American Airlines just reported its 2025 results, and while the headline profit number looks ugly, the more interesting story is what AA is trying to become, and whether it can actually earn a revenue premium for it.
American Airlines Profit Falls In 2025, But The Real Story Is AA’s Premium Pivot
American Airlines has shared its Q4 and full-year 2025 financial results, and it is a mixed bag. Revenue hit a record, profit fell sharply, and CEO Robert Isom once again promised “significant upside” ahead. The difference this time is that American is not just saying it wants to be more premium, it is spending and building toward that goal. But now comes the test of whether this strategy will work.
The Key Numbers
Here are three key metrics from American’s 2025 report:
- Record revenue: $54.6 billion for the full year, and $14.0 billion in the fourth quarter. American says the fourth quarter revenue took a $325 million hit from a government shutdown.
- GAAP profit: $111 million for 2025 (and $99 million in Q4).
- Adjusted profit: $237 million for 2025 (and $106 million in Q4).
Why 2025 “Looks” So Much Worse Than 2024
Yes, American earned far less in 2025 than 2024. In 2024, AA reported $846 million in GAAP net income. In 2025, that fell to $111 million.
But it is worth noting in 2024, AA benefited from a one-time cash payment tied to American’s new Citi co-branded credit card agreement. American explicitly called that out in its 2024 results
“Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December.”
So while 2025 was not a great year by any stretch, part of the delta in the year-over-year comparison is that 2024 had an extra “tailwind” (to use financial jargon) that did not repeat in 2025.
American Is Trying To Become More Premium, And This Time It Is Not Just Talk?
Addressing the results, CEO Robert Isom said:
“American Airlines is positioned for significant upside in 2026 and beyond. We have built a strong foundation, and we look forward to taking advantage of the investments we have made in our customer experience, network, fleet, partnerships and loyalty program. The strategy we have in place will put American in the right position as we celebrate our centennial and embark on our next 100 years as a premium global airline.”
As One Mile At A Time points out, that sounds very familiar to what Isom promised in both 2023 and 2024.
But in 2025, AA actually became more premium…it did not just promise to be. It debuted two new business class suites (on 787-9 and A321XLR), improved its website and app, and enhanced the food and beverage selections in its Admirals Club. This year it has already introduced free Wi-Fi across its narrowbody fleet and will soon introduce Lavazza coffee and Bollinger Champagne onboard.
Watching the success of Delta Air Lines and United Airlines, American is essentially making a bet that it can close the gap by monetizing the front of the plane, improving the ground experience, and winning back higher-yield customers. AA also claims premium demand is doing the heavy lifting, with premium unit revenue outperforming main cabin in Q4, and it says early 2026 revenue intakes are up double digits year-over-year, driven by premium cabins and corporate channels.
Now Comes The Test: Can AA Actually Earn A Revenue Premium?
I am not in the “Isom must go” camp, and I am not in the “Isom is the guy to save AA” camp either. I simply do not know him well enough to take that kind of position. What I do think is this: American is clearly trying harder than it has in a long time, and for once it has tangible product and network initiatives to point to, not just slogans.
The question is whether those investments translate into something American has not consistently demonstrated in the modern era: a durable revenue premium. Furthermore, AA’s operational reliability still lags United and Delta..it cannot expect to win a premium if flights are chronically delayed or cancelled.
American’s 2026 guidance is confident, with adjusted EPS expected between $1.70 and $2.70, and more than $2 billion in free cash flow. That said, AA also warned Winter Storm Fern could hit Q1 revenue by $150-$200 million, which is a reminder of how fragile airline forecasts can be…and with so much geopolitical uncertainty, AA has immense cover with many scapegoats if it later must downgrade profit guidance.
Still, if American is going to pull itself closer to United and Delta, it has to convince customers to pay more, consistently, because they believe they are getting more. That is a hard pivot for an airline that has trained many travelers to shop it primarily on price and schedule, the stated strategy for years.
I rarely think anything is “too little, too late” if it is moving toward a discernible goal, but AA still has a lot of catch-up to play and One Mile At Time is correct that employees are not onboard…something I will starkly outline in an upcoming post.
Finally, while the battle over Chicago O’Hare is serious, I am predicting AA will retreat if the numbers are as dire as United claims. AA has “fortress hubs” in Dallas (DFW), Charlotte (CLT), and Philadelphia (PHL) and if it can grow there (as it is doing with the construction of Terminal F in DFW) it can actually improve profit, unlike with a prolonged fare war in ORD.
CONCLUSION
American posted record revenue in 2025, but profit collapsed compared to 2024. Some of that year-over-year decline is optical, because 2024 had a one-time Citi-related cash payment that did not repeat, and AA also said the government shutdown hurt (not that such pain was unique to American).
The bigger question is what happens next. American is making a real premium push, with a premium-heavy fleet plan, a higher-end longhaul product, lounge investment, and free Wi-Fi as a loyalty hook. If that translates into higher-yield revenue, then 2026 could look meaningfully different. If it does not, then this becomes yet another chapter of American promising upside while the gap to Delta and United stays stubbornly wide. At this point, all I can say is let’s wait and see what happens.
