If Scott Kirby’s mantra is “no excuses, sir,” Robert Isom’s must be “any excuse will do.” But like any experienced teacher, parent, or industry observer I see right through it — and I bet you do, too.

The excuse offered last week — for the airline’s dismal guidance for the third quarter (a loss between 10 and 70 cents per diluted share) and a possible loss on the year,1 depending on fuel prices and demand — was that if only the second quarter earnings call had been held three weeks earlier, they would have had better news to share.

If only!

You could hear variations on this theme at least three times and from at least two executives (presumably with serious faces). CFO Devon May told analysts that as recently as July 2, American would have shared that it could make as much as $1.5 billion in pre-tax profit this year.

And here’s Isom: “If we reported earnings just a few weeks ago, our forecast for the remainder of the year would have been potentially to produce results ... four times better than last year,” Isom said.

As you can probably tell, I don’t think highly of this argument and I can’t see why you would either. I know Isom wants to keep his job, but good CEOs don’t cherry-pick data from the few days when President Trump seemed to tire of the conflict with Iran and Iran loosened its grip on the Strait of Hormuz. Good leaders discuss the situation as it is — not how it was a few weeks ago, or how they hoped it would be.

It’s too bad, because I thought Isom’s crummy excuse overshadowed an otherwise reasonable earnings call effort (at least considering the poor guidance). Isom mostly stuck to his talking points, with fewer cliché-riddled answers than usual. He even shared a four-point plan that he said would close the margin gap between American, United, Delta, and the newly resurgent Southwest. All three competitors reported that they’ll be firmly profitable in the third quarter and for the year.

Was something missing from American’s plan?

Yes. I’ll get to that in a moment. First, the good news.

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As I followed United’s second quarter earnings call last week, I think I heard Scott Kirby obliquely share a warning with fellow CEOs: keep prices up, even when fuel prices fall, or you may lose your job — just like Ted Christie, who “stepped down” from Spirit in April 2025 between the airline’s first and second bankruptcies.

Kirby wasn’t that direct, of course. He’s too smart to utter such an inflammatory remark in a public forum. And since only he knows what he meant, I need to be careful as I analyze his words.

But I am a noted Kirby-watcher, and I think I can make the case that Kirby intended to remind competitors what can happen to CEOs who fail to correctly read industry inflection points.

I’ll share what Kirby said, verbatim, and then I’ll discuss what I think it means.

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I don't have much to quibble about from Delta’s second quarter earnings report. Despite very high fuel prices, Delta produced an adjusted operating income of $1.6 billion with an operating margin of 8.8 percent.

Executives promised continued momentum in the third quarter, predicting an operating margin of 11-13 percent, and teased investors with the prospect of even better future results if fuel prices drop and fares remain high. Ed Bastian called sustaining the high fares an “important step towards improving the industry's financial health and earning sustainable returns over time.”

Maybe so, but we won’t know if airlines can keep prices high for some time, because as the old saying goes, you’re only as strong as your weakest competitor.

So today, let’s examine some of the commercial strategies that Delta executives highlighted on their earnings call last Friday, including their future international growth plans, their interest in Los Angeles, and their bullishness on new basic fares for premium cabins.

Oh, and I’ll hit Bastian for some overly patriotic comments.

Growth mostly will come in growing economies. And that’s not the United States.

Even in the best of times, U.S. GDP typically grows in the low single digits per year. Because well-run airlines don't seek to grow capacity faster than GDP in a mature market (unless they have a strategic reason), Delta is looking for other places to put airplanes.

"We think longer term, the domestic market will move with the economy," chief commercial officer Joe Esposito said. "International for us will grow faster than average just because there's a lot of economies that we still don't serve."

One new route will be Atlanta-to-Riyadh, beginning in October. Another should be the long-teased Los Angeles-to-Manila service. There will be others, too.

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When WestJet unveiled its new LOPA last year for some Boeing narrowbodies, I thought the airline made a reasonable decision to shrink legroom in some seats to Wizz Air levels. Even though some passengers would have limited (or perhaps no?) knee room, I considered it a rational solution to an old problem – how to compete with ULCCs that pack seats on airplanes and undercut other carriers on price.

