By Rajesh Kumar Singh
CHICAGO, Feb 5 (Reuters) – American Airlines is trying to convince investors it can narrow the profit gap with rivals and deliver a sustained turnaround. The escalating showdown with United Airlines at Chicago’s O’Hare International Airport has become one of the clearest tests of that promise — with real stakes for results in 2026.
The Texas-based airline is aiming to spend and execute at the same time: keep upgrading its premium products, grow share in a market where gate access is shaped by utilization, and scale up schedule without eroding reliability.
Analysts warn that if Chicago turns into a prolonged margin squeeze, it could undercut the earnings improvement American is banking on this year.
For Chief Executive Robert Isom — facing sharper scrutiny from labor groups — Chicago is a high-stakes test of execution. After a winter storm last month triggered widespread cancellations and a difficult recovery, unions accused management of being unprepared.
“There’s no strategy to put American back anywhere near on top, let alone close the gap on Delta and United,” said Dennis Tajer, a spokesperson for American’s pilot union.
American has trailed its biggest rivals on profitability for years. On an adjusted pre-tax basis in 2025, the carrier generated $352 million — a fraction of Delta’s about $5 billion and United’s $4.6 billion.
Its shares have fallen about 14% over the past year, compared with gains of roughly 3% for Delta and 1% for United.
American executives have blamed last year’s underperformance on its heavy exposure to a softer domestic market, broader economic uncertainty and a federal government shutdown that weighed on bookings.
At an employee town hall following last week’s earnings release, Chief Financial Officer Devon May told staff it was “actually pretty amazing” that American managed to post any profit at all, according to an audio recording of the meeting reviewed by Reuters.
Even so, Isom sought to reassure workers that the turnaround strategy is taking hold. “We will deliver on producing what I hope is a year of solid profitability … and really making our company more valuable,” he told employees.
THE CHICAGO PROFIT FIGHT
Much will depend on Chicago, where American faces some of its toughest economics even as it ramps up flying.
A Deutsche Bank analysis this week estimated United generates about $10 billion of annual revenue tied to Chicago, compared with just over $5 billion for American, and put United’s 2025 operating margin in the market at about 5% versus an estimated negative 9%-10% for American.
United CEO Scott Kirby told analysts last month that the airline earned about $500 million in Chicago in 2025, while American lost a similar amount — losses he warned could swell to $1 billion this year.
American has rejected his claims as “inconsistent” and “unsubstantiated,” saying it expects Chicago to return to the average profitability of its hub network, though it has not provided a timeline.
In an interview, May told Reuters American is restoring its pre-pandemic level at O’Hare and said the ramp-up has driven roughly 20% growth over the past nine months in its frequent-flier program, co-branded credit-card sign-ups and local customers.
The battle highlights a broader shift in airline competition: control of gates and schedules increasingly determines winners, especially among business travelers. At most big U.S. hubs, the hierarchy is set: Delta dominates Atlanta, United controls Houston and American leads Dallas. Chicago is one of the few airports where two legacy carriers still compete at scale.
GATES, CAPACITY — AND RISK
Gate access remains central at O’Hare, where the city’s reallocation process makes utilization a form of leverage. United controls roughly half of all scheduled flights at the airport, compared with about a third for American, according to Cirium.
American is building what Chief Commercial Officer Nathaniel Piper has called an “audacious schedule,” a bet the carrier says will strengthen its hand in future gate reviews.
United has been ramping up to keep American from gaining ground, a dynamic set to intensify as bankrupt Spirit Airlines seeks court approval to transfer two O’Hare gates to United, after shifting two others to American in December.
Deutsche Bank estimates American and United departures at O’Hare will rise 23% this summer from a year earlier, and warns the jump could weigh on their financial results in Chicago.
Conor Cunningham, an analyst at Melius Research, said the biggest risk for American in 2026 is a full-on fare war in Chicago that gradually impacts other markets. “If history is any guide, competitive skirmishes are rarely contained,” he said.
RELIABILITY AND LABOR PRESSURE
The rivalry is also stoking concerns about operational strain at O’Hare, even as airport officials say congestion remains manageable. May told Reuters customers have responded “fantastically” to American’s expanded schedule, and the airline is taking a “very thoughtful” approach to run the operation smoothly.
Labor leaders argue the recent winter storm exposed vulnerabilities. The disruption left stranded crews scrambling for hotel rooms and, in some cases, sleeping in terminals.
“American’s workforce is not the problem. Leadership is,” its flight attendants’ union told members last week, calling the carrier’s lagging results a “pattern of failure” under Isom and the board.
Company executives are hoping the face-off with United helps rally the workforce.
“We can win in Chicago, team, but it’s got to be a big team effort,” Piper told staff at the town hall. “Common enemy is one of the things that throughout life and history has been a very effective rallying cry.”
(Reporting by Rajesh Kumar Singh, Editing by Nick Zieminski)
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