be a pursuit that I get to do very long,” he said.

American said capital spending on aircraft, cabin upgrades, and lounges will rise next year as it works to restore competitiveness in the premium segment.