American Airlines Group (NASDAQ:AAL) executives said the carrier ended 2025 with results that fell short of prior expectations, citing a prolonged government shutdown and a major winter storm that has disrupted operations in early 2026. On the company’s fourth-quarter and full-year 2025 earnings call, CEO Robert Isom and CFO Devon May detailed operational challenges, a strategy centered on premium growth and customer experience, and financial priorities focused on free cash flow and debt reduction.
Winter Storm Fern drives record disruption
Isom said American has faced “the largest weather-related operational disruption in our history” due to Winter Storm Fern, with ice and freezing rain significantly reducing operations at Dallas Fort Worth (DFW) and Charlotte for multiple days. Over the prior four days, the airline canceled more than 9,000 flights and expected at least two more days of elevated cancellations before returning to normal operations later in the week.
2025 earnings miss tied to government shutdown
May reported fourth-quarter adjusted earnings per share of $0.16 and full-year adjusted EPS of $0.36, excluding net special items. He said the results came in below guidance primarily because of a prolonged government shutdown that impacted revenue by about $325 million, concentrated in the domestic business. May cited American’s exposure in Washington, D.C., particularly at Reagan National (DCA), given its weighting toward government-related travel.
Isom later said government traffic in the fourth quarter was down about 50% because of the shutdown. While it was “too soon” in the first quarter to see the full recovery, management built into forecasts the assumption that American would need to work to win back government business over time.
Demand commentary: January strength, premium outperformance, mixed international trends
Management said demand improved as 2026 began. After softer-than-expected bookings late in the fourth quarter, May said bookings “strengthened meaningfully in January,” with system-wide revenue intakes for the first three weeks of 2026 up double digits year-over-year. Isom separately described January booking trends as all-time records for the first three weeks of the year.
Premium demand continued to outperform main cabin. May said premium unit revenue outpaced main cabin by seven points in the fourth quarter, and he expected premium unit revenue momentum to remain strong in 2026. Chief Commercial Officer Nat Pieper said premium RASM outperformed non-premium by seven points in the fourth quarter across both domestic and international operations.
Regionally, May said American’s international entities performed in line with prior guidance. Atlantic unit revenue rose 4% year-over-year and was the company’s most profitable region during the quarter, supported by seasonal demand and premium strength. Latin America unit revenue remained under pressure, which May said should continue to be a headwind in the first half of 2026, while the Pacific entity’s unit revenue was slightly down year-over-year but improved sequentially from the third quarter due to premium-cabin strength.
Strategy: premium expansion, customer experience, DFW restructure, and loyalty growth
Isom said 2025 was a challenging year, but the airline “did the hard work to build a solid foundation” for future results, pointing to labor agreements ratified over the past 30 months across multiple work groups, a fleet in “excellent shape,” and a restoration of historical sales and distribution indirect share.
He outlined four strategic focus areas for unlocking American’s revenue potential:
- Delivering a consistent, elevated customer experience
- Maximizing the power of the network and fleet
- Building partnerships that deepen loyalty and lifetime value
- Advancing sales, distribution, and revenue management
On product and customer experience, Isom said the company’s fourth-quarter Net Promoter Score for on-time customers was the highest in its history. He highlighted expansion of the Flagship Suite product on new Boeing 787-9s, Airbus A321XLRs, and 777 retrofits; additions to its lounge portfolio, including a Flagship Lounge opened in Philadelphia and plans for Miami and Charlotte; and Admirals Club investments, including renovations at Washington National and a new “Provisions by Admirals Club” concept in Charlotte.
American also began rolling out complimentary high-speed satellite Wi-Fi for AAdvantage members on narrow-body aircraft, dual-class regional jets, and new premium 787-9s, sponsored by AT&T. Isom said the airline expects to offer more free high-speed satellite Wi-Fi on more aircraft and flights than any other carrier globally.
Operationally, Isom said American is transforming its DFW operation by moving to a 13-bank structure designed to increase connection opportunities, reduce air traffic delays, and improve recovery during irregular operations. He said DFW currently serves about 100,000 customers per day and that future infrastructure work, including a new Terminal F and other gate expansions, would support growth. In Q&A, Isom said the carrier expects noticeable benefits from DFW-related schedule and technology changes during the summer.
On loyalty, Isom said AAdvantage enrollments increased 7% year-over-year, marking the greatest number of annual enrollments, with Chicago up nearly 20%. He also said 2025 was a record year for the co-branded credit card program, with spending up 8% year-over-year. The company’s exclusive 10-year co-branded partnership with Citi took effect January 1, and management said acquisition channels transitioned from Barclays to Citi in the fourth quarter, with focus shifting to card conversions in 2026.
2026 outlook: storm impact, earnings range, and debt reduction priorities
May said first-quarter capacity is projected to be up 3% to 5% year-over-year, inclusive of an estimated 1.5-point impact from Winter Storm Fern. First-quarter revenue is expected to rise 7% to 10% year-over-year, including an estimated $150 million to $200 million revenue impact from the storm. First-quarter CASM excluding fuel, profit sharing, and net special items is expected to increase 3% to 5%, with about a 1.5-point impact from the storm. For the first quarter, the company guided to an adjusted loss per diluted share of $0.10 to $0.50, noting a wider-than-usual range as the carrier continues to assess the storm’s impact.
For the full year 2026, American guided to adjusted EPS of approximately $1.70 to $2.70. May said if booking strength continues at its current pace, the full-year guide could prove conservative, while adding that the company was “a month in” and comfortable with the range.
May also said American expects $250 million of additional operating savings in 2026 from its multi-year re-engineering effort versus 2025, bringing cumulative operating savings to nearly $1 billion since 2023 and total working capital improvements to nearly $900 million.
On capital and leverage, May said 2026 capital expenditures are expected to be $4.0 billion to $4.5 billion, with 55 new aircraft deliveries planned. Based on earnings and capital projections, the company anticipates more than $2 billion of free cash flow for the year. American reduced total debt by $2.1 billion in 2025 to $36.5 billion, and May said that at the midpoint of guidance, the company would reach its target of below $35 billion in total debt a year ahead of schedule in 2026. In Q&A, May reiterated that priorities remain focused on customers, team members, and investment needs, with free cash flow directed to strengthening the balance sheet. He said American still aims to get inside 3x net debt to EBITDA and to achieve a “double B flat” credit rating before shifting focus to shareholder returns.
About American Airlines Group (NASDAQ:AAL)
American Airlines Group Inc is a leading global airline holding company headquartered in Fort Worth, Texas. Formed in December 2013 through the merger of AMR Corporation (parent of American Airlines) and US Airways Group, the company operates one of the world’s largest passenger and cargo networks. Its subsidiaries include American Airlines, which provides mainline service, and American Eagle, a network of regional carriers operating short- and medium-haul routes on behalf of the mainline carrier.
The company offers scheduled air transportation for passengers and cargo to more than 350 destinations in over 50 countries.
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