US airlines industry is dominated by a few large firms

You can clearly see the impact of COVID-19. Post pandemic, the industry is slowly recovering.

Airlines is more profitable than air-freight before COVID, but less afterwards
Air-freight continued growing, airlines plummeted in COVID
Workforce kept growing for air-freight but remained stable for airlines.
Air-freight valuation peaked in COVID, airlines plummeted & recovering 

Air-freight had higher current ratio and so lower short-term risk than airlines.
Air-freight had lower liability asset ratio and so lower overall risk than airlines.
Air-freight had higher asset turnover than airlines constantly.
Airlines had higher ROA than air-freight before COVID but lower after.

Airlines is a hard business, with more than 50% of companies losing money in 2024.

Gross margin: Airlines (17%), airport services (20%), aerospace & defense (25%). Not very profitable everywhere.

Airlines vs. Air freight: very similar total revenue and operating income for the US. The average size of air freight is bigger than air freight, but air freight has higher chance to break even.

Airlines and air freight are very similar. Thus expanding to air freight cannot make an airline very rich but can offset the risk of the pandemic.

This picture shows two results: (1) airline and air freight are equally scalable. (2) DAL, UAL and AAL are in one cluster and quite comparable. 

Two results: (1) DAL and UAL are much better than AAL in utilizing assets to generate profit. (2) US airlines are more scalable than Chinese airlines.

(1) DAL & UAL outperformed AAL on liability and ROA (2) AAL is barely profitable and has a liability over assets > 1. (3) There are more airlines clearly in worse trouble than AAL.

AAL is the 3rd largest airline in the US.

AAL: 6th in Operating Margin, behind DAL and UAL.

The KPI examination of AAL relative to the US airlines industry. For profitability, despite its normal gross margin, AAL’s operating margin, net margin, and ROAs are lower in the industry, implying the lower profitability. For financial health,  AAL has a high liability asset ratio which is above one, indicating its inability to pay long-term debts, and thus poor health. Regarding growth, while revenue growth in a normal range, its profit growth is on the lower side, implying slow growth among its peers. For operational efficiency, AAL has a fine operating cost over revenue ratio, but its inventory days and cash cycle is high, indicating a mixed operating efficiency. Although American Airlines is the worst among the big three, but still better than many other smaller airlines. 

Clearly, AAL is quite comparable to DAL and UAL on revenue and gross profit, but much smaller on operating income and net income.

The margins confirm the observations and show a clearer picture.

AAL is comparable on revenue but weak on profits for all years. AAL had the highest liabilities constantly. AAL improved its asset turnover lately and outperformed its peers.

.

AAL had the lowest labor productivity among the top three for all these years.

A higher liability asset ratio may lead to a lower ROA for the US transportation industry.

AAL smallest net margin, why? Assuming competitive / comparable pricing, AAL’s COGS > industry average. DAL won due to lower COGS and Other Costs. UAL by a much lower COGS. 

Given of AAL's higher COGS, AAL's rent & landing fee is much higher than its peers, its purchased fuel power gas and operating & maintenance cost are also on the high side, but its staff cost is similar to its peers.