American Airlines Group (NASDAQ:AAL) saw its shares fall more than 4% in Thursday’s premarket trading after the airline posted a drop in second-quarter earnings and signaled it may incur a loss in the upcoming third quarter.
The airline reported adjusted net income of $628 million for Q2, down 19% from the prior year, though still ahead of analyst expectations of $507.5 million. Second-quarter earnings per diluted share came in at $0.95, exceeding the consensus forecast of $0.75 but falling short of the $1.09 it posted during the same period last year.
While revenue edged up slightly by 0.4% to $14.39 billion—just ahead of analysts’ $14.3 billion estimate—American flagged that ongoing economic uncertainty and rising inflation, partly due to sweeping U.S. tariffs, could pressure consumer demand for air travel.
The company pointed to better-than-expected recovery in leisure travel and noted continued strength in premium cabin bookings, particularly on long-haul international routes. Still, operational disruptions due to adverse weather at major U.S. hubs—such as Dallas, Chicago, Washington, D.C., and the Northeast—contributed to higher costs. Overall expenses rose 2.4% year-over-year to $13.26 billion, driven in part by increased labor expenses.
Looking ahead, American provided cautious third-quarter guidance, stating that, “based on its current booked revenue” and expectations for travel volumes and fuel prices—excluding special items—it expects an adjusted loss per diluted share of between $0.10 to $0.60.
The carrier also gave a wide full-year forecast range, projecting between a loss of $0.20 per share and a profit of $0.80 per share, depending on how demand trends evolve. As the airline explained, it believes “the top end of this range is achievable if demand in the domestic market continues strengthen.” Conversely, it warned the result could land at the bottom of the range “if there were to be macro weaknesses that are not seen today.”
Despite a slight improvement in revenue and strong performance in select areas, investor sentiment turned negative on the guidance, dragging shares lower in early trading.
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