American Airlines Shares Drop on Weak Earnings Outlook

American Airlines’ Q1 2025 earnings forecast disappointed analysts, triggering a 7% drop in its stock during early trading. The carrier predicts an adjusted loss of $0.20 to $0.40 per share for the quarter, significantly wider than analysts’ $0.04 loss estimate, based on fuel prices and demand trends.

Unit costs, excluding fuel, are expected to rise due to reduced capacity—projected to decline up to 2%—and an increased use of regional jets. New labor agreements finalized last year are also contributing to higher costs.

American’s full-year earnings guidance of $1.70 to $2.70 per share aligns with analyst expectations, despite a less optimistic outlook compared to United Airlines and Delta Air Lines. Revenue is projected to grow by 3% to 5% in Q1 2025 and up to 7.5% for the full year.

The airline has worked to recover from its business travel strategy shift, which favored direct bookings over travel agencies, costing $1.5 billion in 2024 revenue. However, American has since reversed that approach and strengthened its credit card partnerships. Compensation from its Citi and Barclays deals rose 17% in 2024, totaling $6.1 billion.

CEO Robert Isom highlighted the airline’s robust network, loyalty programs, and operational reliability as key strengths. In Q4 2024, American reported adjusted earnings per share of $0.86, surpassing Wall Street estimates, and revenue of $13.66 billion, up 4.6% year-over-year.

Despite challenges, American sees potential for growth driven by international demand and trans-Pacific revenue gains.