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American Airlines Group Inc. (AAL)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarterly revenue of $14.392B and diluted EPS of $0.91; non-GAAP diluted EPS of $0.95. Both revenue and EPS exceeded S&P Global consensus (revenue est. $14.294B*, EPS est. $0.77*) on premium international strength and continued indirect channel revenue restoration .
  • Operating margin was 7.9% GAAP and 8.2% ex-specials, down year over year on domestic leisure softness and higher labor costs; management highlighted resilient operations amid a 36% increase in disruptive events from severe weather .
  • Guidance: Q3 2025 adjusted loss per share ($0.10)–($0.60), capacity +2%–3% YoY, total revenue -2% to +1% YoY, CASM-ex +2.5%–4.5%, adjusted operating margin -1% to +2%; FY 2025 adjusted EPS reinstated at ($0.20)–$0.80 (midpoint $0.30) .
  • Balance sheet: $12B total liquidity; net debt ~$29.4B (lowest since Q3 2015); H1 2025 free cash flow $2.5B; aircraft CapEx guide raised to $2.5–$3.0B and total CapEx to $3.5–$4.0B on earlier-than-planned deliveries .
  • Potential stock catalysts: consensus beat; reinstated FY guide at a lower range; Q3 loss guide tied to domestic recovery trajectory and indirect channel normalization by year-end .

What Went Well and What Went Wrong

What Went Well

  • Premium and international unit revenue: “All international entities delivered positive unit revenue growth year over year, with Atlantic passenger unit revenue up 5%,” and premium cabin demand remained strong; premium unit revenue outperformed main cabin by four points .
  • Indirect channel recovery ahead of plan: “Indirect share now down 3% versus historical levels” with plans to restore to historical share exiting 2025; managed business revenue grew 10% YoY .
  • Cash generation and deleveraging: H1 operating cash flow $3.4B and free cash flow $2.5B; net debt ~$29.4B; $12B total available liquidity .

What Went Wrong

  • Domestic leisure softness pressured unit revenue: Domestic PRASM down ~6% YoY; load factor fell 280 bps; management expects sequential improvement through Q3 but noted July as the low point .
  • Margin compression: Operating margin declined from 9.7% to 7.9% GAAP; CASM ex fuel rose 3.4% YoY, reflecting labor contracts and timing of maintenance .
  • Operational disruptions: 36% increase in disruptive events (storms across major hubs) with ~800 diversions and >5,500 weather cancellations in early July; recovery aided by technology investments .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$13.660 $12.551 $14.392
Diluted EPS (GAAP, $)$0.84 ($0.72) $0.91
Diluted EPS (Ex-Specials, $)$0.86 ($0.59) $0.95
Operating Margin (GAAP, %)8.3% (2.2%) 7.9%
Operating Margin (Ex-Specials, %)8.4% (1.6%) 8.2%
MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Billions)13.422*12.559*14.294*
Revenue Actual ($USD Billions)13.660 12.551 14.392
EPS Consensus Mean ($)0.661*(0.668)*0.772*
EPS Actual (Diluted, $)0.86 (0.59) 0.95
Values retrieved from S&P Global.*
Passenger Revenue by Region ($USD Millions)Q2 2024Q2 2025
Domestic9,342 9,159
Latin America1,562 1,550
Atlantic2,019 2,086
Pacific279 328
Total International3,860 3,964
KPIsQ4 2024Q1 2025Q2 2025
Passenger Load Factor (%)84.9 80.6 84.7
Total Revenue per ASM (TRASM, cents)19.10 17.95 18.54
CASM excluding net specials (cents)17.49 18.24 17.02
CASM excluding net specials and fuel (cents)13.99 14.54 13.59
Avg. Fuel Price ($/gallon)2.34 2.48 2.29
ASMs (millions)71,503 69,904 77,636
RPMs (millions)60,676 56,356 65,762

