Latest news with #RobertIsom
Yahoo
5 days ago
- Business
- Yahoo
American, Delta Take Opposite Sides of AI Pricing Debate
Count American Airlines among the humans opposing a robot takeover. At least when it comes to pricing tickets. On Thursday, CEO Robert Isom told analysts after the company's earnings call that he opposed using artificial intelligence for so-called 'personalized pricing' of individual customers' air fares, calling the tactic a 'bait and switch.' That sets American apart from competitor Delta Air Lines, which last week enthusiastically embraced the tech as a future pillar of the company. READ ALSO: Google Search Weathers AI Storm — For Now and Watch Your Freight: Railroad Giants Talk $200 Billion Merger AI Takes Flight Delta's AI pricing plans aren't just plans — they're already here. In its earnings call earlier this month, Delta said that about 3% of domestic tickets sold this year have been priced using AI technology provided by Fetchr, an AI pricing firm. That's up from about 1% of tickets sold last year, and a stepping stone to a 20% share the airline hopes to hit by the end of the year. Eventually, Delta plans to use AI to price 100% of its tickets. The 1% pilot program already produced 'amazingly favorable' results, President Glen Hauenstein reportedly told investors during a November meeting last year, according to a recent Fortune investigation. Unsurprisingly, skeptics want a look under the hood: Earlier this week, a trio of US senators pressed Delta CEO Ed Bastian to answer questions about the airline's pricing strategy, flagging concerns over privacy and the potential for price gouging, and inquiring about the personal data Delta uses to set prices. In a December report providing a broad overview of the impacts of personalized AI pricing across industries, the aptly named consumer watchdog group Consumer Watchdog found that 'the wealthier a person is, the less they're likely to pay, and vice versa. A lower credit score means higher prices offered to consumers of many products.' Delta has pushed back. 'There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise,' the airline said in a statement earlier this week. 2025 Turbulence: Delta's AI hype party was meant as a cherry on top of a positive earnings sundae. The airline reported a 63% profit jump and forecasted stabilizing demand, sending its shares soaring immediately afterward. American, on the other hand, saw its share price tumble 10% Thursday after it lagged profit expectations in the most recent quarter and reinstated its 2025 forecast with a much lower outlook than at the beginning of the year. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
5 days ago
- Business
- Business Times
American Airlines' new Airbus jet grounded by supply chain issue
[TEXAS] American Airlines Group has finally taken possession of its first long-range Airbus A321XLR aircraft, but the plane will remain in Europe because of a supply chain issue that's caused a shortage of seats. The carrier signed paperwork to accept the plane in Hamburg, Germany, on Friday (Jul 25), American said. The company, which ordered 50 of the longer-range aircraft in 2019, plans to initially use this first plane on US transcontinental routes later this year before shifting it to international service. The aircraft is part of American's plan to increase its long-haul fleet to 200 in 2029 from about 125 today. It will also help it capitalise on rising consumer demand for upscale travel options. The aircraft, equipped with 20 suites and 12 premium seats, has the longest range of any single-aisle commercial jet. The plane 'will remain in Europe until ongoing seat supply chain challenges are resolved', the airline said, declining to name the seat manufacturer. Aircraft built in Europe currently get 10 per cent tariffs as part of US President Donald Trump's trade war. The A321XLR delay is not related to those levies, American said. Chief executive officer Robert Isom said in April that the carrier did not plan to absorb extra tariff charges. Delta Air Lines also has new Airbus jets stranded in Europe, because their seats have not yet been certified by regulators, Bloomberg reported earlier this month, citing sources familiar with the matter. The carrier has been cannibalising some of the stranded aircraft by stripping off their US-made engines and using them to get grounded planes in America back into service. BLOOMBERG
Forbes
6 days ago
- Business
- Forbes
American Airlines CEO Jabs Back After Attack By United CEO
Airline execs Scott Kirby, Robert Isom, Ed Bastian, Joanna Geraghty and Robert Jordan attended ... More unveiling of a new ATC system in May. (Photo by Win McNamee) American Airlines CEO Robert Isom on Thursday countered recent negative comments by United's CEO, saying, 'We don't run our airline based on other airlines' perception of our business' Speaking on American's second quarter earnings call, Isom also noted that the carrier is growing at Chicago O'Hare. While United regularly touts its market dominance at ORD, Isom called the airport 'a tremendous opportunity for American,' which had cut back on regional subsidiary flying due to the pilot shortage. 'You'll see Chicago hit 485 peak departures, over 500 as we take a look into next year.' Isom said. At ORD, United currently has about 500 daily departures to 200 destinations, while American has about 480 daily departures to 160 destinations. Isom spoke on American's second quarter earnings call, the last of the earnings calls by the big three carriers. A week earlier, on the United earnings call, CEO Scott Kirby said that the U.S. airline sector has 'two brand loyal airlines really winning and everybody else losing.' He identified United and Delta as the two winners. Kirby added that 'If I dig deeper into it and I look at every airline that's not named United or Delta, I can find at every single one of them, a double-digit percentage of their route network that loses money.' Later on the United call, Andrew Nocella, chief operating officer, noted 'documented share gains in each of our hubs:' O'Hare is arguably the airport where American is best poised to fight back. Isom responded to a question from JP Morgan analyst Jamie Baker, who referred to Kirby's statement and asked, 'Give us an approximation – What overall percentage of American flying loses money?' Isom did not directly respond to that question. However, he noted two 'primary differentiators between us and some of our competitors.' One is that American is 70% domestic, the largest share among the three global carriers. 