American Airlines says au revoir to first-class seating on international flights

American Airlines is eliminating first-class tickets on international flights, saying the carrier isn't selling enough of the pricey seats.

"First class will not exist on the 777, or for that matter at American Airlines, for the simple reason that our customers aren't buying it," Vasu Raja, chief commercial officer, said in announcing the company's third-quarter earnings on Thursday. 

Raja said many passengers are avoiding first-class and instead buying less expensive business-class tickets. American recently said that it will install a new premium level of business class seats called Flagship Suite on its Airbus A321XLR and Boeing 787-9 planes starting next year. That will require scrapping first-class rows. 

"And frankly, by removing it we can provide more business-class seats, which is what our customers most want or most willing to pay for," he said. 

American's business-class ticket gives a passenger more legroom than the economy class seat, free internet access and a longer list of food options, along with pillows and blankets. It's the highest level ticket someone can purchase for short international trips, according to American's website. The Flagship Suite option is for longer international flights and offers seats that fully recline.

American is putting more emphasis on the Flagship Suite because frequent fliers have changed in recent years, Raja said. Years ago, about half of passengers on American were corporate travelers. Now roughly 60% of bookings are "leisure demand that is willing to go and pay more for the quality of the business class seat," Raja said. 

American said it plans to increase Flagship Suite seating by more than 45% by 2026. Delta and United Airlines eliminated first class rows for international flights in 1998 and 2016, respectively.

• Airfares surge 50% as domestic and international travel rebound
• Strong dollar makes it a good time to be an American in Europe
• Biden administration cracks down on hidden airline fees

Baggage fee refund

Separately this week, American Airlines also settled a class-action lawsuit from passengers, agreeing to pay $7.5 million for wrongfully charging some people baggage fees. The funds will be used to refund customers who incorrectly paid checked baggage fees between 2013 and 2021, according to a court order. 

American is also in the middle of contract negotiations with its pilots union. Nearly 300 American Airlines pilots stood in solidarity outside the company's headquarters in Fort Worth, Texas, in September, calling for change. Pilots are asking for a 20% raise among other concessions, Forbes reported last month. 

"There continues to be concerns about a looming recession, and our fear is new labor deals could overwhelm already thin margins and mask many of the structural changes American should benefit from," analysts from Melius said in a research note Thursday.