American Airlines says their business travel with AAdvantage is still strong, even though a backfire on a previous policy will cost them big on the year.

After changing course on a policy which would reduce where flyers earn American Airlines AAdvantage miles, the carrier says their business travel with their loyalty program remains strong. But the move will result in a $1.5 billion loss for the carrier.

The comments were made during the airline’s second quarter earnings call on Thursday, July 25, 2024.

AAdvantage Business Program Responsible for $2.5 Billion in Revenue After Gaffe

In February 2024, American announced a plan that would limit how and where flyers earn AAdvantage miles. Under the proposal, flyers would only earn points when booking through an American Airlines channel, through a corporate agreement, or with “preferred travel agencies.” The airline ultimately dropped the plan after pushback from business travelers, leading to the ouster of then executive vice president and chief commercial officer Vasu Raja.

During the call with reporters, airline CEO Robert Isom admitted that the plans, along with their 2023 distribution strategy with their business partners, will ultimately cost them $1.5 billion in lost bookings. However, Isom also noted that AAdvantage was still strong for business travelers, generating $2.5 billion in 2023 with the majority booked through travel agencies.

“With recent changes, we have now expanded the AAdvantage business program’s benefits. So that participating companies will earn miles and travelers will earn loyalty points wherever they book, including through travel agencies,” Isom said, as quoted by a Yahoo! Finance transcript. “Several more improvements are underway to make the program easier for travel managers to use and we have established a dedicated help desk for AAdvantage d business customers.”

In order to improve the business travel relationship, American will add additional support for their partners, including adding account managers for corporate customers. The goal is to bring back the business lost to competitors from their previous plans.

Among consumers, Isom said AAdvantage members were responsible an 8% year-over-year increase in revenue, with loyalty members accounting for 74% of premium cabin revenue. In addition, spending on credit cards increased by “double digits” during the quarter.

“Citi is certainly at the forefront of [increasing loyalty revenue],” said Isom. “They absolutely want to get involved in more and deeper ways. We’re going to take AAdvantage of that and the opportunity for us…It’s actually making up some of the ground versus where other network peers are and have great comps.”

Overall, American reported their highest-ever quarterly revenue of $14.3 billion, resulting in second-quarter net income of $717 million.

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