American Airlines executives defended its distribution strategy on a first quarter earnings call. Vasu Raja, chief commercial officer, said the quarter marks the end of “a year of transition” for its distribution strategy, in which the airline was focused on creating the right long-term customer proposition and reducing a lot of unnecessary expenses. Now, he said, “we get to do optimization,” which “can really bring in a lot of our travel agency and corporate partners, but very critically, it can drive revenue and profit for the airline.”

A year ago, American began to remove up to 40% of its fares from EDIFACT channels in an effort to shift bookings to its New Distribution Capability (NDC) channels. Raja said that these changes could have come at a “real risk to business revenues,” but American CEO Robert Isom said the carrier has seen “sequential improvement in the recovery of managed corporate travel and domestic business revenue growth outpace capacity growth in the first quarter.”

Raja said “total business revenue” growth was approaching double digits toward the end of the quarter, driven by unmanaged corporations. Managed travel with contracts, he said, is growing a little bit less than that..
Isom said that “engaging directly with our customers through modern internet-based technology is where the industry is headed, and we’re leading the way.” American, he said, is at a point where 95% of all transactions can be digitally serviced.

This week, American delayed its planned preferred travel agency program start date. The reason for that, said Raja, is that the carrier was “pleasantly surprised to see how many people are taking it.” He said a majority of American’s agencies are in NDC transition, and the agencies that represent 30%-40% of the carrier’s revenue are already doing more than 30% of their bookings through NDC and in some cases are on a path to be close to 100% by the end of the year.

American reported first-quarter passenger revenue of nearly $11.5 billion, up 3.2% year over year. Total revenue was nearly $12.6 billion, a 3.1% increase from the same period in 2023. The carrier had a $312 million net loss for the quarter compared with $10 million in net income for the first quarter last year.