Executive Summary

American Airlines’ Q1 2025 revenue was $12.551B with GAAP diluted EPS of ($0.72) and adjusted diluted EPS of ($0.59); management withdrew full-year 2025 guidance amid macro uncertainty and domestic main cabin weakness .
Versus Wall Street consensus, adjusted EPS modestly beat (consensus ($0.67)* vs actual ($0.59)), while revenue was essentially in line ($12.559B* vs $12.551B); international RASM strength offset pressure in domestic leisure demand and indirect channels recovery continues (impact of Eagle Flight 5342 accident estimated at ~$200M revenue) .
Q2 2025 outlook: capacity +2%–4% YoY, total revenue -2% to +1%, CASM-ex +3%–5%, adjusted operating margin 6.0%–8.5%, adjusted EPS $0.50–$1.00; ~27% effective tax rate (largely non-cash) .
Balance sheet improved: Q1 free cash flow $1.7B, total available liquidity $10.8B, total debt reduced by $1.2B in the quarter; committed to reducing total debt below $35B by YE 2027 .
Near-term stock catalysts: withdrawal of FY guidance (uncertainty), Q2 guidance band anchored by domestic softness, traction on indirect distribution recovery, premium/international resilience, and continued deleveraging/free cash flow generation .

What Went Well and What Went Wrong

What Went Well

International and premium strength: Atlantic passenger RASM up 10.5% YoY and Pacific RASM up 4.9% on 24.1% more capacity; premium revenue +3% YoY with paid premium load factor +2.9 pts .
Cash flow and liquidity: Q1 operating cash flow $2.456B and free cash flow $1.711B; ended Q1 with $10.8B total available liquidity .
Cost and balance sheet actions: repriced $2.3B AAdvantage-backed term loan, lowered rate ~300 bps and pushed $1.9B amortization to 2028; reduced total debt by $1.2B; >$10B unencumbered assets, >$13B first lien capacity .

What Went Wrong

Domestic main cabin demand weakness pressured revenue; management highlighted significant softness among price-sensitive cohorts and domestic leisure; government business fell off as well .
Unit cost ex-fuel rose 7.8% YoY in Q1 (labor step-up from recent CBAs; regional mix); CASM-ex expected +3%–5% in Q2 YoY .
FY 2025 guidance withdrawn due to macro uncertainty; adjusted EPS for Q1 came in below prior guidance range (guided ($0.20)–($0.40) vs actual ($0.59)) .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$12.570	$13.660	$12.551
GAAP Diluted EPS ($)	($0.48)	$0.84	($0.72)
Adjusted Diluted EPS ($)	($0.34)	$0.86	($0.59)
Operating Margin (GAAP, %)	0.1%	8.3%	(2.2%)
Operating Margin (Adjusted, %)	0.6%	8.4%	(1.6%)
Pre-tax Margin (GAAP, %)	(3.3%)	5.8%	(5.2%)
Pre-tax Margin (Adjusted, %)	(2.4%)	5.9%	(4.2%)

Vs. Wall Street Consensus (Q1 2025)

Metric	Consensus*	Actual	Surprise
Adjusted Diluted EPS ($)	($0.67)*	($0.59)	+$0.08
Revenue ($USD Billions)	$12.559*	$12.551	($0.008)

Values with * retrieved from S&P Global. Surprise computed using S&P Global consensus and company-reported actuals.

Segment Revenue Breakdown (Passenger, $USD Millions)

Region	Q1 2024	Q1 2025	YoY
Domestic	$8,262	$8,127	(1.6%)
Latin America	$1,902	$1,906	0.2%
Atlantic	$992	$965	(2.7%)
Pacific	$302	$393	30.2%
Total International	$3,196	$3,264	2.1%

Key KPIs

KPI	Q1 2024	Q1 2025
Available Seat Miles (ASM, millions)	70,516	69,904
Passenger Load Factor (%)	81.5	80.6
Yield (cents)	19.94	20.21
Passenger RASM (cents)	16.25	16.30
Total RASM (cents)	17.83	17.95
Operating CASM (cents)	17.82	18.34
CASM-ex special items & fuel (cents)	13.49	14.54
Avg. Fuel Price ($/gal)	2.86	2.48

Liquidity, Cash Flow and Debt (Q1 2025)

Operating cash flow: $2,456M; Free cash flow: $1,711M .
Total available liquidity: $10.8B .
Total debt at quarter-end: $37,424M; Cash + short-term investments: $7,466M; Net debt $29,958M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS ($/share)	Q1 2025	($0.20) to ($0.40)	Actual: ($0.59)	Below prior range
Adjusted EPS ($/share)	FY 2025	$1.70 to $2.70	Withdrawn	Withdrawn
Capacity (ASMs) vs prior year	Q2 2025	n/a	+2% to +4%	New
Total Revenue vs prior year	Q2 2025	n/a	(2%) to +1%	New
CASM-ex (YoY)	Q2 2025	n/a	+3% to +5%	New
Adjusted Operating Margin (%)	Q2 2025	n/a	6.0% to 8.5%	New
Adjusted EPS ($/share)	Q2 2025	n/a	$0.50 to $1.00	New
Effective Tax Rate (%)	Q2 2025	n/a	~27% (substantially non-cash)	New

