In this article, American Airlines’ first-quarter earnings outlook on Thursday fell short of analysts’ estimates, causing its shares to drop by nearly 9%. The carrier predicted an adjusted loss per share of 20 cents to 40 cents for the first three months of 2025, based on current demand trends and a fuel price forecast. This forecasted loss is wider than the 4 cents that analysts had anticipated, according to LSEG.
The airline stated that it anticipates unit costs, excluding fuel, to increase by low-single-digit percentage points over the first quarter of 2024. This increase is driven by lower capacity, expected to decrease by as much as 2% compared to the previous year, a higher mix of smaller regional jet flying, and new labor agreements that were finalized last year.
American’s earnings outlook contrasts with more positive forecasts from competitors United and Delta earlier this month. However, American’s full-year earnings forecast of between $1.70 and $2.70 aligns with analysts’ estimates. American has been working to recover from the impact of a business travel sales strategy that favored direct bookings over travel agencies. The airline abandoned this strategy last year, acknowledging that it would cost them $1.5 billion in revenue for 2024.
Despite this setback, American secured a new credit card deal with its partner Citi. Compensation from its existing deals with Citi and Barclays increased by 17% from 2023 to $6.1 billion last year. CEO Robert Isom expressed confidence in the company’s position, citing the strength of their network, loyalty and co-branded credit card programs, fleet and operational reliability, and the efforts of their team.
American anticipates revenue to increase by 3% to 5% in the first quarter compared to the same period in 2024, and by as much as 7.5% for the full year compared to 2024. In the fourth quarter, American’s profit rose to $590 million from $19 million, with sales increasing by 4.6% year-on-year to $13.66 billion. Both domestic and international revenue saw growth, driven by a surge in trans-Pacific revenue. Adjusted for one-time items, American earned 86 cents per share, surpassing analysts’ expectations. Special items in the previous year included the impact of labor contracts, a write-down of some regional aircraft, and adjustments related to senior debt.
