American Airlines has reported a loss for the first quarter (Q1) of 2025 and pulled its 2025 outlook, citing weaker domestic bookings and economic uncertainty.
American Airlines Reports $473 Million Q1 2025 Loss
The first quarter is traditionally the weakest for US airlines, with demand lower during the Northern Hemisphere winter. This morning, American Airlines reported a $473 million loss for the first quarter, worse than the $312 million loss it posted in Q1 of 2024. That represents an adjusted 59 cents per share loss (analysts expected a 65 cent loss) on revenue of $12.55 billion (analysts had expected $12.56 billion). AA said it recognized $87 million as “one-time charge resulting from pay rate increases effective January 1, 2025.”
Unit revenue did grow 0.7% in the quarter (essentially, the revenue generated for each seat available for sale to be flown one mile), which American attributes–like Delta Air Lines and United Airlines–to stronger demand for premium cabin travel and international travel.
For the second quarter, AA is expecting adjusted earnings per share between 50 cents and $1 and predicting revenue will fall within a range of 1% growth to 2% decline (with Wall Street analysts having expected a 2.2% gain). Capacity will rise by “up to” 4% compared to the same period in 2024.
American Airlines Pulls Full-Year Guidance
Following Delta, Alaska Airlines, and Southwest Airlines, American pulled its 2025 financial guidance, blaming economic uncertainty (United is so far the outlier in offering a bifurcated guidance based on whether the US enters recession).
The company is withdrawing its full-year guidance at this time. American intends to provide a full-year update as the economic outlook becomes clearer.
CEO Robert Isom told CNBC:
“We came off a strong fourth quarter, saw decent business in January and really domestic leisure travel fell off considerably as we went into the February time frame.”
Isom blames “economic uncertainty that pressured domestic leisure demand and the tragic accident of American Eagle Flight 5342” for pulling the forecast, referring to a crash near Washington National Airport on January 29, 2025.
What’s Next?
Like so much of the economy, right now, the tremendous uncertainty over tariffs will make it hard for AA to accurately project the rest of 2025. The spate of recent headlines about foreign travelers being detained in the USA may be anecdotal, but it appears that visitors to the USA from around the world are dropping (we will need at least a couple more months of data to confirm it).
AA should not use this period of uncertainty to suspend its move toward becoming a more premium carrier. If the economy rebounds, AA may be left even further behind by Delta and United if it does not take concrete steps (from as small as suspending headphone collection to as big as debuting its new Flagship Suites) to better compete.
CONCLUSION
As expected, American Airlines reported a first quarter loss and has now pulled its full-year forecast. Even as the carrier expects to profit in the second quarter, the economic cloud appears to be hitting the airline hard, though the next 2-3 months should be clarifying.
What do you make of AA’s 2025 Q1 results?
Come on, you missed the fact that free WiFi for members next January is going to turn everything around!
In all seriousness assuming they promote this to become a member after booking or even on the flight, it will increase members. Which allows all their marketing arms to potentially target new customers that usually price shop to choose AA more often. Certainly won’t turn their fortunes around but I do see it as a small positive step.
There is no doubt that free wi-fi will be good news for customers and I also think, ultimately, for AA’s bottom line.
Well the president recently said he doesnt care if fewer people are visiting the US. So there you go airline, Hotel, and other hospitality workers, the president doesn’t care if you are negatively affected. But don’t worry, he’ll be just fine
I missed this comment – can you share the exact quote? (may be a story in itself – I googled but could not find)
Technically he said it’s “not a big deal”… but the sentiment is the same
https://www.thedailybeast.com/trump-shrugs-off-plunge-in-visitors-to-the-us-as-no-big-deal/
Thanks.
So much work to do at AA on the revenue side, but on the bright side, they had a positive EBITDA (still nowhere near their peers though but also the metric that matters for any airline) and Free Cash Flow in the quarter. Though Free cash flow in the 1st quarter is always misleading and rather useless since that cash is usually flowing for summer travel but not recognized until the summer.
It will be interesting to see how the drop in international travel impacts each carrier. Perhaps AA’s smaller widebody fleet could, for once, be an asset…
Great article, Matthew. Thanks for the summary.
You’re right to point out the irony that AA’s perceived fleet deficiencies may turn out to be advantageous in a downturn.
Time to “Read the Room,” America.
and yet it is the domestic system that is problematic for US airlines.
AA, DL and UA are managing capacity on their international systems and are delivering better international revenue metrics than they and the industry are for domestic.
AA, DL and UA have now reported as have AS and WN.
DL and UA are the only two profitable airlines in the 1st quarter.
There are two numbers that are most significant for passenger airlines and they can very much be used for comparison.
PRASM -passenger revenue per available seat mile, a measure of revenue generating efficiency
AA 16.30
DL 16.78
UA 15.78
WN 14.02
AS 13.24
CASM ex – cost per available seat mile, a measure of cost efficiency w/o fuel and special items.
