Core Viewpoint - American Airlines reported a narrower-than-expected loss per share for Q1 2025, but the loss widened year-over-year, indicating ongoing challenges in the airline industry due to tariff-induced uncertainties [1][7]. Financial Performance - AAL's operating revenues decreased by 0.2% year-over-year to $12.55 billion, with passenger revenues, which account for 90.8% of total revenues, declining by 0.6% to $11.4 billion [4]. - Despite the narrower loss, annual earnings per share estimates for 2025 and 2026 have decreased due to the uncertainty surrounding the airline's outlook [7][8]. Guidance and Outlook - AAL expects earnings per share to be between $0.50 and $1 for Q2 2025 but has withdrawn its full-year guidance for 2025 due to the uncertain economic environment [2][3]. - Other airlines, including Delta Air Lines and Southwest Airlines, have also withdrawn their full-year guidance, reflecting a broader trend in the industry amid economic uncertainty [3]. Market Performance - AAL's stock has declined in double digits year-to-date, primarily due to the slowdown in domestic air travel demand caused by tariffs [9]. - The company's share price has remained relatively stable since the earnings release, but overall performance has been poor compared to industry peers [9]. Valuation - AAL is currently trading at a discount compared to industry levels based on the forward 12-month price-to-sales ratio, with a Value Score of A, indicating potential attractiveness from a valuation perspective [12]. - Low fuel costs, which decreased by 13.2% year-over-year in Q1 2025, could positively impact the company's bottom line [15]. Challenges - The airline faces near-term headwinds from tariff-induced demand slowdowns, high labor costs (with salaries and wages up 9.2% year-over-year), and declining earnings estimates [16][17]. - Given the current uncertainties, it is advised to avoid investing in AAL stock until more clarity emerges [17].

Group 1: Federal Reserve and Interest Rate Expectations - Federal Reserve officials' comments have raised expectations for earlier interest rate cuts, with Governor Waller indicating support for cuts if high tariffs harm the job market [1] - Cleveland Fed President Mester suggested that rate action could occur as soon as June if clearer economic direction is obtained [1] Group 2: Stock Market Reactions - U.S. stock markets surged, with the Dow Jones up 1.23%, Nasdaq up 2.74%, and S&P 500 up 2.03%, driven by the anticipation of interest rate cuts [2] - Major tech stocks saw significant gains, with Tesla, Amazon, and Microsoft rising over 3%, while semiconductor stocks like Micron and Broadcom increased by over 6% [2] Group 3: Consumer Sentiment and Economic Concerns - A recent poll indicated that 47% of Americans believe tariffs will lead to significant price increases, with 53% expressing extreme concern over potential economic recession due to tariff policies [3][4] - Nearly 90% of respondents are worried about rising grocery prices in the coming months, reflecting deteriorating consumer sentiment [4] Group 4: Corporate Earnings and Forecast Adjustments - Procter & Gamble has lowered its revenue and profit expectations for fiscal year 2025, citing deteriorating consumer spending in the U.S. [4] - Hasbro warned of potential $300 million losses and up to $180 million in profit reductions if current tariff policies persist [4] - PepsiCo and American Airlines have also adjusted their annual profit forecasts downward due to increased production costs and economic uncertainty stemming from tariff policies [5] Group 5: Market Predictions and Analyst Adjustments - Deutsche Bank's strategy team has revised its year-end S&P 500 target down to 6,150 points, predicting a 5% decline in earnings, contrary to the general expectation of an 8% increase [5]

Core Insights - American Airlines and other major U.S. carriers have withdrawn full-year 2025 guidance due to ongoing macroeconomic challenges, including weakened domestic demand and broader economic headwinds [1][4][5] Group 1: Economic Environment - The airline industry is facing a challenging economic environment that has significantly impacted travel demand and financial results [6] - The positive momentum seen at the end of 2024 faded quickly in early 2025, leading to a downward revision of outlooks by several airlines [6] Group 2: Demand Dynamics - International travel, particularly on Atlantic and Pacific routes, remains strong with Atlantic passenger revenue per available seat mile (RASM) rising 10.5% year-over-year and Pacific RASM increasing 4.9% [8] - Domestic main cabin demand is weak, with domestic passenger RASM down 0.7% year-over-year, reflecting lower consumer discretionary spending [9] Group 3: Business and Loyalty Revenue - Business travel, especially managed corporate accounts, showed resilience with managed business revenue up 8% in Q1 [10] - Loyalty revenues grew 5% year-over-year, with co-branded credit card spend up 8% [10] Group 4: Customer Experience Initiatives - The company is committed to enhancing customer experience as a differentiator, with initiatives including a centralized customer experience team and new premium product introductions [11] - A major announcement was the rollout of complimentary high-speed satellite Wi-Fi for Advantage members starting in January [12] Group 5: Future Outlook - The company is preparing for continued uncertainty while positioning itself for a potential return of robust travel demand with a flexible cost structure and strong liquidity [13]

