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American Airlines Group Inc. (AAL)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 revenue of $13.69B with sequential unit revenue improvement; GAAP diluted EPS was ($0.17) and adjusted EPS was also ($0.17) as net special items were de minimis . Versus S&P Global consensus, AAL beat on revenue ($13.69B vs $13.63B*) and delivered a smaller loss than expected on EPS (−$0.17 vs −$0.28*) [GetEstimates Q3 2025]*.
  • Management raised full-year adjusted EPS guidance to $0.65–$0.95 (from −$0.20 to $0.80 previously) and guided Q4 adjusted EPS to $0.45–$0.75, anchored by flat YoY URASM outlook and improving main cabin trends into the holidays .
  • Premium continued to outperform: premium unit revenue outpaced main cabin by ~5 points; co-brand card spend rose 9% and AAdvantage active accounts grew 7% YoY, supporting mix/margin into 2026 as premium seat count expands ~2x vs main cabin growth .
  • Deleveraging and cash: total debt fell by ~$1.2B sequentially to $36.8B; liquidity was $10.3B; free cash flow expected to exceed $1B in 2025, supporting the path to < $35B total debt by YE27 .

Values with asterisks (*) are from S&P Global consensus.

What Went Well and What Went Wrong

  • What Went Well

    • Record Q3 revenue with sequential URASM improvement; September unit revenue turned positive; premium outperformed main cabin, narrowing the loss versus expectations .
    • Commercial recovery: corporate revenue rose 14% YoY; management expects indirect channel share to be fully restored exiting 2025, then grow beyond historical levels .
    • Balance sheet progress and cash: total debt reduced by ~$1.2B q/q to $36.8B; 2025 free cash flow expected >$1B; ample liquidity of $10.3B .

  • What Went Wrong

    • Margin compression: operating margin ex-special items was 1.2% vs 4.7% in Q3’24 (industry pricing/cost headwinds), keeping GAAP and adjusted EPS at a ($0.17) loss .
    • Main cabin remained soft vs premium; Latin America short‑haul oversupply pressured unit revenues; domestic mix still normalizing despite sequential improvements .
    • CASM-ex and non-fuel cost pressure: CASM-ex-fuel rose to 13.91¢ vs 13.39¢ in Q3’24; salaries and benefits +8.9% YoY as labor costs step up .

Financial Results

Headline P&L vs prior quarters and YoY

MetricQ1 2025Q2 2025Q3 2025
Revenue ($B)$12.60 $14.39 $13.69
GAAP Diluted EPS—$0.91 ($0.17)
Adjusted EPS (non-GAAP)($0.59) $0.95 ($0.17)
Operating Margin (GAAP, %)—7.9% 1.1%
Operating Margin ex-Special (%, non-GAAP)—8.2% 1.2%
Q3 YoY Revenue Change——+0.3%

Results vs S&P Global Consensus (Q3 2025)

MetricConsensusActual# of Estimates
Revenue ($B)$13.63*$13.69 14*
Primary EPS ($)($0.28)*($0.17) 16*

Values with asterisks (*) are from S&P Global.

Segment Revenue (Passenger) – Q3 2025 vs Q3 2024

RegionQ3 2024 ($MM)Q3 2025 ($MM)YoY %
Domestic$8,681 $8,723 +0.5%
Latin America$1,433 $1,340 −6.5%
Atlantic$2,110 $2,109 −0.1%
Pacific$299 $299 ~0.1%
Total International$3,842 $3,748 −2.5%

KPIs and Unit Economics

KPIQ3 2024Q3 2025
RPMs (mm)65,502 66,580
ASMs (mm)75,665 77,400
Load Factor (%)86.6% 86.0%
Yield (¢)19.12 18.73
TRASM (¢)18.04 17.69
CASM (¢)17.92 17.49
CASM ex fuel & specials (¢)13.39 13.91
Avg Fuel Price ($/gal)2.50 2.37

Balance sheet/cash flow highlights: total debt $36.8B; net debt $29.9B; liquidity $10.3B; YTD free cash flow $1.721B through 9/30 (non‑GAAP) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($/sh)Q4 2025n/a$0.45–$0.75 New
Adjusted Operating Margin (%)Q4 2025n/a~5%–7% New
Capacity (ASMs) YoYQ4 2025n/a+3% to +5% New
Total Revenue YoYQ4 2025n/a+3% to +5% New
CASM-ex YoYQ4 2025n/a+2.5% to +4.5% New
Adjusted Non-Operating Expense ($MM)Q4 2025n/a~330 New
Effective Tax RateQ4 2025n/a~25% New
Adjusted EPS ($/sh)FY 2025−$0.20 to $0.80 $0.65–$0.95 Raised
Effective Tax RateFY 2025n/a~27% New
Free Cash FlowFY 2025n/a>$1B New

Note: All adjusted metrics exclude special items per company definition .

