American Airlines Reworks Indirect Sales Strategy to Regain Market Share
American Airlines is making significant efforts to rebuild relationships with corporate customers and travel agencies after a failed attempt to shift bookings exclusively to direct channels. The airline is actively renegotiating contracts and strengthening its distribution network to recover lost revenue from indirect sales channels.
Fighting Back for Market Share
During the company’s earnings call on January 23, 2025, CEO Robert Isom shared that American Airlines has made notable progress in regaining its lost revenue from indirect sales channels. He confirmed that the company remains on track to restore its market share fully.
“As we exit this year, our indirect flown revenue share improvement was driven by sequential gains in corporate revenue share, which has been the primary focus of our recovery efforts,” said Isom.
Forward bookings for Q1 2025 remain strong, with expectations for continued recovery throughout the year. Isom stated that American Airlines has finalized new contracts with corporate travel agencies and leisure travel firms that serve its most profitable customer segments.
The company has also revised agreements with corporate clients who were significantly impacted by the previous strategy shift, particularly in its hub markets. These changes are aimed at strengthening the airline’s competitive position and regaining lost business.
Revisiting Past Mistakes
In 2023, American Airlines attempted to push bookings directly through its own channels after signing agreements with major global distribution systems (GDS) like Amadeus, Sabre, and Travelport in October 2022. This move was part of its transition to the New Distribution Capability (NDC) model.
However, the strategy did not deliver the expected results. The disruption in indirect sales led to a decline in revenue, forcing the airline to reverse its decision. The failure of this initiative contributed to the departure of Vasu Raja, the company’s former Chief Commercial Officer (CCO), in June 2024.
Six-Month Recovery Progress
When asked about the airline’s progress, Isom expressed confidence that American Airlines is well on its way to recovering from the setback.
“I have great confidence that we are going to recover fully as we move through the year,” he said.
Steve Johnson, the Chief Strategy Officer (CSO), echoed this optimism, stating that the company could restore its sales and distribution revenue by the end of 2025. He acknowledged the extensive efforts required to renegotiate contracts and rebuild trust with corporate customers and travel agencies.
Gaining Momentum Despite Challenges
Despite the positive progress, Isom cautioned that revenue recovery would not be immediate. The airline has been actively engaging with corporate clients and travel agencies to rebuild trust and repair relationships.
“We are learning from the issues associated with our past strategy, and that bodes well for the future,” Isom added.
Johnson acknowledged that the recovery process was not straightforward, sometimes referred to as “the apology tour.” He explained that negotiations were complex, with some partners expressing frustration over the previous shift in strategy. However, he reassured that American Airlines had successfully reached new agreements with key travel managers and agencies.
“We have modified the economics for all our significant corporate customers who were impacted by our old strategy,” Johnson concluded.
Financial Performance and Outlook
American Airlines ended Q4 2024 with net revenue of $13.7 billion, while total revenue for 2024 stood at $54.2 billion—both record figures for the company. However, its net income of $846 million fell short of its competitors, Delta Air Lines and United Airlines.
Despite the challenges, the company remains optimistic about its future. By focusing on indirect sales channels and rebuilding its corporate relationships, American Airlines aims to strengthen its market position and improve profitability in 2025.