Core Insights - American Airlines (AAL) reported a narrower loss of 59 cents per share for Q1 2025, compared to the Zacks Consensus Estimate of a loss of 69 cents, but wider than a loss of 34 cents per share in the same quarter last year [1] - Operating revenues reached $12.55 billion, slightly exceeding the Zacks Consensus Estimate of $12.52 billion, but reflecting a 0.2% year-over-year decline [1] Revenue Breakdown - Passenger revenues, which constitute 90.8% of total revenues, decreased by 0.6% year-over-year to $11.4 billion, falling short of the estimate of $11.5 billion due to a slowdown in domestic leisure demand [2] - Cargo revenues increased by 1.1% to $189 million, surpassing the estimate of $171.7 million [2] - Other revenues rose by 5% to $971 million, exceeding expectations of $891.6 million [2] Key Metrics - Total revenue per available seat mile increased to 17.95 cents from 17.83 cents year-over-year [3] - Passenger revenue per available seat mile increased by 0.3% to 16.3 cents, but was below the expected 16.5 cents [3] - Consolidated yield increased by 1.4% to 20.21 cents, ahead of the estimate of 19.69 cents [3] Capacity and Traffic - Consolidated traffic decreased by 1.9% year-over-year, while capacity contracted by 0.9% [4] - The consolidated load factor decreased by 0.9 points to 80.6%, which was lower than the expected 83.8% [4] Operating Costs - Total operating costs increased by 2% year-over-year to $12.8 billion, with salaries, wages, and benefits rising by 9.2% to $4.2 billion due to a labor deal with pilots [5] - Aircraft fuel and tax expenses decreased by 13.2% to $2.6 billion, with the average fuel price per gallon dropping to $2.48 from $2.86 a year ago [5] Future Outlook - AAL withdrew its 2025 financial guidance due to tariff-induced uncertainty, with plans to provide an update later in the year [7] - For Q2 2025, AAL expects total revenues to decline by 2% to increase by 1% compared to Q2 2024, with system capacity estimated to rise by 2-4% [9] - The company anticipates an adjusted operating margin of 6-8.5% for Q2 2025, with earnings per share projected between 50 cents and $1 [9]

Labor Market - Initial Jobless Claims for last week were reported at 222K, slightly above estimates but indicating a healthy labor market, with claims remaining between 215K and 225K since March [1] - Continuing Claims decreased to 1.841 million, down from a revised 1.878 million, showing positive trends in long-term jobless claims [2] Durable Goods Orders - Durable Goods Orders for March increased by 9.2%, significantly surpassing the expected 1.6%, marking the best performance since July of the previous year [3] - Excluding transportation, the durable goods orders showed no growth at 0.0%, below the anticipated 0.3% [3] - Non-defense orders excluding aircraft met expectations with a growth of 0.1% [3] Q1 Earnings Reports - PepsiCo (PEP) reported earnings of $1.48 per share, missing consensus by 2 cents, while revenues of $17.92 billion exceeded estimates by 0.94% [4] - Procter & Gamble (PG) met earnings expectations with $1.54 per share but missed revenue expectations at $19.78 billion, down from $20.2 billion a year ago [5] - American Airlines (AAL) reported a loss of $0.59 per share, better than the expected loss of $0.69, but revenues were slightly lower at $12.52 billion [6] - Bristol Myers-Squibb (BMY) exceeded earnings expectations with $1.80 per share and revenues of $11.2 billion, surpassing estimates by 4.3% [7] - Comcast (CMCSA) reported earnings of $1.09 per share, beating expectations, and revenues of $29.89 billion, although still below the previous year's $30.06 billion [8] Market Expectations - Upcoming Existing Home Sales data is anticipated, following a positive surprise in New Home Sales, with expectations set at 4.13 million units, down from 4.26 million in February [9] - A significant number of Q1 earnings reports are expected after market close, including major companies like Alphabet (GOOGL), Intel (INTC), and Freeport-McMoRan (FCX) [10]

e American Airlines Group Inc. FIRST - 2025 HTRANGAL April 24, 2025 2 First-quarter results 1. I he company estimates the impact of the American Eaqle Flight 5342 accident reduced first-quarter revenue by ~S200 million 2. See GAAP to non-GAAP and free cash flow reconciliations at the end of this presentation. First-quarter revenue of $12.6 billion1. ● First-quarter GAAP net loss per diluted share ● of ($0.72). Excluding net special items², first-quarter net ● loss per diluted share of ($0.59). Generated $2. ...