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($/share)FY 2025Withdrawn ($0.20) to $0.80; midpoint $0.30 Reinstated at lower range
Adjusted EPS ($/share)Q3 2025N/A($0.10) to ($0.60) New
Capacity (ASMs YoY %)Q3 2025N/A+2% to +3% New
Total Revenue (YoY %)Q3 2025N/A(2%) to +1% New
CASM-ex (YoY %)Q3 2025N/A+2.5% to +4.5% New
Adjusted Operating Margin (%)Q3 2025N/A(1%) to +2% New
Tax RateQ3 2025N/A~20% benefit New
Aircraft CapEx ($B)FY 2025~$2.0–$2.5 (Q1 view) $2.5–$3.0 Raised
Total CapEx ($B)FY 2025N/A$3.5–$4.0 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesAnnounced complimentary satellite Wi‑Fi for AAdvantage members starting 2026 (AT&T); focus on customer experience org TSA Touchless ID; first to test one-stop security LHR–DFW; Connect Assist; operational AI recovery project HEAT; premium lounge expansion Execution ramping; measurable service improvements
Supply chain/capacityModerate capacity, CASM management; planning to regain indirect share Early aircraft deliveries pull into Q4; 50 deliveries in 2025; aircraft CapEx raised Capacity flexibility improving; near-term CapEx higher
Tariffs/macroN/A in Q4 pressEmbraer tariffs discussed; management expects no long-term issues; cites ongoing government engagement Monitoring; limited operational impact expected
Product performanceQ4 led peers in passenger unit revenue; loyalty cash remuneration up 17% Premium demand resilient; Atlantic PRASM +5%, Pacific capacity +17% with modest PRASM gain International premium strength intact
Regional trendsQ1 domestic PRASM down; international PRASM positive with lower capacity Domestic PRASM -6% YoY; sequential improvement expected in Aug/Sep; transatlantic softer in Jul/Aug, improving by Sep Domestic recovery into late Q3; Europe normalizes by Sep
Regulatory/legalN/AChicago gate dispute resolution progressing; plan to exceed 500 peak departures in 2026 Supports Chicago hub growth trajectory

Management Commentary

  • CEO: “American produced record quarterly revenue of $14.4 billion... Our year over year passenger unit revenue improvement led our network peers for the fourth straight quarter” .
  • CFO: “Excluding net special items, American reported a second quarter operating margin of approximately 8% and earnings per share of $0.95 both at the high end of our guidance... net debt... our lowest since the third quarter of twenty fifteen” .
  • CEO on distribution: “Indirect share now down 3% versus historical levels... we remain on track to get back to our historical share of indirect channel revenue as we exit 2025” .
  • CEO on domestic outlook: “Domestic unit revenue was down approximately 6% year over year... we expect that July will be the low point and that performance will improve sequentially each month” .

Q&A Highlights

  • Domestic trajectory: Management expects sequential revenue improvement through Q3 with July comparable to Q2; ~65% of Q3 revenue and ~20% of Q4 booked at call time .
  • Indirect channels and corporate: Historical indirect share expected by year-end; managed business revenue +10% YoY despite flattish market .
  • Margin gap vs peers: Gap widened in 2025 due to domestic exposure and fully priced labor contracts; expect closing in 2026 via distribution recovery, Citi agreement benefits, and premium initiatives .
  • Chicago growth and network: Peak departures ~485 and aiming >500; gate capacity in place; continued investment in Philadelphia, Miami, New York .
  • Tariffs and Embraer: No long-term issues anticipated; strong partnership and high U.S. content on aircraft; ongoing government discussions .
  • AI use: Focused on operational recovery and customer service (HEAT project), not pricing manipulation; emphasis on trust with customers .

Estimates Context

  • Q2 2025 beat: Revenue $14.392B vs $14.294B*; EPS $0.95 vs $0.77*; beats driven by premium international demand, indirect channel restoration, and cost execution . Values retrieved from S&P Global.*
  • Q1 2025: EPS beat (actual -$0.59 vs -$0.67*), revenue near in-line (actual $12.551B vs $12.559B*) . Values retrieved from S&P Global.*
  • Q4 2024: EPS and revenue beats (EPS $0.86 vs $0.66*; revenue $13.660B vs $13.422B*) on broad unit revenue strength . Values retrieved from S&P Global.*
  • Adjustments likely: Q3 2025 consensus may need to reflect the adjusted loss per share guide and slower domestic RASM in July; FY 2025 EPS expectations lowered given reinstated range ($0.20)–$0.80 .

Key Takeaways for Investors

  • International premium mix is a structural strength; Atlantic PRASM +5% and Pacific capacity additions support revenue resilience even as domestic normalizes .
  • Near-term earnings risk flagged by Q3 loss guidance despite improving monthly trajectory; watch domestic booking trends and capacity moderation in Aug/Sep .
  • Distribution strategy is progressing; full indirect share expected by year-end offers a 2026 revenue tailwind (management previously sized at ~$$1.5B uplift) .
  • Cost discipline remains credible: CASM-ex growth contained; H1 free cash flow $2.5B, net debt down; deleveraging path to <$35B total debt by YE 2027 remains intact .
  • CapEx raised on earlier deliveries; monitor aircraft induction timing and utilization to ensure returns amid domestic softness .
  • Execution on customer experience and technology (one-stop security, HEAT) is tangible; potential for premium yield expansion and NPS improvement to bolster PRASM .
  • Trade and regulatory watch items (Embraer tariffs, Chicago gates) appear manageable; network optimization in Chicago/Philadelphia/Miami/New York should drive margin mix over 2026 .