American Airlines has reinstated its annual outlook despite ongoing economic uncertainty affecting domestic travel demand across the industry. The airline, based in Fort Worth, Texas, provided a broad forecast range following its earnings report, citing economic instability as a factor in reduced consumer spending. The company had previously paused financial guidance in April.
The airline projects an adjusted loss per share ranging from 20 cents to a profit of 80 cents for 2025. The midpoint of this projection is 30 cents per share, which is below the average analyst estimate of 61 cents per share, according to LSEG data. American Airlines, which earns more than two-thirds of its passenger revenue from the US domestic market, stated that if domestic travel demand strengthens, it expects to reach the upper end of its forecast. However, if the economy weakens, it anticipates being at the lower end.
“The domestic network has been under pressure due to economic uncertainty and the hesitation of domestic passengers to travel,” CEO Robert Isom told analysts during an earnings call. The airline noted that weak domestic travel demand impacted bookings in July, but Isom expressed optimism that performance would improve in August and September.
“We expect that July will be the low point,” he added.
The company anticipates that its domestic unit revenue, or revenue per seat, will remain lower year-over-year in the third quarter. Non-fuel operating costs are expected to rise by up to 4.5 percent during the same period. For the third quarter, American Airlines forecasts an adjusted loss per share between 10 cents and 60 cents, compared to analyst estimates of a 7-cent loss, according to LSEG data.
This outlook contrasts with the more optimistic forecasts from competitors Delta and United Airlines. Alaska Air Group has also reported improvements in passenger traffic and pricing power.
Most US airlines withdrew their financial forecasts in April as President Donald Trump’s trade war created the biggest uncertainty for the industry since the pandemic. While some have resumed providing guidance, there remains uncertainty about how the economy will perform in the evolving tariff landscape.
Domestic travel demand has remained weak, with budget travelers cautiously approaching their plans, negatively impacting airlines that primarily serve the US domestic market and price-sensitive customers. Even the typically busy summer travel season has underperformed this year, with unsold economy seats forcing carriers to reduce fares.
This has affected the second-quarter earnings of Southwest Airlines, the largest US domestic airline. At American Airlines, the domestic market was the weakest in the second quarter, with unit revenue declining 6.4 percent compared to the previous year. However, international unit revenue increased, particularly in the transatlantic market, which saw a 5 percent annual rise.
On Wall Street, American Airlines’ stock has declined, falling 7.2 percent from market open as of 11:30 am in New York (15:30 GMT).
— News Original —
American Airlines restores forecast amid economic uncertainty
American Airlines has restored its full-year outlook as broader economic uncertainty continues to weigh on domestic consumer demand across the travel industry.
The Fort Worth, Texas-based carrier on Thursday offered a wide range for its full-year forecast on the heels of its earnings report, saying the broader economic uncertainty is hobbling consumer spending. The airline had suspended financial guidance in April.
The airline says it expects an adjusted loss per share of 20 cents a share to a profit of 80 cents a share in 2025. The midpoint of the forecast is 30 cents per share, compared with analysts’ average estimate of 61 cents a share, according to LSEG data.
American, which generates more than two-thirds of its passenger revenue from the US domestic market, said that if domestic travel demand continues to strengthen, it expects to hit the top end of its outlook. But if the economy weakens, it only expects to be at the bottom end of the forecast.
“The domestic network has been under stress because of the uncertainty in the economy and the reluctance of domestic passengers to get in the game,” CEO Robert Isom told analysts on an earnings call.
American said tepid domestic travel demand affected its bookings in July. Isom, however, said the performance is expected to improve sequentially in August and September.
“We expect that July will be the low point,” he said.
The company expects its domestic unit revenue, or revenue generated from each seat, to remain lower year-over-year in the third quarter. Its non-fuel operating costs are estimated to be up as much as 4.5 percent in the September quarter.
American expects an adjusted loss per share in the range of 10 cents to 60 cents in the third quarter, compared with analysts’ estimates of a loss of 7 cents, according to data compiled by LSEG.
The company’s outlook contrasts with upbeat forecasts of rival Delta and United Airlines. Alaska Air Group has also reported improvements in passenger traffic and pricing power.
Most US airlines withdrew their financial forecasts in April as President Donald Trump’s trade war created the biggest uncertainty for the industry since the COVID-19 pandemic. While some have reinstated their expectations, there is lingering uncertainty as to how the economy will fare in an ever-evolving tariff landscape.
Demand in the domestic travel market has remained subdued, with budget travellers approaching their plans with caution, hurting carriers that primarily service the US domestic market and price-sensitive customers.
Even summer, typically the peak money-making season for airlines, is falling short this year, with unsold standard economy seats forcing carriers to cut fares.
It dented the second-quarter earnings of Southwest Airlines, the largest US domestic airline.
At American, the domestic market was the weakest in the second quarter, with its unit revenue declining 6.4 percent from a year ago. The company’s unit revenue in international markets was up, led by a 5 percent annual jump in the transatlantic market.
On Wall Street, the stock is taking a hit and was down 7.2 percent from the market open as of 11:30am in New York (15:30 GMT).