U.S. airlines have had great success with their basic economy products by adding pre-flight restrictions — including limits on flight changes, baggage, and seat selection — while leaving the in-flight experience untouched. All coach passengers receive complimentary drinks and snacks, access to TV and movies, seats with reasonable legroom, and (sometimes) free internet. Why fly Spirit (RIP) if the Big 5 could give them a better experience at the same price?

But WestJet thought that might not be the best approach for its customers.

Last year, as it redesigned the cabins on some previously all-economy aircraft to add premium seats, WestJet decided to slice and dice the coach cabin, effectively ensuring that many basic economy travelers would have a worse onboard experience than others. These airplanes had four versions of coach seats: extra-legroom economy, along with three types of economy class seats, at 30, 29, and 28 inches of pitch (with the tightest room at the back of the aircraft).1

If passengers wanted the old WestJet economy class standard of 30 inches, they’d have to pay extra for it.

“It’s all about segmentation,” WestJet CEO Alexis von Hoensbroech told me last month in an interview in Miami at the World Aviation Festival. “We increased the number of premium seats in front, and we also thought that we need to deliver a product that is primarily servicing price-sensitive people so we introduced a product that is pretty standard at many other airlines, just in the back part of the plane.”

It looked like a possible a win-win. The airline could add more premium seats, while maintaining excellent unit costs. Passengers (at least in an ideal world) could benefit too; the theory was that WestJet could offer more cheap inventory to compete with discounters. “It was generally to allow for very affordable ticket prices for people who just want a seat,” von Hoensbroech said.

Passengers did not see it that way. Many grumbled quietly, but not Amanda Schmidt, who posted a video on TikTok in January showing her 6’3” father (barely) wedged into the seat on a nearly four-hour flight from Edmonton to Toronto. In the original TikTok, Schmidt jokes: if you wanted to put two legs under the seat in front of you, you’d have to pay for the second leg. Global media soon poked at the airline, including the New York Post, which headlined a story: “Infuriated WestJet passenger shows sardine-can seating in new planes”.

Initially, WestJet punched back on social media, saying “these pitches are in line with what you’ll find across North American airlines.” But 10 days later, WestJet aborted its plan; it removed one row to ensure all standard economy seats would have roughly the same (more generous) legroom.

“It’s not just because of the public noise that it created — that’s usually not what drives us — but we also looked at the data,” von Hoensbroech. “We saw that people who were traveling were less likely to buy new tickets, and we thought: that’s not good.”

In hindsight, WestJet’s executives may not have properly weighed how far it flies these aircraft compared to the European low-cost carriers with similar seat pitch.

“We ride those 737s really long, especially during winter,” von Hoensbroech said. “We fly to the Caribbean. We fly four-, five-, six-, seven-, sometimes even eight-hour flights on a 737. That’s tough on the 28-inch seat pitch, and we got the feedback right away. We always knew it was risky. But if you never try, you never find out.”

“I always say: ‘if you never revert a decision, you're not pushing hard enough.’”

Here’s some other news von Hoensbroech and I talked about.

The U.S. demand problem is old news. Now, Cuba is a pain.

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Airlines outside the United States often salivate over the revenue American, Delta, and United capture from their loyalty programs — you’ve read that in this newsletter many times. Yet at an investor day last month, executives from International Airlines Group expressed no envy. In fact, they argued that by one important metric they’re doing better than the Big 3.

That metric is not absolute revenue, because of course, the Big 3 do make a lot of money from loyalty. Delta earned about $8.2 billion last year from its American Express relationship alone, and United and American likely aren’t that far behind. IAG Loyalty1 — which says it has the world's fourth most valuable loyalty business —reported £2.64 billion in loyalty revenue (about $3.5 billion U.S.).

The metric isn’t percentage of total revenue either. On that, IAG earns about 9 percent of its revenue from loyalty, roughly 3 points less than the combined average of Big 3.2

So what is this mysterious metric, and why is IAG Loyalty so bullish?