Earnings Call Themes & Trends

Topic	Q3 2024 (10/24/24)	Q4 2024 (1/23/25)	Q1 2025 (4/24/25)	Trend
Indirect channel recovery	Gap improved to ~7 pts below historical by Sept; new TMC agreements underway	Restoring corporate/agency share; contracts reworked; momentum into Q1	On track to restore share by YE 2025; Q2 expected +2 pts sequential improvement	Improving
Premium/international demand	Premium revenues +8% YoY; Atlantic/South America strong	Premium load factor +3 pts; strong transcon/LHR franchise	Premium bookings strong; Atlantic/Pacific RASM outperformance; short-haul Latin inflected	Strong
Cost initiatives/efficiency	Reengineering delivering savings; CapEx moderated	~$500M 2024 savings; 2025 +$200M target; working capital +$100M	CASM-ex Q1 +7.8% YoY; Q2 +3%–5%; ongoing productivity/tech investments	Mixed: near-term pressure, longer-term efficiencies
Macro & domestic leisure softness	Unit revenue improving; election/seasonality noted for Q4	Constructive industry backdrop into Q1	Economic uncertainty; domestic main cabin weakness; withdrew FY guide	Deteriorated
Balance sheet/deleveraging	Target ≥$13B debt reduction by YE 2024	Achieved $15B reduction ahead of schedule; commit < $35B by YE 2027	$1.2B debt reduced in Q1; >$10B unencumbered assets; >$13B first lien capacity	Continued improvement
Regulatory/ATC modernization	—	Emphasis on ATC improvements and infrastructure	Continued advocacy; macro/tariffs questions addressed	Ongoing engagement
Technology/AI initiatives	AI/tech to improve offers and efficiency	App redesign; WiFi upgrades; premium lounges	New Customer Experience org; free high-speed WiFi for AAdvantage members in 2026	Building execution

Management Commentary

“Economic uncertainty... pressured demand and impacted American's first quarter results and second quarter outlook. Given this macro environment, we're withdrawing our full year outlook.” — CEO Robert Isom .
“We ended the first quarter with $10.8 billion of total available liquidity, and we produced free cash flow of $1.7 billion... reduced total debt by $1.2 billion during the quarter.” — CFO Devon May .
“International unit revenue... up 2.9% year over year... continued growth in premium and loyalty revenue... indirect channel recovery remains on track.” — Press Release .
“Based on current assumptions, Q2 adjusted EPS $0.50 to $1.00; adjusted operating margin 6.0% to 8.5%; CASM-ex +3% to +5%.” — Investor Update (Ex. 99.3) .

Q&A Highlights

Capacity bias: “Negative bias to capacity as we go forward... nimble and quick to react; summer plan set at +2%–4% in Q2.” — CEO .
Domestic main cabin softness: “Mid- to high single-digit weakness... particularly over the summer... premium and indirect bookings remain solid.” — Vice Chair Steve Johnson .
Corporate/indirect recovery: “On track to recover share by year-end; Q2 share expected to build; prior government business also fell off.” — Management .
Balance sheet strength: “> $10B unencumbered assets; > $13B first lien capacity; repriced AAdvantage term loan, lowered rate ~300 bps.” — CFO .
Tariffs risk: “We don’t intend to absorb aircraft tariffs; working toward civil aviation framework continuation; limited near-term Airbus deliveries.” — CEO .

Estimates Context

Q1 2025 adjusted EPS: consensus ($0.67)* vs actual ($0.59) → modest beat; 13 EPS estimates [GetEstimates].
Q1 2025 revenue: consensus $12.559B* vs actual $12.551B → essentially in line; 15 revenue estimates [GetEstimates].
Implications: Expect analysts to trim domestic unit revenue assumptions and raise international/premium contributions; near-term estimate dispersion likely to widen given withdrawn FY guide and broad macro commentary .
Values retrieved from S&P Global.

Key Takeaways for Investors

Near-term setup: Withdrawn FY guidance elevates uncertainty; Q2 range ($0.50–$1.00) brackets domestic softness but leans on international/premium resilience .
Distribution recovery is a core lever: Management targets YE 2025 restoration of indirect channel share, with sequential improvements, supporting revenue normalization .
Cash generation/deleveraging continue: $1.7B Q1 FCF, liquidity $10.8B, $1.2B quarterly debt reduction; committed to < $35B total debt by YE 2027 — a valuation support .
Cost cadence: CASM-ex pressures from labor/mix in H1; management targets further efficiencies; monitor Q3/Q4 cost trajectory and regional mix .
Mix shift to premium/international: Sustained demand in Atlantic/Pacific and premium cabins should buffer domestic weakness; watch Latin America and indirect channels sequential trends .
Event risk: Macro and potential tariff outcomes on aircraft/components; management advocates maintaining “zero-for-zero” civil aviation regime .
Trading implications: Expect sensitivity to macro headlines and domestic booking trends; positive catalysts include stronger Q2 print within guidance, visible indirect recovery, and continued debt reduction/free cash flow.

Notes: The company estimates the impact of American Eagle Flight 5342 accident reduced first-quarter revenue by ~$200M .

American Airlines Group Inc. (AAL)·Q1 2025 Earnings Summary