American Airlines turns to algorithms for improved fuel efficiency, passenger flow

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Dive Brief:

  • American Airlines posted a record Q2 revenue of $ 13.4 billion, a 12.2% increase over the same quarter in 2019 and the biggest single quarter in the company’s history, CEO Robert Isom said in an earnings call Thursday.
  • Despite rising fuel prices, ongoing pilot shortages, difficulties provisioning aircraft and other operational challenges, the airline reported net income of $ 476 million in Q2, down 28% from the same quarter in 2019. The carrier flew at 8.5% less capacity than in Q2 2019 , according to Isom.
  • CIO and EVP Maya Leibman credited several key technologies for keeping the air carrier on course financially and operationally, during the call. These included algorithms created to track thunderstorm activity at hubs in Charlotte and Dallas. “We can actually slow down the operation a little bit rather than use a blunt force instrument, like canceling an entire bank,” she said.

Dive Insight:

The skies haven’t been consistently friendly for the airline industry over the last few months. Jet fuel prices skyrocketed, rising by 90% in the first six months of 2022, according to a McKinsey & Company report. Supply chain issues, occasional COVID-19 spikes and pilot shortages have added to the headaches.

“The pilots are one piece,” Leibman said in the earnings call. “But not a day goes by where we don’t have issues with provisioning our aircraft with pillows, blankets, plastic cups and food. At various times, we have issues with fueling. It’s just a myriad of things that have to come together to put an aircraft in the air. “

As the largest domestic air carrier by volume, American showed profitability in Q2, thanks in part to its modernization efforts. In May, American partnered with Microsoft to make Azure its preferred cloud platform for advanced analytics, with the goal of optimizing customer experience and airline operations.

Leibman has been at the center of those efforts since rising to EVP and CIO in 2012. She pointed to storm-tracking algorithms, reduced taxi times for aircraft and improvements in overbooking as three areas in which recent digital enhancements benefited the company.

“We’ve also really enhanced some focus on how we do gating at some of our larger airports,” she said. “And we’ve done some interesting work in creating algorithms that help us, especially in markets like Charlotte, where we get these pop-up thunderstorms.”

Leibman will step down as CIO and take on an advisory role after the company appoints a successor, the airline said in a May SEC filing. American Airlines did not immediately respond to a request for additional comment on the ongoing CIO search.

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