Financial Data and Key Metrics Changes - American Airlines Group reported a first quarter GAAP net loss of $473 million, with an adjusted loss of $386 million, or $0.59 per diluted share [30] - First quarter revenue was $12.6 billion, down 0.2% year over year, while unit revenue increased by 0.7% year over year [31] - First quarter unit cost excluding fuel and net special items was up 7.8% year over year [31] - The company ended the first quarter with $10.8 billion in total available liquidity and produced free cash flow of $1.7 billion during the quarter [34] Business Line Data and Key Metrics Changes - Domestic passenger RASM decreased by 0.7% year over year, while premium revenue increased by 3% year over year [16][31] - Long-haul international passenger RASM led the way, with Atlantic passenger RASM up 10.5% and Pacific passenger RASM up 4.9% [14][15] - Managed business revenue was up 8% year over year, with specific strength noted in the financial and professional services sectors [19] Market Data and Key Metrics Changes - The company experienced strong demand for international travel from the US, particularly in the Atlantic and Pacific regions [15] - Short-haul Latin passenger RASM increased year over year for the first time in over a year, indicating a recovery in that market [15] - The company noted significant weakness in demand from indirect channels, particularly among price-sensitive customers [58] Company Strategy and Development Direction - The company is focused on enhancing its partnership with Citi, growing its Advantage loyalty program, and improving customer experience [13] - American Airlines Group aims to deliver sustainable free cash flow and strengthen its balance sheet while navigating the current economic environment [10][12] - The company is committed to transforming customer experience and has established a new customer experience organization to improve all aspects of the customer journey [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging economic environment impacting demand and has withdrawn its full-year outlook due to uncertainty [9] - Despite the challenges, management expects to deliver a profitable year and produce positive free cash flow if current demand trends continue [10] - The company remains cautious about capacity deployment and plans to adjust based on demand and competitive conditions [21] Other Important Information - The company completed its fleet renewal with low aircraft CapEx requirements for the remainder of the decade [11] - American Airlines Group has the youngest fleet among US network carriers and is committed to improving customer experience through various initiatives [23][24] - The company is on track to open its newest flagship lounge in Philadelphia in May, further enhancing its premium offerings [25] Q&A Session Summary Question: Capacity moderation in light of demand weakness - Management indicated that they have set their capacity plan for the summer with a growth expectation of 2% to 4% [47] - There is a negative bias towards future capacity adjustments based on demand trends [48] Question: Corporate share recovery and yield expectations - Corporate share recovery is on track, and yields are expected to meet management's expectations [51] Question: Performance across international entities - Strength is noted across international operations, particularly in Europe and South America, with solid performance expected through the summer [54] Question: Domestic demand trends - Domestic main cabin demand is weak, particularly among price-sensitive customers, but premium bookings remain strong [58] Question: Impact of the tragic accident on bookings - The impact of the accident was significant in the first quarter but is not expected to affect future performance [128] Question: Corporate travel expectations - Business travel remains strong, with no significant pullback observed at this time [151]

