Update shared on 22 Sep 2025
Fair value Increased 47%American aims to improve yields by doubling down on Premium Economy
I wouldn't go so far as to change my general description of American Airlines as one of the most precarious legacy carriers out there, completely at the mercy of its creditors and, thus, benign refinancing conditions. Yet not only does the latter stand to materialise now that the Fed has restarted to cut interest rates; American also aims to double down just on the right lever to improve its business operationally.
Legacy carriers earn their money with their premium offers: Yields are best where travellers can be induced to cough up more money to get more frills for the same trip, even if that might eat up a bit more space in an aircraft's seat layout and, hence, capacity.
Best of these is Premium Economy, where the loss of seat rows due to extra leg space is lowest as compared with Business or even First, while still enabling the airline to improve its revenue per seat sold (or, more precisely, its revenue passenger miles). The result is higher yields, the key profitability metric in the airline industry. So as long as American can execute on this plan while refinancing conditions stay easy, the Eagle might be spreading its wings again.
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