American kept just $71 million on nearly $17 billion, and is purportedly adding more widebodies. The people who built American Airlines’ debt want to fix it.
The $71 Million Quarter
American did something remarkable last quarter in the most disappointing possible way. It booked record revenue of nearly $17 billion and kept just $71 million in adjusted earnings. Delta earned $1.6 billion in the same stretch and United earned $805 million, so the largest airline in the world by fleet took home a rounding error next to either. Matthew walked through how thin that margin is and why fuel cost explains much of it but not all. The more interesting question is what American intends to do about it, because the answer is to do more of what created the gap.
Growing Fastest, Earning Least
It might help to start by comparing capacity. While Delta and United hold seats back to protect pricing power, American is flying more, with capacity up 5.4% in the second quarter, and around 5% planned for the full year, and 48 aircraft joining the fleet in 2026. It is the fastest-growing of the big three and the least profitable by a wide margin. American’s pre-tax margin trailed both peers by more than 500 basis points last year even as revenue set records, and Isom’s own turnaround pitch is built around closing a $3 billion profit gap with United and a $5 billion gap with Delta.
Growth is not the answer when every new seat mile earns less than the last. Delta and United learned that discipline and that premium is what prints margin. American keeps reaching for size, which is the one lever that has not worked.
The Order That Adds To The Pile
Now layer on the fleet. American has an open request for proposals with both Boeing and Airbus for a new widebody order, weighing more 787s against the Airbus A330neo, on top of the 89 Dreamliners it already has on the books (19 yet to be delivered, and an option for 19 more.) The stated goal is to grow internationally, the premium long-haul market where Delta and United make their money when examining the core business and not the co-branded credit card suite. The balance sheet is both the difference and the problem.
American Airlines Group already carries the heaviest debt of the big three, roughly $27 billion to $30 billion net against about $20.8 billion at United and $15.6 billion at Delta, with leverage near four times earnings while Delta sits at 2.6. Widebodies are the most expensive metal an airline can buy. Financing another fresh long-haul fleet means more debt stacked onto the most leveraged carrier in the bunch, in service of the same grow-your-way-out plan that produced a $71 million quarter.
The order is not a done deal and the oneworld alliance is growing while Star has lost some carriers in the last couple of years, but as the only carrier with an in-country alliance partner the Fort Worth, Texas-based carrier will have to be strategic and successful if they could grow their way out, but how much more debt could the airline absorb?
“A new A330-800 fresh off the line costs about $260 million, and the larger A330-900 costs slightly more at $296 million. The Boeing counterpart will run you $248 million for the 787-8, $293 million for the popular 787-9, and $338 million for the 787-10.” – Aerotime
Assuming a 50% discount from book price and a minimum of 48 frames (it needs to replace 45 older 777-200s), the carrier would add $5.92bn in debt if it only added 787-8s. If it was solely growth routes, the 787-8 would make sense. It has the range to hit most dots on the map from an American hub with the least amount of risk due to its smaller size than 787-9/10 models. But the carrier is looking for replacements for older 777-200 models which have a higher seat count than 787-8s (273 vs 234) but most importantly, the 777-200s have nearly twice the premium seat configuration. If the airline is pivoting to premium, it will need more than that to make it work. That would push the airframe cost over $7bn assuming the same volume and discount.
Not all of the 777-200s are selling out but none of these will replace the 777-300ER fleet of 18 aircraft. United is purportedly circling an otherwise unsellable 20 777-9 sub fleet as the type nears certifications and Emirates has already rejected its first ten types as the aircraft were built as early as 2020 but have never seen service.
UNITED AIRLINES COULD BE EYEING BOEING’S “TERRIBLE TEENS” 777-9s
United Airlines may be considering the acquisition of around 20 early-build Boeing 777-9 aircraft that were rejected by their original customers, most notably Emirates.
These aircraft were built years ahead of the… pic.twitter.com/W2K00mKLYa
— Turbine Traveller (@Turbinetraveler) July 25, 2026
That could be a good fit for American’s larger routes specifically to London but almost none of this offers growth.
Economics on the Airbus A330-800/900 frames are slightly worse.
Trust The People Who Built This?
Isom told investors American is positioned for significant upside and laid out a plan to close those profit gaps through reliability, premium cabins, and new widebodies. But Isom has run large parts of American for a decade, as chief operating officer, then president from 2016, and chief executive since 2022, part of the same leadership that took on the debt, chose volume over margin, and leaned on the America West instincts this site has flagged before. The people describing the hole are the people who dug it.
It does mean the pitch deserves scrutiny. When the plan to escape a debt-fueled growth problem is more debt-fueled growth, run by the executives who designed the first version, the burden of proof sits with them, not with the analysts handing them the benefit of the doubt.
Where This Could Actually Work
To be fair, American does need widebodies eventually, with its oldest 777s facing retirement in the 2030s, and premium international is genuinely where the profit sits. If the airline used a modern long-haul fleet to lift revenue per seat rather than just add seats, this could be the rare growth story that improves margins instead of diluting them. The question is not whether American needs premium international. It is whether this balance sheet and this management can fund it without digging the hole deeper first.
It could also work if American pushes those retirement concerns further into the future and uses immediate airframes solely for growth. But new markets take time to grow. Perhaps American’s most successful European growth story has been Athens where the carrier now flies from five hubs after only starting service a few years ago. American would need to hit on most of its bets with new aircraft to get out of the hole the current management group created and it doesn’t seem like a credible plan to me.
Conclusion
The largest airline in the world, American Airlines, reported $71 million last quarter, grew faster than anyone else while doing it, and answered with a shopping list for more of the most expensive planes in the sky. Leading that plan are the executives who built the debt it is now trying to escape. Maybe it works, and premium international finally closes the gap. My honest take is that American is betting on more of the same and asking shareholders to trust the people who created the problem are the best ones to fix it. Why would the ones who made the mess be the ones to clean it up? That is the question American’s own strategy keeps refusing to answer.
What do you think?
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