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When network planners join JetBlue, Marty St. George likes to play them a scene from “Glengarry Glen Ross,” the film adaptation of the David Mamet play about a group of competitive, big-city real estate agents. In St. George’s favorite part, one of the main characters is explaining the rules of a sales contest.

“The punchline is: ‘First prize is a new Cadillac, second prize is a set of steak knives, and third prize is ‘you’re fired,’” St. George said.

St. George isn’t suggesting he’ll fire planners for proposing losing routes (though given the airline’s tenuous financial position, cash-negative routes are not ideal). Instead, he’s reminding them that the No. 3 position in an airline market is worthless, while No. 2 is just OK. In a scale business, the top dog wins a disproportionate portion of the profits — and that’s what JetBlue seeks. Anywhere, really.

“We have never had a focus city where we were reliably No. 1 by a big number,” St. George said. “The joke I said in the meeting was the only place we were reliably No. 1 in the market was in Presque Isle, because we’re the only guy that flies there.”

Now, JetBlue has its chance.

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Between sessions at last week’s IATA General Meeting, in the lobby of the Grand Hyatt in Rio, almost all the attendees were asking me (and others, too) the same two questions:

Will Robert Isom survive the year at American? And when he goes — whether soon or in the future — who will replace him?

I learned more about the who than the when1. The executives I spoke to said the list of candidates is an open secret, at least among the most plugged-in insiders. They said American’s board is likely aware of all of these candidates, if only because members have a duty to plan ahead, whether or not they expect a quick regime change.

I'll share that list with you today, but first I want to touch on the two most common theories about when Isom might go.

The first theory is that Isom will be gone by the end of the year. Many insiders say Isom has failed and probably won’t materially improve American’s profitability any time soon, despite copying Delta and United in a late shift to premium. This group believes that the new passenger experience improvements that Isom recently approved — Starlink internet, the Bollinger champagne and Lavazza coffee — were eleventh-hour attempts to save his job, but they won’t work.

The second theory is more complicated. Here’s the gist: at any company, insiders have healthy egos; they want to remain in control, and they fear reputational damage. To protect themselves, they may prefer not to admit mistakes. Sometimes this makes them fallible, irrational, and incapable of seeing the bigger picture.

Isom has been the board’s guy for a long time. By my count, four board members (of today's 12) remain from 2016, when the board asked Scott Kirby to leave. It's old news, but it’s been clear that Kirby — not Isom — should have been the heir-apparent to Doug Parker. In addition, nine independent directors remain from 2023, the peak of American's post-pandemic self-imposed strategy blunders. Either implicitly or explicitly, the board must have endorsed those moves.

In this theory, insiders wonder whether board members want to give Isom more time to succeed in order to protect their legacies, and perhaps their board positions. As you may recall, some of United's board members (outside of Oscar Munoz) did not fare well after they fired Jeff Smisek in 2015, because at least two major investors started asking questions about the board’s ability. In a Reuters story that year headlined "United Airlines faces board fight over poor performance," the news outlet quoted a research firm expert: "This situation is really all about shaking up what Altimeter/PAR thinks is an entrenched and ineffective board."

Ok, enough theories. Here’s the list.

These four are top candidates. One may not be able to take the job.

Doug Parker

Don't act so surprised.

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If you were following news reports from the IATA Annual General Meeting, you’d think executives spent hours in Rio de Janeiro discussing rising fuel prices, the war in Iran, future mergers and acquisitions, and supply chain woes.1 That stuff matters, but let me assure you: these serious conversations are a tiny part of what happens at this meeting every year. So what does happen?

Well, there’s the serious and sober part, when executives engage — often in dreary, windowless rooms at a convention center — with partners and potential partners about alliances, codeshares, interline agreements, and frequent flyer tie-ups. Then, at night, many executives enjoy happy hours and boozy dinners,2 perhaps with former colleagues or maybe with leaders from their airline’s closest joint venture and codeshare partners.

