American Airlines 2Q 2025 earnings

Introduction to American Airlines’ Q3 Forecast

American Airlines shares slumped 9% Thursday after the carrier’s third-quarter profit forecast fell short of Wall Street’s expectations and it reinstated its 2025 financial forecast well below its outlook at the start of the year.

Causes of the Slump

CEO Robert Isom told CNBC’s "Squawk Box" that the results are driven by consumer weakness, flat corporate travel demand that continued into the start of the summer and operational problems from a series of storms. "July’s been a tough month … because of the domestic consumer weakness," Isom said. Demand appears better in the coming months, he said, and American is scaling back its capacity growth.

Industry Comparison

Delta Air Lines and United Airlines earlier this month said travel demand has stabilized, though both carriers issued lower 2025 forecasts than at the beginning of the year. American on Thursday forecast a 2025 adjusted per-share loss of as much as 20 cents or earnings of as much as 80 cents, down from adjusted earnings estimates of between $1.70 and $2.70 it made in January.

Q3 Forecast

For the third quarter, American said it expects an adjusted per-share loss of 10 cents to 60 cents, while analysts polled estimated a 7-cent loss. The airline said in an earnings release that it only expects the low end of its forecast if "there were to be macro weaknesses that are not seen today" and the high end if the domestic travel market continues to improve.

Performance in the Second Quarter

Domestic travel demand has been a weak spot this year, though many U.S. travelers have continued to fly abroad in droves to popular destinations like Japan and Italy. American’s passenger revenue per available domestic seat mile, a pricing power gauge, was down more than 6% in the second quarter, while it was up nearly 3% for international. Here is how American performed in the second quarter compared with Wall Street estimates:

• Earnings per share: 95 cents adjusted vs. 78 cents
• Revenue: $14.39 billion vs. $14.3 billion expected

Financial Results

In the three months ended June 30, American’s revenue rose 0.4% to $14.39 billion, ahead of expectations, while net income dropped 16.5% to $599 million, or 91 cents a share. Adjusting for one-time items, American posted earnings of $628 million, or 95 cents a share, well ahead of analysts’ expectations.

Conclusion

American Airlines’ Q3 forecast and reinstated 2025 financial forecast indicate challenges ahead for the airline industry, particularly with domestic consumer weakness and operational issues. Despite these challenges, the airline is optimistic about demand in the coming months and is adjusting its capacity growth accordingly.

FAQs

• Q: Why did American Airlines’ shares slump?
  A: American Airlines’ shares slumped due to the carrier’s third-quarter profit forecast falling short of Wall Street’s expectations and reinstating its 2025 financial forecast well below its initial outlook.
• Q: What are the main factors affecting American Airlines’ performance?
  A: The main factors include consumer weakness, flat corporate travel demand, and operational problems from storms.
• Q: How does American Airlines’ forecast compare to other airlines?
  A: Delta Air Lines and United Airlines also issued lower 2025 forecasts than initially expected, indicating industry-wide challenges.
• Q: What are American Airlines’ expectations for the third quarter?
  A: American expects an adjusted per-share loss of 10 cents to 60 cents for the third quarter.
• Q: How did American Airlines perform in the second quarter?
  A: American’s revenue rose 0.4% to $14.39 billion, and net income dropped 16.5% to $599 million, with adjusted earnings of 95 cents a share.