American Airlines Group Inc. delivered a disappointing first-quarter earnings outlook on Thursday, forecasting a wider-than-expected loss and sending its shares tumbling more than 5%. The carrier projected an adjusted loss per share of 20 cents to 40 cents for the first three months of 2025, significantly higher than the 4-cent loss analysts had anticipated, according to LSEG data.
The airline attributed the bleak outlook to several factors, including lower capacity, a higher mix of regional-jet flying, and the financial impact of new labor agreements finalized last year. American expects its capacity to decline by as much as 2% compared to 2024, while unit costs, excluding fuel, are projected to rise in the low-single-digit percentage range.
The downbeat forecast contrasts sharply with the more optimistic projections from rivals Delta Air Lines and United Airlines, both of which have benefited from strong demand and improved pricing. American's full-year earnings forecast of 1.70to1.70to2.70 per share, however, aligns with analysts' estimates.
The airline has been working to recover from a failed business-travel sales strategy implemented in 2023, which prioritized direct bookings over travel agencies. The approach alienated corporate clients and cost American an estimated $1.5 billion in 2024 revenue. CEO Robert Isom acknowledged the misstep, stating, "We are reengineering the business to build an even more efficient airline."
Despite the challenges, American has made strides in other areas. The carrier recently secured a new credit card deal with Citigroup, building on its existing partnerships with Citi and Barclays. Compensation from these agreements rose 17% in 2023 to $6.1 billion, providing a significant revenue boost.
"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," Isom said in a news release.
For the first quarter, American expects revenue to increase by 3% to 5% compared to the same period in 2024, with full-year revenue projected to rise as much as 7.5%. The airline's fourth-quarter performance, however, offered a glimmer of hope. Adjusted earnings per share came in at 86 cents, surpassing analysts' expectations of 64 cents, while revenue rose 4.6% year-over-year to 13.66billion,beatingestimatesof13.66billion,beatingestimatesof13.40 billion.
The fourth-quarter results were driven by strong performance in both domestic and international markets, with trans-Pacific revenue leading the way. Net income for the quarter surged to 590million,upfrom590million,upfrom19 million in the same period a year earlier.
Despite these gains, American faces headwinds from rising fuel costs, which have climbed sharply in recent months due to global crude price increases and geopolitical tensions. The airline's stock, which gained about 30% in 2023, has lagged behind Delta's nearly 50% rise and United's 138% surge.