Sadly, airlines never invite me to those bilateral meetings (I hear they can be quite boring), and a carrier only once invited me to a boozy dinner, though just for dessert. But I do participate in what many consider to be the best part of the AGM: the gossip, when executives freely share industry chatter as if they’re characters from “Mean Girls.” The fodder is what you would expect: job openings, people they don’t like, and competitor executives they view as incompetent.3

I’m not going to betray what I learned in off-the-record discussions, but there is a topic that executives will discuss with me “on background” (that’s what you say to me when you’re telling me something I can use so long as it can’t be traced to you). They love to chat about big open jobs — specifically, who is going to get them.4

This year, the favorite topic was: who will replace Robert Isom and when?5 I’ll cover that soon, but since we think Isom has time, I’ll focus on a more urgent personnel matter: who will lead Air Canada no later than Sept. 30 after Mike Rousseau, who does not speak French, retires. Here’s what I heard in Rio about Rousseau’s likely successors.

The top three

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By now you should know the top headlines from last week’s Bernstein Strategic Decisions Conference. I won’t repeat them. You should come to The Airline Observer for the insider-y stuff that others don’t cover.

What they didn’t cover is how Robert Isom once again proved he is both bland and seemingly incapable of selling a compelling narrative about American’s future to investors.

I almost feel bad for the guy. As usual, Scott Kirby — Isom’s former boss and current public antagonizer — soaked up most of the attention at Bernstein with inflammatory comments on JetBlue’s losses. (Kirby was clear he’s not interested in a pre-bankruptcy JetBlue, though he’d gobble up American, should the opportunity arise.)

Kirby likely delights in making Isom look like an amateur. But other CEOs know how to play this rhetorical game too. Even Bob Jordan, whom I once considered the most vanilla man in aviation,1 has learned how to tease investors with enough nuggets to win extra press coverage. (This time, he said Southwest might add first class seats, as well as long-haul flights to as many as a dozen destinations.)

So while Kirby and Jordan played offense at last week’s conference, Isom mostly played defense, just like usual. And not a particularly effective version of it.

Perhaps I should let it go, and admit that’s who Isom is. A former operations chief, Isom is cautious, long preferring controlling costs over investing in cabin interiors, branding, and lucrative (but risky) long-haul flights. Still, I’ll note that, perhaps because I think he wants to retain his job, Isom recently embraced the promise of premium revenues and international flying. There have been improvements; now he must do a better job of communicating it.

Today, I will share with you four things Isom told investors in hopes of changing how investors think of the airline (and his leadership). I respect that Isom no longer views an airline seat as a commodity product, but I still don’t think he fully gets what it will take to turn American around.

Let’s get into it.

Isom used a hockey metaphor. It was incorrect.

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“We’re putting in an overlay that’s not letting the system overreact to a drop in bookings,” chief commercial officer Sophie Dekkers told analysts last week on EasyJet’s FY2026 first half results earnings call.

Even as more airlines trust A.I. and machine learning to give them concrete answers, how to price in an uncertain environment remains a dilemma. With August bookings down 7 percent compared to expectations, EasyJet had two choices – lower its prices (as the machine would suggest), or pray for better times while managing for yield.

EasyJet opted for the second option, because its executives bet they know information about consumer behavior that the revenue management system does not. CEO Kenton Jarvis told analysts that demand is robust, just delayed compared to historical norms, because customers have been spooked by “unhelpful comments” from European politicians who fear potential fuel shortages.

Airlines now know fuel won’t be a problem, but it’s not clear that all travelers have received the message. Some have been taking a wait-and-see attitude for late-summer trips.

”People are just leaving that decision to later,” Jarvis said. ‘We don’t yet know what the fare environment will be for July, August, and September."

‘A game of chicken’

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It should not surprise you which style I prefer. While I h…

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Wizz Air Chief Commercial Officer Ian Malin also said he has no qualms, telling me his airline has secured its fuel for May and June, and is expecting its suppliers soon will secure stock for July.

