United, American Chicago O'Hare: Loss Claims Challenged

Scrutiny on O'Hare Financials

United Airlines CEO Scott Kirby has repeatedly claimed that American Airlines faces annual losses exceeding $1 billion at Chicago O'Hare, suggesting economic pressures would eventually force its exit. These figures have varied; late last year, Kirby cited an $800 million loss, which increased to $1.1 billion by early this year.

A new Claude-assisted analysis now examines these assertions, aiming to provide data-driven insights into the competitive landscape at the busy hub.

While the analysis confirms United's superior pricing power, it raises significant questions about the methodology used to calculate American's purported losses, particularly concerning how a substantial financial deficit is derived.

Revenue Modelling Under Question

The analysis reveals United earns 10.5% more per passenger-mile on domestic Chicago tickets than American. Specifically, United achieved 26.56 pence of ticket value per passenger-mile compared to American's 24.04 pence during the second quarter of 2025. This suggests United holds a local pricing advantage.

However, the study's approach to American's revenue figures draws criticism. It substitutes modelled revenue for actual ticket revenue and then applies these modelled yields to all occupied seats, including connecting and award passengers not present in the initial ticket sample.

This contrasts sharply with the federal government’s Origin and Destination Survey (DB1B) data, which showed approximately £1.34 billion for American and £1.89 billion for United from Chicago-origin tickets for an annualised quarter, while the analysis's later profit table reported much higher modelled figures of £4.39 billion and £5.66 billion respectively.

Cost Assumptions and Alternative Estimates

Further methodological concerns arise from the analysis's cost calculations. It uses local passenger share to determine the mainline versus regional departure mix, which may not accurately represent hub operations where regional jets carry a disproportionate number of connecting passengers.

The analysis also treats regional airline operating costs as direct expenses for American or United, and defines Form 41 aircraft expense as “all-in” cost, despite it omitting crucial operational components such as passenger service, ground handling, airport charges, distribution, and corporate administration.

These assumptions contribute to the analysis assigning £2.8 billion in “missing expenses” to American, leading to its projected billion-dollar loss.

In contrast, Deutsche Bank analyst Michael Linenberg estimated in February this year that United generated approximately £10 billion in Chicago-linked revenue with a 5% operating margin, while American generated just over £5 billion with a negative 9-10% margin, implying a smaller, but still considerable, loss for American.

Competitive Landscape Continues

The Claude-assisted analysis, despite its findings on United's pricing strength, does not demonstrate that American Airlines is incurring an *avoidable* £1 billion loss at Chicago O'Hare. This distinction is crucial, as it suggests American could not simply save this amount by ceasing operations at the hub.

American needs Chicago for its network strategy, while United seeks to gain American’s gates, increase its feed, and enhance its pricing power should its competitor depart. Leaked internal American figures reportedly showed a roughly £70 million loss for the second quarter, combining domestic and international results, a figure significantly below Kirby’s annual claims.

The ongoing debate highlights the intense competition and strategic importance of Chicago O'Hare for both major carriers, with no immediate signs of American withdrawing its presence.