American Airlines shareholders are suing the airline for painting an overly positive picture of the success of the airline’s sales and distribution strategy, including attempts to move all bookings online using NDC.
The depiction of the future disintermediated distribution scenario by the airline caused “artificial inflation” of stocks, the shareholders allege.
According to a statement from Gross Law Firm, the airline’s shareholders are claiming that American Airlines made “overwhelmingly positive statements to investors regarding American’s new sales and distribution strategy” during the period January 25 to May 28, 2024.
The strategy, launched in January, aimed to reduce internal expenses and drive up demand for the company’s online services. At its fourth quarter results presentation, the airline said it was aiming to achieve 100% online bookings through direct and agency channels by using the NDC channel and withholding loyalty points for bookings made through travel agencies, as reported by Travel News.
This strategy backfired and in May, the airline said it would rethink its sales and distribution plans with the recognition that travel advisers play an essential role in facilitating bookings.
The class action states that statements made by American Airlines misrepresented the true state of the business and that the company was concealing material adverse facts. “The company’s sales and distribution strategy was not driving the revenue projected,” the statement reads.
Shareholders are seeking recovery funds for the losses incurred by those who invested during this period, because airline stocks were artificially inflated by these misleading statements.
