In the fourth quarter of 2024, American Airlines continued its focused effort to regain its foothold in the corporate travel market, with CEO Robert Isom setting ambitious targets for a complete recovery by the end of 2025. This effort comes after a turbulent period for the airline, which saw its share of corporate business diminish in 2023 and early 2024 due to strategic shifts that alienated travel agencies and their corporate clients.
During the Q4 earnings call, Isom expressed optimism about the airline’s recovery, highlighting significant improvements in business travel revenue, which saw an 8% increase year-over-year. He noted that this growth represented a “sequential improvement of two points” over the previous quarter, signaling a positive trend heading into the new year. “As we look at forward bookings, it really suggests that we’ve got traction in the marketplace,” he said, underscoring the airline’s renewed momentum in restoring its position.
The challenges faced by American Airlines stemmed from its decision to prioritize direct bookings and the New Distribution Capability (NDC) in 2023. While this strategy aimed to modernize distribution channels, it inadvertently strained relationships with travel agencies and corporate clients who relied on traditional Global Distribution Systems (GDS). By May 2024, the airline recognized the misstep and pivoted away from this approach, refocusing on rebuilding these crucial partnerships.
“We remain on track to fully restore our revenue share from indirect channels as we exit this year,” Isom commented, signaling confidence in the airline’s recovery path. In addition to regaining the trust of agencies and corporate customers, American Airlines also worked on securing new agreements that would bolster its corporate business.
Steve Johnson, American Airlines’ vice chair and chief strategy officer, was tasked with leading the carrier’s corporate recovery efforts. He acknowledged that regaining the airline’s share of corporate travel wasn’t going to happen overnight, but he expressed hope that the full recovery could occur sooner than expected. The company had already made significant strides in negotiating new deals with corporate travel agencies, resulting in agreements with 30 key agencies during Q4. These new partnerships are expected to be major contributors to share recovery in the first half of 2025, as American Airlines works to offer enhanced incentives to move more business to the carrier.
Johnson highlighted the importance of this shift in strategy, stating, “While it was going on, understandably, we were negotiating, so you didn’t see a lot of share shift during that period of time. But it was ultimately successful.” The new agreements include terms designed to entice corporate customers back, offering them compelling reasons to choose American Airlines for their travel needs.
Isom’s personal involvement in the recovery process also played a crucial role. He invested significant time engaging directly with corporate customers and travel agencies, ensuring that the airline’s message was clear and that concerns were addressed. “I spent a considerable amount of my time making sure that I was up to speed and talking to our corporate customers and agencies, as well. That work is paying off,” he said, emphasizing the importance of strong communication in mending relationships.
The airline also reported a 3.3% year-over-year increase in passenger revenue for Q4, amounting to $12.4 billion, and net income of $590 million. These positive financial results reflect not only the recovery in corporate travel but also the broader strength of American Airlines’ operations.
With new deals in place and a reinvigorated approach to corporate travel, American Airlines is poised to continue its recovery into 2025, aiming to regain lost ground and further solidify its position in the competitive corporate travel market.