Financial Data and Key Metrics Changes - American Airlines Group reported a first quarter GAAP net loss of $473 million, with an adjusted loss of $0.59 per diluted share, excluding special items [30] - First quarter revenue was $12.6 billion, down 0.2% year over year, while unit revenue increased by 0.7% year over year [31] - First quarter unit cost, excluding fuel and net special items, rose by 7.8% year over year [31] - The company ended the first quarter with $10.8 billion in total available liquidity and produced free cash flow of $1.7 billion during the quarter [34] Business Line Data and Key Metrics Changes - Long-haul international passenger RASM increased, with Atlantic passenger RASM up 10.5% year over year and Pacific passenger RASM up 4.9% [15] - Domestic passenger RASM decreased by 0.7% year over year, reflecting a deceleration in US consumer discretionary spending on air travel [16] - Premium revenue increased by 3% year over year, with premium cabin RASM outperforming main cabin RASM by four points in domestic and eight points in international [16][17] - Managed business revenue was up 8% year over year, with specific strength noted in the financial and professional services sectors [19] Market Data and Key Metrics Changes - The company experienced strong demand for international travel from the US, particularly in the Atlantic and Pacific regions [15] - Short-haul Latin passenger RASM increased year over year for the first time in over a year, remaining one of the most profitable regions [15] - The company noted a significant weakness in demand from price-sensitive customers booking through indirect channels, impacting overall domestic performance [58] Company Strategy and Development Direction - The company is focused on enhancing partnerships, growing the Advantage loyalty program, and improving customer experience [13] - American Airlines Group aims to deliver sustainable free cash flow and strengthen its balance sheet while navigating the current economic environment [10][12] - The company is committed to transforming customer experience and has established a new customer experience organization to improve all aspects of the customer journey [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging economic environment impacting demand and has withdrawn its full-year outlook due to uncertainty [9] - Despite the challenges, management expects to deliver a profitable year and produce positive free cash flow if current demand trends continue [10] - The company plans to remain nimble in capacity deployment, adjusting based on demand and competitive conditions [21] Other Important Information - The company completed its fleet renewal with low aircraft CapEx requirements for the remainder of the decade [11] - American Airlines Group has the youngest fleet among US network carriers and is committed to improving customer experience through various initiatives [23][24] Q&A Session Summary Question: Capacity moderation in light of demand weakness - Management indicated that they have set their capacity plan for the summer with a growth expectation of 2% to 4% [47] - They expressed a negative bias towards future capacity adjustments based on demand trends [48] Question: Corporate share recovery and yield expectations - Management confirmed that corporate share recovery is on track and yields are as expected [51] Question: Performance across international entities - Management noted strength in international operations, particularly in Europe and South America, while domestic performance remains strong in premium bookings [54][55] Question: Domestic demand trends - Management acknowledged significant weakness in demand from price-sensitive customers, particularly in the domestic main cabin [58] Question: Corporate share recapture dynamics - Management explained that the weakness in main cabin demand is overshadowing the recovery in corporate share [98] Question: Liquidity and debt management - Management expressed confidence in their liquidity position and plans to reduce total debt to less than $35 billion by year-end 2027 [35][145] Question: Chicago hub strategy - Management emphasized the importance of the Chicago hub and their strategy to rebuild their position there, while also managing capacity in Charlotte [106]

Group 1 - U.S. spirit exports reached a record $2.4 billion in 2024, driven by tariff concerns and ongoing global trade disputes [1] - U.S. spirits exports to the EU surged by 39%, influenced by fears of a potential return of a 50% tariff on American whiskey imports in 2025 [2] - The lifting of retaliatory tariffs by the UK and EU has allowed U.S. spirits to recapture lost market share since 2018-2021 [2] Group 2 - Ongoing trade disputes unrelated to the spirits sector have created uncertainty, limiting sales growth for many U.S. distillers [2] - The threat of a 200% tariff on French Champagne and other EU spirits has diminished as U.S. and EU trade negotiations continue [3]

Labor Market - Initial Jobless Claims for last week were reported at 222K, slightly above estimates but indicating a healthy labor market, with claims remaining between 215K and 225K since March [1] - Continuing Claims decreased to 1.841 million, down from a revised 1.878 million the previous week, showing positive trends in long-term jobless claims [2] Durable Goods Orders - Durable Goods Orders for March increased by 9.2%, significantly exceeding the expected 1.6%, marking the best performance since July of the previous year [3] - Excluding transportation, the durable goods orders showed no growth at 0.0%, below the expected 0.3%, indicating potential concerns in enterprise spending [3] Q1 Earnings Reports - PepsiCo (PEP) reported earnings of $1.54 per share, meeting estimates, but revenues of $19.78 billion fell short by 2.75% compared to expectations [4] - American Airlines (AAL) reported a loss of -$0.59 per share, better than the expected -$0.69, but revenues were slightly lower at $12.52 billion [5] - Bristol Myers-Squibb (BMY) exceeded expectations with earnings of $1.80 per share and revenues of $11.2 billion, but the stock is trading lower [6] - Comcast (CMCSA) reported earnings of $1.09 per share, surpassing expectations, but revenues of $29.89 billion were below the previous year's $30.06 billion [7] Market Expectations - Upcoming reports include Existing Home Sales, with expectations set at 4.13 million units, down from 4.26 million in February [8] - The Q1 earnings season has shown mixed results, with companies facing challenges in forward guidance, including major firms like Alphabet and Intel expected to report [9]