Dive Brief:
- American Airlines is renewing focus on customer experience and loyalty to bolster the airline amid a "challenging economic environment," executives said on a Q1 2025 earnings call Thursday.
- While revenue grew 0.7% year over year in the first quarter, U.S. consumer discretionary spending and consumer spending on air travel slowed throughout the quarter, CEO Robert Isom said. As a result, domestic passenger revenue per available seat mile fell 0.7% year over year.
- Loyalty was a bright spot. Loyalty revenues grew 5% year over year, and enrollments in American’s AAdvantage loyalty program increased 6% year over year.
Dive Insight:
American pulled its full-year financial guidance, citing macroeconomic uncertainty. Despite weaker travel demand in the main cabin, the carrier, like Delta Air Lines and United Airlines, pointed to its loyalty program and premium offerings as sources of strength.
“Performance in our premium and loyalty revenues continued to show strength year over year,” Isom said. “Premium revenue increased 3% year over year in the first quarter on 0.3% lower capacity.”
The loyalty program bolstered premium revenue. AAdvantage members make up three-quarters of premium cabin revenue, according to Isom.
“Over the long run, travel comes back,” Isom said. “We have a renewed focus on customer experience. You will see American investing in our premium product. We do believe no matter the economic environment that customers will want to be treated better. They will want services and amenities that they are certainly willing to pay for. American is committed to being a leader on that front.”
American has been leaning into customer experience in recent months to drive revenue growth. The airline appointed Heather Garboden chief customer officer and created a CX unit in February, announced plans to offer complimentary in-flight Wi-Fi to AAdvantage members last week and began revamping its app.
“We're positioning American for sustained long-term success and a big part of that is transforming our customers' experience and engagement with us,” Isom said. The new customer experience organization “will advocate on behalf of customers, leading the strategy and implementation of initiatives to improve every part of the customer journey from bookings to the airport to in-flight experience customer feedback.”
In addition to the macroeconomic uncertainty the airline industry faces as a whole, the January crash of American Eagle Flight 5342 at Washington Reagan National in Washington, D.C. weighed on earnings. American estimated the crash and impact reduced first quarter revenue by approximately $200 million and reiterated its commitment to safety.
“We're supporting the families and loved ones through our office of continued care and outreach, which we established within a week of the accident,” Isom said.
