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What happened to the Dream? — June 2024

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What has gone wrong at American Airlines? It is the world’s largest airline under various measures: the largest number of aircraft with a fleet of over 1,500 tin cans; it carried more than 210 million passengers in 2023. But it trails its major network competitors in the US (the world’s next two largest airlines) in terms of revenues, margins, profits and balance sheet health.

A decade ago, American emerged from Chapter 11 bankruptcy protection and acquired US Airways to provide the last element in the consolidation of the US Legacies. That filing for Chapter 11 had been forced on it by the bankruptcies and restructuring (and subsequent consolidating mergers) of its two main rivals Delta/Northwest and United/Continental. But it emerged substantially larger and with a competitive cost base. Between 2014 and 2019 American reported a period of very strong earnings, with its operating profit margin peaking at 18% in 2015.


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