'We do have a network that we're proud to say is more oriented towards the domestic network' Isom said. American repeatedly explained its second quarter underperformance by citing domestic concentration at a time when international flying is more profitable. Isom cited, 'The reluctance of domestic passengers to get in the game' and said 'We think that's going to change.' The second differentiator Isom cited is that 'We are paying our team members at market wages. Others are benefitting from not doing that.' Isom seemed to refer to United's flight attendant contract, which is currently out for ratification by members. American Airlines did not respond to a request for clarification. While American flight attendants currently have a better contract, United's second quarter results included $561 million to pay flight attendants signing bonuses. Moreover, United CFO Mike Leskinen noted that his cost estimate for the third and fourth quarters includes the cost of a flight attendant contract. The total cost of the contract is about $6 billion over five years, so United's second quarter spending on signing bonuses is arguably more than the quarterly cost of the contract. Possibly Isom was referring to the wages that Delta pays its mechanics and fleet service workers. They are non-union: The International Association of Machinists and the International Brotherhood of Teamsters are seeking to organize the two groups, respectively, while the Association of Flight Attendants is seeking to organize Delta flight attendants. Isom and Kirby, who once worked together at US Airways, have traded barbs over the past year. 'It's like parents yelling at a little league game,' said Dennis Tajer, spokesman for Allied Pilots Association, which represents American pilots. ted
Yahoo
6 days ago
- Business
- Yahoo
Is American Airlines Stock Too Cheap to Ignore After Beating Q2 Expectations?
American Airlines AAL stock was down as much as 10% in Thursday morning's trading session despite pleasantly exceeding Q2 top and bottom-line expectations. This comes as the largest domestic airline carrier gave a cautious outlook, reinstating but narrowing its full-year EPS guidance amid ongoing uncertainty in travel demand. That said, American Airlines stated it has moved past the brunt of the economic impact, which begs the question of whether AAL shares are too cheap to ignore after dropping more than 30% this year to around $11. Image Source: Zacks Investment Research American Airlines Q2 Review Reporting Q2 sales of $14.39 billion, American Airlines' top line slightly expanded from $14.33 billion in the comparative period and edged estimates of $14.28 billion. Thanks to disciplined cost control, which was aided by lower fuel costs, American Airlines' Q2 earnings of $0.95 per share comfortably surpassed expectations of $0.79 by 20%, although this was down from EPS of $1.09 a year ago. Although weaker cross-border travel demand has been a concern that could weaken the outlook for most airlines in correlation with higher tariffs, American Airlines received a boost from strong international and premium cabin demand, especially in the Atlantic markets, where passenger unit revenue rose 5% year over year. Joining Delta DAL and United UAL Airlines, which reported Q2 results earlier in the month, American Airlines also received a margin boost from loyalty program growth, seeing a 7% jump in Active AAdvantage accounts and a 6% increase in spending on co-branded credit cards. Furthermore, American Airlines CEO Robert Isom stated the company is well-positioned to navigate volatility due to its loyalty initiatives, modernized fleet, and strengthened balance sheet. Image Source: Zacks Investment Research Reinstated but Lowered EPS Guidance Notably, American Airlines reinstated but lowered its full-year earnings guidance, expecting adjusted fiscal 2025 EPS to range from a loss of $0.20 to a profit of $0.80, with a midpoint of $0.30. This is significantly lower than previous forecast of $1.70 to $2.70 per share, although the top of the guidance fell in range of the current Zacks Consensus of $0.73. It's noteworthy that during Q3, American Airlines anticipates an adjusted loss of $0.10-$0.60 per share, citing weak domestic demand in July. AAL Valuation Comparison At current levels, American Airlines stock trades at 17.4X forward earnings. While this comes off as a discount to the benchmark S&P 500's 24.5X, AAL trades above its Zacks Transportation-Airline Industry average of 14.5X, with Delta and United Airlines trading at just 10X and 9X forward earnings, respectively. In terms of price-to-sales, American Airlines does significantly stand out, with investors paying just $0.15 for every dollar the company makes. In comparison, Delta, United, and the industry average are at $0.50 or more, with the S&P 500 having a forward P/S ratio of 5.4X. Image Source: Zacks Investment Research Conclusion & Final Thoughts As the largest airline in the world in terms of passengers carried and daily flights, it's very tempting to add long-term positions in American Airlines stock at under $15 a share. However, there could still be better buying opportunities ahead, given American Airlines' cautious outlook in regard to reinstating but lowering its EPS guidance. For now, AAL lands a Zacks Rank #3 (Hold), and patience is certainly needed for those who invest in American Airlines stock. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Airlines Group Inc. (AAL) : Free Stock Analysis Report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Boston Globe
