How Did American Airlines Shrink Its Loss Despite Rising Costs?

Core Viewpoint - American Airlines Group, Inc. reported a narrower third-quarter loss that exceeded Wall Street estimates, indicating a stronger performance than anticipated [1][2]. Financial Performance - The company reported a third-quarter adjusted net loss per share of 17 cents, which was better than Goldman Sachs' estimate of a 35-cent loss and within the company's guidance range of a 10-cent to 60-cent loss [2]. - Revenue per Available Seat Mile (RASM) decreased by 1.9% year over year, which was an improvement compared to Goldman Sachs' estimate of a 2.4% decline [3]. - For the fourth quarter, American Airlines issued EPS guidance of 45 cents to 75 cents, surpassing both consensus and Goldman Sachs' estimate of 33 cents [4]. - The company raised its full-year 2025 EPS guidance to a range of 65 cents to 95 cents, up from a previous range of a 20-cent loss to an 80-cent profit, and ahead of the consensus estimate of 42 cents [5]. Revenue and Cost Outlook - American Airlines expects revenue to rise by 3%-5% with capacity also increasing by 3%-5%, which Goldman estimates implies flat unit revenue at the midpoint [4]. - The company guided unit cost (CASM ex-fuel) to increase by 2.5%-4.5% year over year, aligning with the consensus estimate of a 3.3% increase [4]. - Passenger Revenue per Available Seat Mile (PRASM) fell by 2.7%, with domestic routes performing better than international routes, which saw a decline of 5.0% [5]. Analyst Insights - Goldman Sachs maintained a Sell rating on American Airlines with a 12-month price forecast of $10, indicating a 17.3% downside from the previous day's close of $12.09 [1][6]. - Investors are expected to seek geographical and cabin-level details behind the revenue guidance during the company's conference call [6]. Market Reaction - Following the earnings report, AAL shares were trading higher by 6.45% to $12.87 [7].