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American Airlines shares tumble as outlook falls short

An American Airlines Boeing 787-8 Dreamliner departs from Los Angeles International Airport en route to Tokyo on September 19, 2024 in Los Angeles, California. 
Kevin Carter | Getty Images
  • American Airlines has spent much of the past year working to reverse the damage from a business-travel sales strategy.
  • American forecast a wider-than-expected loss for the first quarter and an increase in costs.
  • The airline signed a new credit card deal with Citi late last year.

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American Airlines' first-quarter earnings outlook on Thursday fell short of analysts' estimates, sending its shares down nearly 9%.

The carrier forecast an adjusted loss per share of 20 cents to 40 cents for the first three months of 2025 based on current demand trends and a fuel price forecast, a wider loss than the 4 cents analysts were expecting, according to LSEG.

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The airline said it expects unit costs, excluding fuel, to rise in the low-single-digit percentage points over the first quarter of 2024 driven by lower capacity, which it expects to fall as much as 2% over last year; a higher mix of smaller, regional jet flying; and new labor agreements it finalized last year.

The earnings outlook contrasts with sunnier forecasts from rivals United and Delta earlier this month, though American's full-year earnings forecast of between $1.70 and $2.70 is in line with analysts' estimates.

American spent much of the last year working to reverse the fallout of a business travel sales strategy that pushed for direct bookings instead of travel agencies. American has since abandoned that failed strategy and last year said that previous approach would cost it $1.5 billion in 2024 revenue.

However, it also sealed a new credit card deal with its partner Citi. Compensation from its existing deals with Citi and Barclays rose 17% from 2023 to $6.1 billion last year, American said.

"As we look ahead to this year, American remains well-positioned because of the strength of our network, loyalty and co-branded credit card programs, fleet and operational reliability, and the tremendous work of our team," CEO Robert Isom said in a news release.

American said it expects revenue to be up between 3% and 5% in the first quarter versus the same period in 2024, and up as much as 7.5% for the full year compared with 2024.

Here is how American performed in the fourth quarter compared with Wall Street estimates compiled by LSEG:

  • Earnings per share: 86 cents adjusted vs. 64 cents
  • Revenue: $13.66 billion vs. $13.40 billion expected

American's fourth-quarter profit rose to $590 million from $19 million on sales that were up 4.6% on the year to $13.66 billion. Both domestic and international revenue rose, led by a surge in trans-Pacific revenue.

Adjusted for one-time items, American earned 86 cents per share, more than analysts expected. Special items last year included the impact of labor contracts, a write-down of some regional aircraft and adjustments related to some of its senior debt.

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