6 days ago
- Business
- Boston Globe
40 percent of workers see wage growth lagging inflation, study finds
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up AVIATION Advertisement AI air fare pricing is a 'bait-and-switch' says American Airlines CEO American Airlines Group Inc.'s top executive blasted the use of artificial intelligence in setting air fares, calling the practice inappropriate because it could trick travelers. 'Consumers need to know that they can trust American,' chief executive Robert Isom said on a call with analysts after the company reported earnings. 'This is not about bait-and-switch. This is not about tricking.' Isom's criticism of the practice echoes several members of the Congress, who are pushing for answers from Delta Air Lines Inc. on its plans to use AI to help set pricing on as much as 20 percent of its network by the end of this year. Delta said this month that it's still in the testing phase that involves about 3 percent of the network today. Delta says it's testing AI to eliminate manual processes and accelerate analysis for dynamic pricing, a strategy long used by airlines and others to raise or lower fares based on demand, timing, and other factors. It is not using the technology to target customers using personal data, and all customers see the same fares in all retail channels, the carrier said in a statement. 'There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise,' according to the statement from the airline. 'A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process.' American is using AI to improve airline operations and recovery from service interruptions and to make it easier for consumers to work with the carrier, Isom said. Employing it in pricing decisions 'is not something we will do,' he said, adding that 'some of the things I've heard are just not good.' — BLOOMBERG NEWS Advertisement MARKETS Advertisement Even as stocks set record, JP Morgan is bullish there are better days to come. The S&P 500 Index's record-setting spree may be stoking concerns about inflated share prices and a revival of meme-stock froth, but JPMorgan Chase & Co.'s trading desk isn't concerned. Rather, it expects the furious rally in US equities to keep going. 'While bullishness is not yet consensus, client conversations reveal that even those that skewed bearish are throwing in the towel,' the bank's head of global market intelligence Andrew Tyler said Thursday in a note ahead of the market open. Recent progress in trade deals, positive economic data, and rekindling mergers and acquisitions activity should keep powering the stock market, according to Tyler. From a technical standpoint, the rally is also being supported by the combination of the momentum unwind and meme mania making it difficult for traders to hold short positions. The market could even 'take a significant step higher' if macroeconomic data holds up and the impending trade deal between the United States and Europe is sealed with China following closely behind, Tyler said. — BLOOMBERG NEWS AUTOMOTIVE Tesla profits slip again amid ongoing slump in EV sales Tesla on Wednesday reported a slump in profit, the third quarterly decline in a row, as the company cut car prices in an attempt to revive sales. The company made $1.2 billion from April to June, down from $1.4 billion a year earlier. Sales fell to $22.5 billion from $25.5 billion in the second quarter of 2024. Tesla has not reported an increase in quarterly profit since the third quarter of 2024. Tesla's weak earnings are likely to reinforce concern among some investors that CEO Elon Musk is neglecting the car business while he focuses the company's resources on autonomous driving software, self-driving taxis, and humanoid robots. Musk has said those technologies will make Tesla the most valuable company in the world. Tesla has begun testing a limited self-driving taxi service in Austin, Texas, and said Wednesday it would expand the service 'rapidly.' Wall Street has largely bought into that vision, and the company's share price is up about 50 percent since early April. But such taxis and robots are not yet generating significant revenue for Tesla, and the company remains reliant on the car business to finance Musk's futuristic plans. — NEW YORK TIMES Advertisement BIG TECH Alphabet earnings surge on growth in AI Whether Google will be a winner in the race for dominance in artificial intelligence won't be clear for at least a year or two. In the meantime, its bottom line is doing just fine. Alphabet, Google's parent company, reported second-quarter results Wednesday afternoon that were better than expected. Revenue rose 14 percent from a year earlier to $96.4 billion, while earnings per share jumped 22 percent to $2.31. Analysts had expected revenue of $93.98 billion and earnings per share of $2.20. 'We are leading at the frontier of AI,' said Sundar Pichai, the company's chief executive. Pichai, who mentioned AI more than a dozen times in his commentary on the quarter, added, 'AI is positively impacting every part of the business.' Investors appeared underwhelmed by the quarterly results. Alphabet shares rose less than 2 percent on the news. One apparent problem: Capital expenditures for the year will be $10 billion higher than the company had projected, it said, because of its booming cloud storage business. Even for Google, the new estimate of $85 billion is real money. A few years ago, Google was spending about a quarter of that sum. Investors want the company to pour enough into new data centers to have competitive cloud and AI businesses but not so much that it affects lush profit margins. That's a difficult balancing act. — NEW YORK TIMES Advertisement
