AAL Incurs Narrower-Than-Expected Q3 Loss, Expects Profitability in Q4

American Airlines’ AAL third-quarter 2025 loss of 17 cents per share was narrower than the Zacks Consensus Estimate of a loss of 27 cents. In the year-ago quarter, AAL reported earnings per share of 30 cents. Operating revenues of $13.69 billion beat the Zacks Consensus Estimate of $13.63 billion and edged past the year-ago number of $13.65 billion. The top line was aided by the strength of high-margin premium services.

Passenger revenues, accounting for 91.1% of the top line, decreased 0.4% year over year to $12.5 billion. The figure was, however, higher than our estimate of $12.32 billion. Cargo revenues increased 5% to $212 million. The metric was, however, short of our estimate of $214.4 million. Other revenues increased 9.4% to $1 billion, which was in line with our expectations.

Total revenue per available seat miles (a key measure of unit revenues) decreased to 17.69 cents from 18.04 cents recorded a year ago. Passenger revenue per available seat miles decreased 2.7% to 16.1 cents. However, the figure beat our expectation of 15.93 cents. Consolidated yield decreased 2% to 18.73 cents, ahead of our estimate of 18.53 cents.

American Airlines Price, Consensus and EPS Surprise

American Airlines price-consensus-eps-surprise-chart | American Airlines Quote

Consolidated traffic (measured in revenue passenger miles) increased 1.6% year over year. Capacity (measured in average seat miles) expanded 2.3%. Consolidated load factor (percentage of seats filled by passengers) decreased 0.6 points to 86%. The figure for the load factor was in line with our expectations.

Total operating costs (on a reported basis) inched down 0.1% year over year to $13.54 billion, with expenses on salaries, wages and benefits growing 8.9% to $4.46 billion. The labor deal, inked with its pilots in 2023, contributed to this increase. Expenses on aircraft fuel and taxes decreased 3.7% to $2.77 billion. Average fuel price per gallon (including related taxes) decreased to $2.37 from $2.5 a year ago.

Consolidated operating costs per available seat mile (excluding fuel and special items) increased 3.9% to 13.91 cents. The actual figure was more than our estimate of 13.81 cents. Fuel gallon consumption increased 1.9% to $1.17 billion in the third quarter of 2025.

American Airlines, currently carrying a Zacks Rank #3 (Hold), exited the quarter with $10.3 billion of total available liquidity.

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Impressive Outlook From AAL

Management expects capacity in the fourth quarter of 2025 to be 3-5% higher than fourth-quarter 2024 actuals. Total revenues are likely to increase in the 3-5% range from year-ago levels. Cost per available seat miles (adjusted) in the December quarter is expected to increase in the 2.5-4.5% range from fourth-quarter 2024 actuals. AAL expects its fourth-quarter adjusted operating margin to be in the range of 5-7%. 

American Airlines expects adjusted earnings per share in the range of 45-75 cents in the fourth quarter, as capacity cuts are resulting in pricing gains. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 30 cents per share. The effective tax rate for the fourth quarter of 2025 is expected to be 25%. The total adjusted non-operating expense is expected to be roughly $330 million in the December quarter.

For the full-year 2025, AAL expects adjusted earnings per share to be between 65 cents and 95 cents. The Zacks Consensus Estimate for 2025 earnings is pegged at 35 cents per share. The effective tax rate for the full-year 2025 is expected to be 27%. AAL expects free cash flow for 2025 to be in excess of $1 billion.

Q3 Performances of Other Airline Companies

Delta Air Lines DAL reported third-quarter 2025 earnings (excluding 46 cents from non-recurring items) of $1.71 per share, which beat the Zacks Consensus Estimate of $1.52. Earnings increased 14% on a year-over-year basis due to low fuel costs.

Revenues in the September-end quarter were $16.67 billion, beating the Zacks Consensus Estimate of $15.79 billion and increasing 6.4% on a year-over-year basis. Due to improving air-travel demand, adjusted operating revenues (excluding third-party refinery sales) increased 4.1% year over year to $15.2 billion.

United Airlines UAL reported mixed third-quarter 2025 results wherein its earnings beat the Zacks Consensus Estimate, but revenues missed the same.

UAL's third-quarter 2025 earnings per share (excluding 12 cents from non-recurring items) of $2.78 surpassed the Zacks Consensus Estimate of $2.64 but declined 16.5% on a year-over-year basis. The reported figure lies above the guided range of $2.25 to $2.75.

Operating revenues of $15.2 billion fell short of the Zacks Consensus Estimate of $15.3 billion but increased 2.6% year over year. Passenger revenues (which accounted for 90.7% of the top line) increased 1.9% year over year to $13.8 billion. UAL flights transported 48,382 passengers in the third quarter, up 6.2% year over year.

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