”I struggle to accept that we will systematically run out of fuel,” Malin said. “Four weeks ago people were saying we had four weeks’ worth of fuel. Today there are no issues anywhere in our network. Now the press is saying it’s six to eight weeks. We have daily calls with all our airports and fuel suppliers. Nobody is saying they will run out.”2

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But under his successor, Jimmy Dempsey (a long-time financial executive), Frontier is taking a more measured approach, in both expansion and rhetoric. During Frontier’s first quarter earnings call on Tuesday, Dempsey made it clear that he does not seek world domination. Instead, he wants to return the airline to consistent profitability.

So while Frontier will evaluate opportunities to add flights, and consider bidding for assets at key airports, Dempsey said he won’t make irrational decisions to win share.

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Scott Kirby likes to remind us about his math acumen, so I figured he might share a sophisticated analysis of fare patterns. Or, perhaps he might he explain how raising fares in lockstep is illegal (remember the “capacity discipline” era?) and challenging to coordinate because some carriers grow for their own reasons.

But he did neither. Instead, he blamed other CEOs, saying some lack the knowledge and backbone to raise fares, except when faced with external stressors. Kirby said too many CEOs take advice from marketing and government relations executives and argued those people worry too much about whether the public will view their airlines as price gougers. In Kirby’s telling, that’s a big reason airfares have fallen in real terms since the pandemic.

”I’ve watched this for at least 25 years now and have come to the conclusion that ... every airline CEO should have to have spent two years at a reasonably senior position in revenue management [and] understand it,” Kirby said. “Most of them haven’t. That’s the reason it’s harder to get fares up.”2

I understand his argument. The math nerds who populate revenue management departments might be the smartest people at an airline, but many of them — how can I say this nicely? — struggle to communicate effectively. When they approach a CEO with ideas based on advanced math, Kirby said, they’re drowned out by louder voices who warn of public backlash. Some voices might remind CEOs that grandstanding lawmakers like to summon airline executives for questioning. Who wants that?

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Some subscribers have emailed and texted to say Scott Kirby’s very detailed statement about American rebuffing his desire to acquire the airline is an indication that Kirby wishes to move on. “They declined to engage and instead responded by publicly closing the door,” Kirby said in a statement filed Monday with the SEC. “And without a willing partner, something this big simply can’t get done.”

If you think he’s done, you don’t know Kirby.

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The numbers were not pretty. The parent company of Alaska, Hawaiian, and regional airline Horizon reported a net margin of -9.6 percent on revenue of $3.3 billion. The group spent an extra $100 million for fuel than it had budgeted, paying an average cost of $2.98 per gallon, about 14 percent higher year-over-year.

Overall demand was robust, but the group faced some revenue challenges as it limped to a loss equal to $1.69 per share. During what CEO Ben Minicucci called “once in a generation rainstorms” in Hawaii, with rainfall during two weeks in March reaching 3,000 percent of normal levels in some regions, passengers called off many trips, driving “a spike in cancellations and near-term book away,” chief commercial officer Andrew Harrison said on Tuesday’s first quarter earnings call.

Customers might have shifted to Mexico, but Puerto Vallarta (where Alaska is the top U.S carrier) had its own problems. “Civil unrest leading up to the spring break travel period had a meaningful impact on demand as well,” Harrison said.

Alaska and Hawaiian remain leisure-oriented airlines, and these two regions account for roughy 30 percent of the group’s capacity — enough to cost the company nearly a point of RASM in the first quarter.

While the worst is over, Harrison warned of an overhang into April and May, a major headwind for a company that needs massive revenue to counter rising costs. It predicts its second quarter fuel bill will be $600 million higher than it planned for, and it expects to pay an average of $4.50 per gallon.1 “As of today, we are recovering approximately one-third of incremental fuel costs,” Harrison said.

With fuel costs expensive (and fluctuating), the company has suspended EPS guidance, telling analysts there are too many potential outcomes to make a concrete prediction about prices. Nonetheless, whatever the price-per-gallon, executives said they’re optimistic they can pass on some expenses to customers.

“Some of these fare increases are sticking,” Minicucci said. “We’re getting an average of $25 [extra] on an average fare, give or take, depending on which market it is.”

