AAL Reports Narrower-Than-Expected Q1 Loss, Withdraws FY25 View

American Airlines’ AAL first-quarter 2025 loss (excluding 13 cents from non-recurring items) of 59 cents per share was narrower than the Zacks Consensus Estimate of a loss of 69 cents. In the year-ago quarter, AAL reported a loss of 34 cents per share. Operating revenues of $12.55 billion edged past the Zacks Consensus Estimate of $12.52 billion but decreased 0.2% year over year.

Passenger revenues, accounting for 90.8% of the top line, decreased 0.6% year over year to $11.4 billion. The metric was just shy of our estimate of $11.5 billion. Passenger revenues were hurt by the slowdown in domestic leisure demand due to tariff woes. Cargo revenues increased 1.1% to $189 million. The metric surpassed our estimate of $171.7 million. Other revenues increased 5% to $971 million, which surpassed our expectation of $891.6 million.

American Airlines Price, Consensus and EPS Surprise

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

Total revenue per available seat miles (a key measure of unit revenues) increased to 17.95 cents from 17.83 cents recorded a year ago. Passenger revenue per available seat miles increased 0.3% to 16.3 cents. However, the figure was lower than our expectation of 16.5 cents. Consolidated yield increased 1.4% to 20.21 cents, ahead of our estimate of 19.69 cents.

Consolidated traffic (measured in revenue passenger miles) decreased 1.9% year over year. Capacity (measured in average seat miles) contracted 0.9%. The move to trim capacity is aimed at protecting margins and avoiding lowering fares. Consolidated load factor (percentage of seats filled by passengers) decreased 0.9 points to 80.6%. The figure for the load factor was lower than our expectation of 83.8%.

Total operating costs (on a reported basis) inched up 2% year over year to $12.8 billion, with expenses on salaries, wages and benefits growing 9.2% to $4.2 billion. The labor deal, inked with its pilots in 2023, contributed to this increase. Expenses on aircraft fuel and taxes decreased 13.2% to $2.6 billion. Average fuel price per gallon (including related taxes) decreased to $2.48 from $2.86 a year ago.

Consolidated operating costs per available seat mile (excluding fuel and special items) increased 7.8% to 14.54 cents. The actual figure was a tad more than our estimate of 14.38 cents. Fuel gallon consumption was flat at $1.04 billion in the first quarter of 2025.

American Airlines, currently carrying a Zacks Rank #5 (Strong Sell), exited the quarter with $10.8 billion of total available liquidity.

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

Owing to the tariff-induced uncertainty, AAL withdrew its 2025 financial guidance. Management stated that it would provide an update later in the year as visibility improves.  

Delta Air Lines DAL, while kicking off the first-quarter 2025 earnings season on April 9, had also withdrawn its outlook for 2025 due to the uncertainty. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Like AAL, DAL’s management also said that it would provide an update later in the year on improvement in visibility.  

Another key player in the Zacks Transportation-Airline industry, United Airlines UAL, offered a dual outlook for 2025 due to the prevalent uncertainty. In a stabilized environment, UAL expects 2025 adjusted EPS between $11.50 and $13.50. For a recessionary environment, UAL expects 2025 adjusted EPS between $7 and $9.

AAL's Q2 Outlook

For the second quarter of 2025, management expects total revenues to be down 2% to up 1% from the second quarter of 2024 actuals. System capacity is estimated to be up 2-4% from second-quarter 2024 levels. Cost per available seat miles (adjusted) in the June quarter is expected to increase in the 3-5% range from second-quarter 2024 actuals. AAL expects its second-quarter adjusted operating margin to be in the 6-8.5% range. The effective tax rate for the June quarter is expected to be 27%. AAL expects a earnings per share to be between 50 cents and $1 in the second quarter of 2025. The Zacks Consensus Estimate is currently pegged at 96 cents per share, above the mid-point of the guided range.

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

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