American Airlines Group Inc. reported stronger-than-expected second-quarter earnings on Thursday. However, a disappointing profit forecast pushed American Airlines stock more than 5% lower in premarket trading.
American Airlines Beats Q2 Earnings Estimates
American Airlines posted adjusted earnings of $0.15 per share during the second quarter. That result comfortably exceeded analysts’ expectations of $0.03 per share.
Quarterly revenue reached a record $16.7 billion, representing an increase of 16.3% compared with the same period last year. The revenue figure was broadly in line with Wall Street forecasts.
Despite the earnings beat and strong sales growth, investors focused on the airline’s weaker profit guidance.
Weak Q3 Guidance Pressures American Airlines Stock
American Airlines now expects adjusted earnings per share to range from a loss of $0.65 to a profit of $0.65 for fiscal 2026. The company blamed the wide forecast partly on elevated fuel expenses.
For the third quarter, management expects an adjusted loss of between $0.70 and $0.10 per share.
The midpoint of that range represents a loss of approximately $0.40 per share. This outlook came in significantly below analysts’ consensus estimate of a $0.61 profit.
Nevertheless, American Airlines expects third-quarter revenue to grow between 16% and 19% year over year.
Revenue Growth Exceeds Company Expectations
CEO Robert Isom said the airline’s second-quarter revenue growth exceeded its initial expectations and extended the company’s recent business momentum.
According to Isom, American Airlines’ commercial strategy continues to focus on improving the customer experience, expanding its international network, increasing premium revenue and strengthening its loyalty business.
These priorities helped the airline generate higher passenger revenue across several important customer segments.
Rising Fuel Costs Weigh on Profitability
Although revenue remained strong, higher fuel prices placed considerable pressure on American Airlines’ financial performance.
The company’s fuel expense increased by $2.2 billion, or 83%, compared with the previous year. American Airlines managed to offset almost half of this additional cost by charging higher fares.
Based on fuel-market projections available as of July 21, the airline expects its third-quarter fuel bill to increase by another $1.7 billion year over year.
The company also forecasts an average fuel price of approximately $3.75 per gallon during the quarter.
Premium and Corporate Revenue Continue to Rise
Premium passenger unit revenue increased by 13.4% compared with the same quarter last year. Meanwhile, Main Cabin unit revenue climbed by 8.8%.
Revenue from managed corporate customers rose by 26% year over year. This marked the fifth consecutive quarter in which corporate revenue recorded double-digit growth.
The strong figures suggest that business travel and demand for premium services remain important sources of growth for the airline.
American Airlines Maintains Strong Liquidity
American Airlines ended the second quarter with total available liquidity of $11.3 billion.
The company’s record revenue, improving premium demand and strong corporate bookings supported its overall performance. However, rising fuel expenses and the weak third-quarter earnings forecast overshadowed those positive developments.
As a result, investors reacted negatively despite the better-than-expected second-quarter earnings report.
