American’s Whiny Earnings Call

Executives came up with *new* excuses about why they underperform Delta and United. I didn't think much of them.

Dear readers,

Considering lagging domestic demand, American Airlines had an OK second quarter result, with net income of $599 million and a 7.9 percent operating margin. On margin, it again underperformed its top two peer airlines, and as is their custom now, CEO Robert Isom and CFO Devon May offered excuses for why their airline lags Delta (with its 12.6 percent second quarter operating margin) and United (with an 8.7 percent margin). All of which are, of course, outside their control.

“If you take a look at our results today, the primary differentiator between us and some of our competitors is largely two things,” Isom said on Thursday. “One, we're paying our team members at market wages. Others are benefiting from not doing that. I'm sure that that will catch up over the long run. And the second thing is, we do have a network that we're proud to say is more oriented to domestic. And let's face it: the domestic network has been under stress because of the uncertainty in the economy and the reluctance of domestic passengers to get in the game.”

I credit the two executives for their new and creative narrative about why they stink compared to others. During prior American calls, I have heard excuses about old credit card deals with crummy economics, and about distribution woes (a problem of their own making), and even an acknowledgment that American’s undersized network in Chicago, New York, and Los Angeles is an issue.

But this double-whammy of labor economics plus network was a new one for me. And while I am sure Isom and May were proud of their argument (they both used almost exactly the same talking points to answer different questions), I don’t think it was nearly as effective as they may think.

These are ridiculous talking points

At least with me, they were not effective. In fact, I find them offensive to my intelligence. Do Isom and May think the people who listen to these calls are stupid?