American Airlines Group Stock

American Airlines Group Inc., together with its wholly-owned subsidiary, American Airlines, Inc. (American), engages in the operation of a major network air carrier. The company’s subsidiaries include Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont).

Airline Operations

Together with its wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, the company’s primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million passengers boarded the company’s flights. During 2023, the company launched more than 50 new routes, providing service to close to 350 destinations around the world, and it announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In 2024, the company announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and Tokyo, Japan.

As of December 31, 2023, the company operated 965 mainline aircraft supported by its regional airline subsidiaries and third-party regional carriers, which together operated an additional 556 regional aircraft.

American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and their affiliates, working together to provide a superior and seamless travel experience.

Regional

The company’s regional carriers provide scheduled air transportation under the brand name American Eagle. The American Eagle carriers include the company’s wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). The company’s regional carriers are an integral component of its operating network. The company relies heavily on regional carriers to serve small markets and also to drive connecting traffic to its hubs from markets that are not economical for it to serve with larger, mainline aircraft. In addition, regional carriers offer complementary service in many of its mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and uniforms similar to those of the company’s mainline operations. In 2023, 46 million passengers boarded the company’s regional flights, approximately 45% of whom connected to or from its mainline flights.

The company’s regional carrier arrangements are in the form of capacity purchase agreements with its third-party regional partners and similar arrangements with its wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to it. The company controls marketing, scheduling, ticketing, pricing and seat inventories. In return, the company agrees to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that the company either reimburses or pays 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name.

Cargo

The company’s cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In 2023, the company served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail across its network.

Distribution and Marketing Agreements

Passengers can purchase tickets for travel on American through several distribution channels, including the company’s website (www.aa.com), its mobile app, its reservations centers and third-party distribution channels, including conventional travel agents, travel management companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as IATA New Distribution Capability (NDC) technology, which is the primary means by which the company distributes its content to third parties through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers access to enhanced content and functionality, providing a simplified booking experience, and enabling it to provide more relevant, tailored offers to customers.

Member of oneworld Alliance

American is a founding member of the oneworld Alliance, which includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty programs and providing reciprocal access to the carriers’ airport lounge facilities.

Joint Business Agreements and Other Cooperation Agreements

American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities.

The company also has established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas.

In July 2010, in connection with a regulatory review related to the company’s transatlantic joint business, it provided certain commitments to the European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in March 2026. The company continues to cooperate fully with the CMA.

Marketing Relationships

To improve access to each other’s markets, various the U.S. and foreign air carriers, including American, have established marketing agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as its joint businesses or strategic alliances. As of December 31, 2023, in addition to the relationships, American had codeshare, marketing and/or loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aereas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan Airlines and Vueling Airlines.

In 2023, the company completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of its network to other markets in South America, such as Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals.

Also in 2023, the company launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines.

The company had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers have commenced wind-down activities to accommodate mutual customers.

AAdvantage Program

The company’s AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued patronage with American and its partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, members earn mileage credits, and AAdvantage Gold, AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage credits by using the services of more than 1,000 non-flight partners, such as the company’s co-branded credit cards, certain hotel and car rental companies and shopping and dining partners. The AAdvantage program in general, and its co-branded credit card programs in particular, are material assets of its business and have become increasingly important to the company’s company over time.

Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to the company’s Admirals Club, or for other non-flight awards, such as car rentals and hotels, from its program partners. Travel awards are available on all flights operated by American and, subject to capacity-controlled seating, on flights operated by its partners. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by earning Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of its co-branded credit cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, the company introduced a new business loyalty program, AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for booking business travel through its website or mobile app.

In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on votes from travelers around the world.

Under its agreements with AAdvantage members and program partners, the company reserves the right to change the terms of the AAdvantage program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to change.

During 2023, the company’s members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of the company’s 2023 total revenue passenger miles flown were from award travel.

Competition

Domestic

On most of its domestic nonstop routes, the company faces competing service from other domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. In addition, the company faces competition on some of its connecting routes from airlines operating point-to-point service on such routes. The company also competes with all-cargo and charter airlines and, particularly on shorter segments, ground and rail transportation.

In addition, the company faces pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which compete in many of the markets in which it operates, with competition from these carriers increasing and new entrants regularly announcing their intention to start up new ultra-low-cost carriers.

Customers

The company flies to close to 350 destinations in the United States and internationally, and it is committed to providing its customers with a world-class travel experience. In 2023, the company achieved its best-ever full year completion factor, with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to Recommend score for the full year.

Domestic and Global Regulatory Landscape

The Federal Aviation Administration (FAA) similarly exercises safety oversight and regulates most operational matters of the company’s business, including how it operates and maintains its aircraft.

The U.S. federal laws that have a particular impact on the company’s operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation and Liability Act (Superfund Act). The U.S. Environmental Protection Agency (EPA) and other federal agencies have been authorized to promulgate regulations that have an impact on the company’s operations.

American is subject to the requirements of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), an international, market-based emissions reduction program adopted by the International Civil Aviation Organization (ICAO) in 2016.

History

The company was founded in 1926. It was incorporated in 1982. It was formerly known as AMR Corporation and changed its name to American Airlines Group Inc. in 2013.