American Airlines reported better-than-expected earnings for the second quarter—but its outlook for the rest of 2024 and into 2025 has investors bracing for a bumpy ride.
American pulled in 95 cents per share in adjusted earnings, beating Wall Street’s 78-cent estimate. Revenue? A solid $14.4 billion, just above expectations.
American now expects its 2025 adjusted earnings to range from a 20-cent loss to an 80-cent profit per share. That’s a huge drop from the earlier forecast of $1.70 to $2.70 it made back in January. Ouch.
Shares fell nearly 6% in premarket trading on Thursday as Wall Street digested the new forecast.
CEO Robert Isom told CNBC that July has been tough, with weaker-than-expected US travel demand. The company says the low end of its forecast would only happen if economic conditions get worse—but the high end depends on a rebound in domestic travel, which hasn’t shown up yet.
And that’s key: American makes two-thirds of its money from domestic flights, more than rivals like United or Delta. That focus leaves it extra exposed when US consumers tighten their belts.
Why is demand so soft?
- Budget travelers are thinking twice before booking.
- Airlines are cutting fares to fill unsold economy seats.
- US tariffs and inflation are making people more cautious with their wallets.
American expects to lose 10 to 60 cents per share in Q3 — way worse than analysts’ expected 7-cent loss.
Domestic revenue (a measure of pricing power) fell 6.4%, while international flights, especially across the Atlantic, actually saw gains.
Even though summer is usually peak season for airlines, it’s not delivering like it used to.
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