Earnings Call Themes & Trends

TopicQ1 2025 (Prev-2)Q2 2025 (Prev-1)Q3 2025 (Current)Trend
Premium mix/performancePremium RASM +4 pts domestic, +8 pts international vs main cabin; paid premium LF +2.9 pts; co-brand spend +8% Continued premium strength; AAdvantage active +7%; co-brand spend +6% Premium URASM +5 pts vs main cabin; ~50% of ticket revenue from premium; paid premium LF nearly 80%; co-brand spend +9%; AAdvantage active +7% Strengthening mix tailwind
Sales/distribution recoveryIndirect channel share gap reduced to ~7%; on track to restore by YE25 Restoration continued; plan to return to historical share by YE Expect full restoration by YE, then expand beyond historical Recovery maturing; upside beyond YE25
Network focusCautious capacity (negative bias) amid uncertainty Q2 capacity +2–4% YoY; international strength Q4 capacity +3–5%; focus on CHI/PHL/NY; expansion in PHX/MIA; premium seats to grow ~2x main cabin Targeted hub rebuild; premium densification
Domestic main cabinWeak; discretionary demand soft Softness persists; domestic yields down YoY Sequential improvement; September URASM positive; Q4 URASM guided flat YoY Stabilizing from trough
Costs/CASM-exCASM-ex up 7.8% YoY CASM-ex trend mixed; ex-fuel CASM up vs 2024 CASM-ex-fuel 13.91¢ vs 13.39¢ LY; Q4 CASM-ex +2.5–4.5% Pressured but contained
Balance sheetNet debt lowest since 2015; deleveraging path Total debt ~$38B; net debt ~$29B Total debt $36.8B; −$1.2B q/q; liquidity $10.3B Ongoing deleveraging
Regulatory/macroTariffs/government issues cited —Govt. shutdown impact near DCA modest; ATC issues; planning for recovery Monitored; manageable

Management Commentary

  • “The American Airlines team is delivering on our commitments… continued investments in our network, customer experience and loyalty program will position us well to drive revenue growth and shareholder value in 2026 and beyond.” — CEO Robert Isom .
  • “Adjusted [Q3] loss per share of $0.17, a 50% beat versus the midpoint of our prior guidance… domestic URASM improved sequentially each month and turned positive in September.” — CFO Devon May .
  • “In the third quarter, we grew our corporate revenue by 14% year over year… exiting this year, we expect to have fully recovered the revenue share that was lost by our prior sales and distribution strategy.” — CEO Robert Isom / Commercial update .
  • “Total debt at the end of the third quarter was $36.8 billion, down by $1.2 billion from the second quarter… we expect to generate free cash flow of over $1 billion for the year.” — CFO Devon May .
  • “Our premium cabin is now… nearly 80% [paid load factor]… nearly 50% of our ticket revenue comes from premium.” — Management on premium demand .

Q&A Highlights

  • Unit revenue trajectory: Management highlighted sequential improvement across Q3, positive September URASM, and guided Q4 URASM to flat YoY, with improving main cabin trends into the holidays .
  • Premium strategy: Premium URASM outperformed by ~5 points; paid premium LF nearly 80%; plan to double relative premium seat growth vs main cabin and expand lie‑flat seats >50% by decade’s end .
  • Hubs and share: Confident in Chicago rebuild (500+ departures) despite competition; further growth planned in PHL, PHX, MIA and continued New York optimization .
  • Costs/CASM-ex: Fourth‑quarter CASM-ex guided +2.5–4.5% YoY; $750M annualized savings vs 2023 from re‑engineering initiatives; labor cost certainty through 2027 .
  • Balance sheet and liquidity: Over 50% progress toward sub-$35B total debt target by YE27; $10.3B liquidity; deleveraging aided by limited capex and FCF >$1B .

Estimates Context

  • Q3 2025 S&P Global consensus: Revenue $13.63B*, Primary EPS ($0.28); actuals: Revenue $13.69B, EPS ($0.17), representing beats on both lines [GetEstimates Q3 2025].
  • Estimate dispersion: 14 revenue estimates and 16 EPS estimates in the quarter*, suggesting reasonable coverage breadth [GetEstimates Q3 2025]*.
  • Implications: With FY adjusted EPS guidance raised to $0.65–$0.95 and Q4 adjusted EPS of $0.45–$0.75, models likely lift on premium mix, corporate recovery, and Q4 unit revenue stabilization, while tracking CASM-ex and Latin short-haul supply .

Values with asterisks (*) are from S&P Global.

Key Takeaways for Investors

  • Premium and loyalty flywheel is working: sustained premium outperformance, higher paid premium LF, and co-brand strength should support mix and margins into 2026 as premium seat density increases .
  • Commercial recovery catalyst: corporate revenue +14% and restoration of indirect channel share by YE25 provide incremental revenue tailwinds versus 2024; this was a key overhang now turning into upside .
  • Guidance reset higher: FY adjusted EPS raised; Q4 profitability framed by flat URASM and 5%–7% adjusted operating margin; near-term revisions should trend up if bookings for Nov/Dec hold .
  • Cost discipline vs labor step-ups: CASM-ex remains elevated vs 2024 but is guided within +2.5–4.5% in Q4 as efficiency initiatives scale; watch non-fuel cost lines (labor, rents/fees, maintenance) .
  • Balance sheet de-risking: $1.2B sequential debt reduction, liquidity of $10.3B, and FY25 FCF >$1B keep the deleveraging path to < $35B by YE27 on track—important for equity downside protection and optionality .
  • Regional nuance: Short‑haul Latin oversupply and domestic main cabin softness are risks, but sequential URASM improvement and strong Atlantic profitability mitigate near‑term downside .
  • 2026 setup: Citi co‑brand expansion, premium densification, hub rebuild (CHI/PHL/NY/PHX/MIA), and deleveraging provide multi‑factor upside optionality as macro normalizes .

Appendix: Additional Data Points

  • Consolidated operating expenses: $13.54B in Q3 (−0.1% YoY); salaries/benefits +8.9% YoY; fuel expense −3.7% YoY .
  • Liquidity and debt detail: total debt $36.785B; cash and short‑term investments $6.858B; net debt $29.927B .
  • Free cash flow (non‑GAAP) YTD through 9/30/25: $1.721B .

Citations:

  • Q3 2025 8-K press release, exhibits, and investor update
  • Q3 2025 earnings call transcript
  • Q2 2025 press release (for prior-quarter trend and prior guidance)
  • Q1 2025 earnings call transcript (for prior-two-quarters trend)

Values with asterisks (*) are from S&P Global.