Global airline American Airlines (NASDAQ: AAL) met Wall Street’s revenue expectations in Q3 CY2025, but sales were flat year on year at $13.69 billion. Its non-GAAP loss of $0.17 per share was 38.2% above analysts’ consensus estimates.

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StockStory’s Take

American Airlines’ third quarter saw a positive market reaction as the company met revenue expectations and delivered a non-GAAP loss narrower than Wall Street anticipated. Management credited the quarter’s performance to growth in corporate travel, a recovering main cabin business, and continued strength in premium cabin demand. CEO Robert Isom noted that improved sales and revenue management initiatives, alongside the successful execution of a new agreement with Citi, were critical to stabilizing the commercial organization. The company also began to see the benefits of targeted capacity restoration in key hub markets such as Chicago and New York.

Looking ahead, American Airlines’ raised full-year non-GAAP EPS guidance reflects management’s optimism around ongoing premium product expansion and the anticipated impact of its exclusive co-brand credit card partnership with Citi. CEO Robert Isom highlighted that investments in fleet upgrades and customer experience will support premium seat growth at double the rate of main cabin seats. Management also pointed to the scale-up of the AAdvantage loyalty program and process improvements for operational efficiency as key factors underlying their outlook, stating, “We expect remuneration from our co-branded credit card and other partners to reach approximately $10 billion per year.”

Key Insights from Management’s Remarks

Management attributed quarterly results to a rebound in corporate travel, premium cabin outperformance, and targeted expansion in key hub markets, while also naming a new Chief Commercial Officer to drive future growth.

• Corporate revenue rebound: American Airlines grew its corporate revenue by 14% year-over-year, attributing this to strengthened sales and distribution strategies and the rebuilding of relationships with business customers after prior disruptions in indirect sales channels.
• Premium product momentum: Premium cabin demand outpaced main cabin by five percentage points, with nearly 50% of ticket revenue now sourced from premium seats. Management reported a 65% premium cabin load factor and increasing willingness among leisure travelers to pay for upgraded experiences.
• Hub network restoration: The company focused capacity growth on hubs in Chicago, Philadelphia, and New York, with a particular emphasis on recapturing share in Chicago. AAdvantage loyalty program enrollments in Chicago rose 20% year-over-year as American rebuilt its presence.
• Major loyalty and credit card initiatives: The transition to an exclusive co-brand card partnership with Citi began, including the introduction of a new mid-tier product. Management expects this partnership to materially increase loyalty revenue and operating income as it scales through the decade.
• Leadership transition: Nat Pieper was appointed as the new Chief Commercial Officer, bringing over 25 years of airline experience. Steve Johnson will return to his role as Vice Chair and Chief Strategy Officer after leading the commercial turnaround.

Drivers of Future Performance

Management’s outlook is driven by premium product expansion, loyalty program monetization, and efficiency gains, with ongoing cost controls amid shifting market dynamics.

• Premium seat and product investments: The company plans to grow premium seats at nearly twice the rate of main cabin seats, including retrofitting existing aircraft and expanding new flagship suites. This shift is expected to enhance margins as premium demand from both business and leisure travelers remains strong.
• Loyalty and credit card monetization: American anticipates substantial growth in loyalty program revenue, targeting approximately $10 billion per year in remuneration from co-brand partners by the decade’s end. Management believes this will result in over $1.5 billion in incremental annual operating income compared to 2024.
• Operational efficiency and cost control: The company is focused on maintaining productivity gains, leveraging technology to streamline processes, and keeping labor cost increases close to inflation. Management cautioned that airport rents and landing fees may outpace inflation, but expects overall cost performance to support margin expansion in coming years.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be closely monitoring (1) the ramp-up of the new Citi co-brand credit card partnership and its impact on loyalty-driven revenue, (2) the pace and financial benefit of premium seat and flagship suite expansions across the fleet, and (3) progress in restoring share and profitability at core hubs, particularly Chicago and New York. Execution on operational efficiency measures and further adoption of digital customer enhancements will also be important indicators of strategic success.

American Airlines currently trades at $12.74, up from $12.07 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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