To gain pricing power, the group is removing flights in Mexico and on late-night departures in high-frequency markets. Though North America capacity should fall slightly year-over-year in the second quarter, systemwide capacity is expected to rise 1 percent, because of new long-haul flights from Seattle.

How big of a problem is all of this?

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If only Wizz Air executives had listened to their nemesis, Ryanair’s Michael O’Leary, who spent years gleefully suggesting that Wizz’s Abu Dhabi joint venture would fail. Perhaps O’Leary’s bombastic rhetoric was inappropriate, but his message to Wizz was accurate: ULCCs typically succeed when they fly packed airplanes on short stage lengths and turn airplanes quickly to leverage their cost advantage.

Unfortunately, Wizz chose a different path with its 2019 joint venture with the Abu Dhabi Developmental Holding Company. The sovereign investor wanted a low-cost option to connect Abu Dhabi with Europe, the Middle East, Asia, and Africa, both to bring in tourists and to make it easier for laborers to travel back and forth. Meanwhile, Wizz wanted entry into a market where it (presumably) would have less risk, since it only owned 49 percent of Wizz Air Abu Dhabi.

I don’t think you need as much experience as O’Leary to ask how this airline, which began flying in January 2021, would be a good idea. Long flights to Europe, Asia, and parts of Africa always were going to challenge the ULCC model, and while it’s true that passengers tend to find cheap fares, the Wizz brand wasn’t (and probably still isn’t) well known in the Middle East.

With little going right, Wizz Air Abu Dhabi closed Sept. 1. When they ended the 12-aircraft operation, executives blamed several challenges they had not expected, including high maintenance costs, engine issues, operational reliability problems, and government restrictions on which routes it could fly.1

With the benefit of hindsight, we know that shutting down the airline was a good idea. Six months later, Israel and the United States attacked Iran, and Iran retaliated in part by targeting the UAE with missile and drone attacks. By then, only about 4.7 percent of Wizz’s capacity flew to the Middle East, mainly on longer hauls from European bases to Saudi Arabia, the UAE, Israel, and Jordan.

“A lot of people say, ‘You look really smart,’” Wizz chief commercial officer Ian Malin told me in an interview last month. “Certainly we didn’t know what was going to happen, but one of the reasons for pulling out of that airline … was because every time there was political instability, geopolitical sorts of stuff, the capacity got all messed around.”

I like Malin, and not just because he’s such a loyal listener to The Air Show that he listened to it last year during the Wizz Air Skopje half marathon. I found him candid in discussing Wizz’s recent stumbles, and I appreciated how he led me through his network changes, like bolstering operations in Italy and Eastern Europe. I thought he chose his words carefully only once — when he responded to O’Leary’s very public vendetta against his employer, which goes beyond Abu Dhabi.

“Michael can say all sorts of stuff, and he will,” Malin said. “We don’t really care. We know that there’s a lot of good things he does. He should focus on what he does well and not trying to identify what we do poorly.”

Here are some highlights of my discussion with Malin.

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I checked in with American’s corporate communications team and learned that American now has a different approach to how it approves confirmed travel for competitors. While it will give tickets in advance in some circumstances, it now does so on a case-by-case basis and not nearly as often as before September, when it had a more liberal policy. More often than not, the answer is no, except for joint venture partners, because they’re not really competitors.

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However, some airlines elsewhere lack such optimism. Last week, I spent time in Auckland with Air New Zealand CEO Nikhil Ravishankar,1 and I learned he’s treating this situation far differently than Ed Bastian, who has told investors that Delta should recover all of the run-up in fuel within a couple of months. Before this crisis, Air New Zealand already had raised prices to cover its increased costs (like airport charges), and Ravishankar said he’s not sure how much more his market can bear.

“The world is volatile, and so it’s tempting to use the term unprecedented against every crisis we see,” Ravishankar said. “Some qualify as unprecedented crises, and some don’t. This is as unprecedented and as existential, I think, as it gets.”

How bad is it?

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