American Airlines Faces Steep Profit Decline Amidst Transformation Efforts
American Airlines reported a significant decline in its 2025 net income, reaching $111 million, an 87% decrease from the previous year. This performance trailed competitors Delta Air Lines and United Airlines, and its fourth-quarter adjusted earnings per share and revenue fell below Wall Street estimates.
American Airlines reported a significant decline in its 2025 net income, reaching $111 million, an 87% decrease from the previous year, trailing competitors Delta Air Lines and United Airlines.
Looking ahead, American Airlines projects financial improvements in 2026, with anticipated increases in full-year adjusted earnings per share and first-quarter revenue, despite an expected adjusted loss in the first quarter. The company is pursuing a transformation strategy focused on enhancing customer experience and expanding premium product offerings, aiming for these services to account for half of its revenue by the end of the decade. These efforts come amidst operational challenges and union scrutiny regarding the airline's performance and leadership.
2025 Financial Performance Review
American Airlines concluded 2025 with a net income of $111 million, marking an 87% reduction from $846 million reported in 2024. During the same period, Delta Air Lines reported a net income of $5 billion, and United Airlines reported $3.4 billion, highlighting American's significant underperformance relative to its rivals.
Key financial metrics for the full year 2025 included:
- Net Income: $111 million (down 87% from $846 million in 2024)
- Total Operating Revenue: $54.6 billion (up 0.8% from $54.2 billion in 2024)
- Total Operating Expenses: $53.2 billion (up 3% from $51.6 billion in 2024)
- Passenger Load Factor: 83.6% (down 1.3% from 84.9% in 2024)
- Total Revenue Per Available Seat Mile: 18.25 cents (down 1.4% from 18.51 cents in 2024)
For the fourth quarter of 2025, American Airlines reported adjusted earnings per share of 16 cents, which was below the Wall Street estimate of 34 cents. Revenue for the quarter reached $14 billion, slightly under the $14.03 billion projection, representing a 2.5% increase from the prior year. The company recorded a net income of $99 million, or 15 cents per share, for the fourth quarter.
2026 Outlook and Projections
American Airlines projects adjusted earnings per diluted share of $1.70-$2.70 for the full year 2026. The airline anticipates a nearly $2 improvement in adjusted earnings per share at the midpoint compared to the previous year.
For the first quarter of 2026, compared to the first quarter of 2025, the airline projects:
- Available Seat Miles (ASM): Increase of 3-5%.
- Total Revenue: Increase of 7-10%.
- Cost Per Available Seat Mile (CASM): Increase of 3-5%.
- Adjusted Loss: $0.10-$0.50 per share.
CEO Robert Isom stated that American Airlines is positioned for substantial growth in 2026 and beyond, attributing this outlook to investments in customer experience, network, fleet, partnerships, and its loyalty program.
Operational Challenges and Impacts
Operational challenges significantly affected the airline's recent performance and projections. A government shutdown negatively impacted fourth-quarter 2025 revenue by approximately $325 million.
Recent winter storms, which caused extensive flight cancellations, are projected to reduce the company's first-quarter 2026 capacity guidance by 1.5 percentage points and result in an estimated negative revenue impact of $150 million to $200 million. The airline encountered difficulties recovering from these storms, leading to stranded crews, some without accommodation near airports. CEO Robert Isom described a late January storm as "probably the most impactful" during his tenure.
Strategic Focus on Premium Offerings
American Airlines is implementing a transformation strategy led by CEO Robert Isom, with a key focus on expanding premium offerings to attract high-spending customers. The goal is for premium products to account for half of the airline's revenue by the end of the decade.
The airline's strategy includes:
- Improving customer service and enhancing network and revenue management.
- Revamping wide-body planes with larger business-class cabins.
- Adding three-class cabins to new Airbus narrow-body aircraft.
- Expanding airport lounges.
- Refreshing food and beverage services, including premium options for long-haul flights.
Premium product offerings performed positively in the fourth quarter of 2025, with year-over-year premium unit revenue surpassing main cabin performance. American Airlines aims to narrow the profitability gap with rivals such as Delta Air Lines and United Airlines through this strategy. The airline also asserts it operates "the strongest network in the U.S.," with eight hubs located in the ten largest metropolitan areas.
Internal and External Reactions
The airline's performance has drawn scrutiny from pilot and flight attendant unions. The Allied Pilots Association communicated with the airline's board, requesting a meeting to discuss financial and operational issues and stating the airline is on an "underperforming path" without a clear strategy. Unions have expressed dissatisfaction, noting that American Airlines' performance has lagged behind competitors, resulting in lower profit-sharing for over 130,000 employees. CEO Robert Isom acknowledged the "meager profit-sharing" resulting from the modest profit.
In the financial markets, American Airlines' stock has remained flat in 2026 year-to-date. In comparison, Southwest Airlines' stock has increased by over 30% in 2026, while United and Delta have seen increases of over 3% and 8% respectively during the same period.
Historically, in 2017, former American Airlines CEO Doug Parker projected the airline would achieve approximately $3 billion in profits even in challenging years. United CEO Scott Kirby has also projected that American Airlines could incur a $1 billion loss in Chicago over the year due to market competition.