American Airlines Beats on Q2 Earnings & Revenues, Expects Loss in Q3

Core Insights - American Airlines (AAL) reported second-quarter 2025 earnings of 95 cents per share, exceeding the Zacks Consensus Estimate of 79 cents, but down from $1.09 in the same quarter last year [1][10] - Operating revenues reached $14.4 billion, surpassing the Zacks Consensus Estimate of $14.29 billion and the previous year's figures [1][10] Revenue Breakdown - Passenger revenues, which constitute 91.1% of total revenues, decreased by 0.6% year-over-year to $13.1 billion, impacted by a slowdown in domestic leisure demand [2] - Cargo revenues increased by 8.2% to $211 million, exceeding the estimate of $204.4 million [2] - Other revenues rose by 13% to $1.06 billion, surpassing expectations of $973 million [2] Key Metrics - Total revenue per available seat mile decreased to 18.54 cents from 19.05 cents year-over-year [3] - Passenger revenue per available seat mile fell by 3.6% to 16.9 cents, slightly above the expectation of 16.89 cents [3] - Consolidated yield decreased by 1.5% to 19.96 cents, ahead of the estimate of 19.76 cents [3] Capacity and Traffic - Consolidated traffic increased by 0.9% year-over-year, while capacity expanded by 3.2% [4] - Consolidated load factor decreased by 1.9 points to 84.7%, lower than the expected 85.5% [4] Operating Costs - Total operating costs rose by 2.4% year-over-year to $13.26 billion, with salaries, wages, and benefits increasing by 10.9% to $4.4 billion due to a labor deal with pilots [5] - Aircraft fuel and tax expenses decreased by 13% to $2.67 billion, with the average fuel price per gallon dropping to $2.29 from $2.70 a year ago [5] Future Outlook - Management anticipates a 2-3% increase in capacity for Q3 2025 compared to Q3 2024, with total revenues expected to either decline by 2% or increase by up to 1% year-over-year [7] - AAL projects a loss per share of 10-60 cents for Q3, influenced by sluggish domestic travel demand [8] - For the full year 2025, AAL expects a loss of 20 cents or earnings of up to 80 cents per share, contingent on domestic demand [9]