American Airlines’ first quarter was marked by stable revenue performance and a non-GAAP loss that came in narrower than analysts expected, which contributed to a positive market reaction. Management pointed to continued strength in international travel demand and premium cabin sales as key drivers, offsetting a notably softer domestic market. CEO Robert Isom specifically cited “strong demand for international travel from the US” and emphasized that “premium revenue increased 3% year over year,” even as main cabin bookings proved more sensitive to economic pressures. The company also highlighted progress in recapturing business travel share and ongoing recovery in indirect sales channels, which continued to support revenue.
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American Airlines (AAL) Q1 CY2025 Highlights:
- Revenue: $12.55 billion vs analyst estimates of $12.53 billion (flat year on year, in line)
- Adjusted EPS: -$0.59 vs analyst estimates of -$0.67 (12.1% beat)
- Adjusted EPS guidance for Q2 CY2025 is $0.75 at the midpoint, below analyst estimates of $1.01
- Operating Margin: -2.2%, down from 0.1% in the same quarter last year
- Revenue Passenger Miles: 56.36 billion, down 1.12 billion year on year
- Market Capitalization: $7 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions American Airlines’s Q1 Earnings Call
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David Scott Vernon (Bernstein): Asked about capacity plans given weak demand. CEO Robert Isom replied that the company has set capacity for summer but will remain “nimble” with a “negative bias to all capacity as we go forward.”
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Savi Syth (Raymond James): Inquired about international versus domestic performance in guidance. Vice Chair Steve Johnson highlighted ongoing strength in international markets, especially Europe and the Pacific, but acknowledged persistent weakness in U.S. main cabin demand.
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Scott Group (Wolfe Research): Probed the extent of softness in the domestic main cabin and its impact on overall results. Johnson estimated “mid to high single digit weakness” in this segment and said it is overwhelming the gains from corporate share recovery.
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Jamie Baker (JPMorgan Securities): Asked about liquidity and asset flexibility if cash flow deteriorates. CFO Devon May emphasized the company’s strong liquidity position and significant unencumbered assets, noting flexibility to respond to downside scenarios.
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Mary Schlangenstein (Bloomberg News): Questioned exposure to tariffs on Airbus deliveries. CEO Isom stated the company would not intend to absorb additional aircraft costs and is working with policymakers to protect the U.S. aviation sector.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be watching (1) whether international and premium segment strength can continue to offset domestic softness, (2) management’s willingness and ability to adjust capacity in response to demand trends, and (3) the progress of cost savings initiatives amid higher labor costs. Execution on loyalty program growth, customer experience enhancements, and indirect channel recovery will also be important indicators of American Airlines’ ability to navigate the current environment.
American Airlines currently trades at $10.62, up from $9.32 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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