AA 14.54
DL 14.44
UA 13.17
WN 12.81
AS 11.89
The difference between the two is a pretty good approximation of profit per available seat mile for passenger airlines.
PRASM and CASM are related to stage length or the average flight distance; longer stage lengths bring down both numbers while shorter stage lengths push them higher. UA has the longest average stage length followed by AS then DL then AA then WN. (of the 5 carriers that have reported – approx. 90% of US carrier capacity
On a stage length adjusted basis, DL and UA clearly get a revenue premium to the industry and have the highest profit per ASM. AA simply does not get the revenue that DL and UA get but has higher costs. WN’s costs are out of line with its ability to generate revenue.
PRASM and CASM do not reflect cargo (where UA leads the industry) and non-transportation revenue – which is where DL has the highest difference between PRASM and TRASM. It also does not include fuel or non-operating expenses such as interest costs.
AA slightly larger than DL in domestic passenger revenue but shrank; DL and UA domestic passenger revenue up 4%, AA down 1%; AA domestic RASM down the least, UA the most
AA Latin America revenue flat; DL and UA grew
All 3 had less TATL capacity; DL strongest revenue and RASM gain
AA and DL both grew TPAC capacity; UA was essentially flat in TPAC
DL paid the least per gallon for fuel, 1 cent lower than AA and 2 cents lower than WN which lost money on fuel hedges
DL had the highest load factor – slightly ahead of AS; WN’s the lowest – almost 8 points lower than DL; UA’s LF fell the most
AA most salary expense and growing the most, DL the lowest; UA growing the least – indicative that AA and DL (and WN) have current labor contracts while UA has had amendable contracts and the list will grow to all 6 non-pilot groups by the summer.
The bottom line is that the industry still has overcapacity in the domestic marketplace, DL and UA are the only two that are getting top level revenue.
Costs are still high and reflect the post-covid labor cost increases that were implemented by DL and raised by nearly every other carrier – except UA.
AA is trying desperately to increase revenue but likely will continue to be a financial underperformer as they have been for years.
AS is yet again in a costly merger integration in the midst of weakening domestic demand.
DL is clearly taking the long game in terms of squeezing competitors’ ability to get revenue high enough to cover costs,
UA has pretty well closed the revenue gap it has had with DL but cannot post the same level of margins it is posting now when it matches industry labor costs
WN is simply a high cost airline w/ inadequate revenue generation.
both AS and WN are in the midst of major strategic changes in the midst of weakened domestic demand.
The big 3 continue to see strong international and premium demand, something AS and WN are not accessing to anywhere near the same degree.
Great insight. Thanks Tim.
Tim, After crying for paragraphs about me following you from site to site, you go straight to Cranky and only reply to me. No post of your own yet. Just a reply to me.
There’s never any irony lost with you.
so why are you discussing activity on another site when you specifically note
“I’m not interested in your usual back/forth rants and Cranky has asked to limit that.”
yes, he has and Matthew is right that no one wants to read or hear personal back and forth.
If Cranky doesn’t want to hear it and Gary doesn’t want to hear it and has told you so, why do you think it is ok here?
Matthew got right exactly what I have asked on other sites and have said here.
Just post what you want to post on the topics being discussed, let other do the same; if you disagree w/ the facts that someone presents, offer your facts; if you disagree w/ someone’s opinions which are not backed up by facts, then present your opinion and still just walk away.
It really is not a hard concept.
The internet is not one continuous website.
Troll elsewhere
Yes. The internet is a big place full of backstories
feel free to tell Matthew that he should share his revenue w/ any number of other websites.
Participate on the websites of your choice and leave what happens on other sites to the operators of those other sites.
Again, not a difficult concept.
Discussing the topic at hand is not trolling.
Matthew justifiably gave positive feedback to each of our topic-related posts on THIS site and this article. Why can’t you leave it at that?
Enjoy your day.
Hypocrisy isn’t a cute look on you.
with just a couple hours left in the trading day, Wall Street likes what AA said and airlines in general.
AAL stock is leading US airline stocks up at a level higher than market gains as a whole.
While American is not a strong financial performer, they communicated their expectations to investors and delivered on investor expectations.
ALK stock is the laggard in industry stock performance, down 9% with 2.5 hours left to go in the trading day. Wall Street does not like the softened outlook that ALK is now giving.
AAL’s guidance for the 2nd quarter results in profits around $500 million, less than half of what DAL and UAL are guiding to in what is now usually the best quarter for US airlines.
No airline is providing detailed guidance for the 3rd quarter at this point; if there are negative impacts from inbound foreign tourism, they will be apparent in the 3rd quarter. AA, DL and UA are comfortable with their international bookings for the 2nd quarter