Do you think American’s premium pivot will actually work or will it continue to lag United and Delta?
image: American Airlines
“improved its website and app” – in any material / innovative ways (aside from limited additional context on delays, but that’s a 2026 thing)?
AA’s technology limitations are one of my primary deterrents to flying them. The self service options and user experience feel mostly unchanged from a decade ago.
Contrast AA digital to UA where a plethora of information is easily available and even complicated rebookings/changes can be handled seamlessly and pretty transparently in app
As someone stuck with AA living in a fortress hub, yes, they’re finally starting to actually try to go “premium”, but the reality remains a fragmented, inconsistent mess:
– The 787-9P and A321XLR are nice up front. But they also decimated MCE in the process, and if this is their plan for the entire fleet, it’s going to make me that much less likely to choose AA for international long-haul. MCE is a huge selling point where I can’t fork over the extra cash for PE or J, but want a little extra room for the family.
– You still have the el cheapo “Oasis” domestic fleet with the tightest seat pitch in Y compared to the competition, and streaming-only, BYOD entertainment, even in F. I’ll get flamed in the comments, but yes, IFE is important. BYOD feels incredibly cheap.
– Catering has improved but is hardly premium at this stage.
– Apart from the JFK lounges, the Flagship Lounges are a noticeable step below the D1 and Polaris lounges.
– They’re still having a devil of a time running an on-time operation. And the on-board service is distinctively not premium way too often.
So yes, there’s incremental progress, but they have a looooong way to go. And I don’t get the feeling the team in charge totally gets that.
Only having 18-24 MCE seats on most of their narrow bodies pretty much guarantees I’ll never make AA my go-to airline
It’s not just that they’ve cut the seat count – on the XLR, your only choice for MCE are the two exit rows, and on the 787-9P, the two bulkheads. There’s a lot of reasons people choose not to sit in those seats, and if I get on an XLR, I can’t even pay for MCE if I wanted to because I have a child under 15. I guess they’re trying to incentivize you to pay up for PE, but this just feels short-sighted. And decidedly un-premium if you’re seated in the back.
I am genuinely curious what the seat pitch is on the XLR. Page 2 of a PDF in the AA newsroom claims 32” but it’s not posted to the Planes page on aa.com. The seat maps sites claim 31”. If it really was 32” you’d think they’d be shouting it from the rooftops.
Also got ‘downgraded’ from a 777 to a 787-P on an upcoming TATL. Had 4 MCE seats picked out and now because the 787 only has 12 seats that families can sit in, only have 3 of 4 seats MCE. No email notice of the plane swap either, just noticed it one day. AA basically told me to go pound sand. I’m not happy about it at all and may just book on another airline.
If flying economy, I don’t understand why I’d take AA with the family if I can’t get extra legroom. Every one of their competitors offers extra legroom economy to families. It is so shortsighted and is already having me rethink my loyalty. MCE seating is a real, tangible benefit in an age of limited upgrades. To be able to select MCE seats for a family of 4 that go for $100 each TATL is real value that they are now not delivering.
This pretty much sums it up on the airline side.
Two things I’d add on the loyalty / credit card side-
1) AA miles are still better than DL/UA miles (yay).
2) If these are flying credit card companies, they need to invest in more premium places and make a play for premium passengers. They have to make a play for ORD. Likewise, NYC / LAX. They also need to work better with Citi – 4 AA passes on a Strata Elite is slightly better than the strained UA-Chase partnership, but where on earth are the Citi lounges? It’s what makes the Strata Elite silly – folks are signing up for these cards long term for the lounges, not to maybe make a couple hundred bucks off a coupon book. You need Citi lounges to get premium folks to sign up for premium Citi cards so that folks put spend on those cards, earn TY points that can be converted to AA miles, and then Citi can purchase more AA miles from AA.
Eh, it’s a shame things haven’t gone better for AA (and its workers), but I’m hopeful that they’ll pull out of this in due time; I like what they’re doing with new aircraft, cabins, premium lounges.
It seems that Wall Street has also adopted a “wait and see” approach on this issue…
AA execs noted on their earnings call that 80% of UA employees are being paid less than industry average compensation.
AA’s earnings would be a whole lot higher if they were paying UA salaries and benefits.
Well not everyone can make more than the average, now can they?
and the obvious reality is that UA employees are underpaid which gives UA a substantial competitive advantage -but UA employees continue to suck up the Kirby Koolaid and take it for the team with every paycheck.
problem is that AA employees are not delivering a superior product even with the higher pay they get and the things they can control including their own service delivery.
In other words, there is no correlation between pay and service. Thank you for your attention to this matter.
I think AA’s biggest premium advantage they have is their partners. BA, JL, and QF are probably the best JV partners you could have, and LON and TYO are actually places people want to travel to. CX and QR are also partners that really don’t have a comparable in the other alliances. (I’d say SQ is close, but HKG will edge them out on nearly every metric).