American Airlines Beats on Q2 Earnings & Revenues, Expects Loss in Q3

American Airlines’ AAL second-quarter 2025 earnings (excluding 4 cents from non-recurring items) of 95 cents per share beat the Zacks Consensus Estimate of 79 cents. In the year-ago quarter, AAL reported earnings per share (EPS) of $1.09. Operating revenues of $14.4 billion beat the Zacks Consensus Estimate of $14.29 billion and moved past the year-ago number.

Passenger revenues, accounting for 91.1% of the top line, decreased 0.6% year over year to $13.1 billion. The metric was hurt by the slowdown in domestic leisure demand due to tariff woes. The figure was in line with our estimate. Cargo revenues increased 8.2% to $211 million. The metric surpassed our estimate of $204.4 million. Other revenues increased 13% to $1.06 billion, which surpassed our expectation of $973 million.

American Airlines Price, Consensus and EPS Surprise

 

American Airlines price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote

Total revenue per available seat miles (a key measure of unit revenues) decreased to 18.54 cents from 19.05 cents recorded a year ago. Passenger revenue per available seat miles decreased 3.6% to 16.9 cents. However, the figure was a tad higher than our expectation of 16.89 cents. Consolidated yield decreased 1.5% to 19.96 cents, ahead of our estimate of 19.76 cents.

Consolidated traffic (measured in revenue passenger miles) inched up 0.9% year over year. Capacity (measured in average seat miles) expanded 3.2%. Consolidated load factor (percentage of seats filled by passengers) decreased 1.9 points to 84.7%. The figure for the load factor was lower than our expectation of 85.5%.

Total operating costs (on a reported basis) inched up 2.4% year over year to $13.26 billion, with expenses on salaries, wages and benefits growing 10.9% to $4.4 billion. The labor deal, inked with its pilots in 2023, contributed to this increase. Expenses on aircraft fuel and taxes decreased 13% to $2.67 billion. Average fuel price per gallon (including related taxes) decreased to $2.29 from $2.7 a year ago.

Consolidated operating costs per available seat mile (excluding fuel and special items) increased 3.4% to 13.59 cents. The actual figure was more than our estimate of 13.53 cents. Fuel gallon consumption increased 2.7% to $1.16 billion in the second quarter of 2025.

American Airlines, currently carrying a Zacks Rank #3 (Hold), exited the quarter with $12 billion of total available liquidity.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Unimpressive Outlook From AAL

Management expects capacity in the third quarter of 2025 to be 2-3% higher than third-quarter 2024 actuals. Total revenues are likely to be either down 2% or increase up to 1% from year-ago levels. Cost per available seat miles (adjusted) in the September quarter is expected to increase in the 2.5-4.5% range from third-quarter 2024 actuals. AAL expects its third-quarter adjusted operating margin to be in the range of negative 1% to positive 2%.

American Airlines expects a loss per share of 10-60 cents in the third quarter, as sluggish domestic travel demand results in more unsold seats and a decline in fares. The Zacks Consensus Estimate for third-quarter earnings is pegged at 10 cents per share. The effective tax rate for the third quarter of 2025 is expected to be 20%.

For full-year 2025, AAL expects a loss of either 20 cents or earnings of up to 80 cents per share. The company believes that the top end of the range is achievable if demand in the domestic market continues to strengthen. AAL expects to be at the bottom end of the range if there were to be macro weaknesses not prevalent currently. The Zacks Consensus Estimate for earnings is pegged at 73 cents per share. The effective tax rate for the full-year 2025 is expected to be 35%. AAL expects free cash flow for 2025 to be positive.

Q2 Performance of Other Airline Companies

Delta Air Lines DAL reported second-quarter 2025 earnings (excluding $1.17 from non-recurring items) of $2.10 per share, which beat the Zacks Consensus Estimate of $2.04. Earnings decreased 11% on a year-over-year basis due to high labor costs.

Revenues in the June-end quarter were $16.65 billion, which the Zacks Consensus Estimate of $16.2 billion and decreased marginally on a year-over-year basis. Adjusted operating revenues (excluding third-party refinery sales) increased 1% year over year to $15.5 billion.

United Airlines’ UAL second-quarter 2025 adjusted EPS (excluding 90 cents from non-recurring items) of $3.87 beat the Zacks Consensus Estimate by a penny but declined 6.5% on a year-over-year basis. The reported figure lies within the guided range of $3.25-$4.25 per share.

Operating revenues of $15.2 billion missed the Zacks Consensus Estimate of $15.4 billion but increased 1.7% year over year. Passenger revenues (which accounted for 90.8% of the top line) increased 1.1% year over year to $13.8 billion. UAL flights transported 46,186 passengers in the second quarter, up 4.1% year over year. 

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This article originally published on Zacks Investment Research (zacks.com).

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