American vs. United: Chicago's High-Stakes Airline War

American and United Face Off in Chicago Hub

American Airlines is intensifying its competition with United Airlines at Chicago’s O’Hare International Airport. This move is a critical test of its strategy to close a significant profitability gap with its main rivals and deliver a sustained turnaround for investors.

A Battle for Profitability

For years, American has lagged behind its competitors. In 2025, the airline reported an adjusted pre-tax profit of $352 million, a fraction of United's $4.6 billion and Delta's $5 billion. According to a Deutsche Bank analysis, United’s Chicago hub is highly profitable, while American’s operates at an estimated loss of 9% to 10%.

Economic and Market Risks

Analysts warn the escalating rivalry could lead to a prolonged margin squeeze for American. Both carriers are set to increase summer departures at O'Hare by 23% from the previous year, raising the risk of a full-scale fare war that could negatively impact earnings and potentially spread to other markets.

Strategic Outlook

The outcome of this competition in Chicago is pivotal for American's financial performance in 2026. The airline is betting that an expanded schedule will strengthen its position and prove its turnaround strategy is effective, despite facing operational pressures and criticism from labor unions.

FAQ

Q: Why is the Chicago market important for American Airlines?
A: It serves as a key test of its turnaround strategy and its ability to narrow the substantial profit gap with competitors like United Airlines.

Q: What is the primary risk of this increased competition?
A: The main risk is a potential fare war that could severely squeeze profit margins for both airlines and impact financial results beyond the Chicago market.

Source: Investing.com