AAL Posts Narrower-Than-Expected Q1 Loss Amid Revenue Strength

American Airlines AAL posted a loss (excluding 18 cents from non-recurring items) of 40 cents per share in the first quarter of 2026, narrower than the Zacks Consensus Estimate of a loss of 45 cents. The carrier reported a loss of 59 cents per share in the year-ago quarter.

Operating revenues of $13.91 billion rose 10.8% year over year and edged past the consensus mark of $13.81 billion. Management pointed to strengthening demand and unit revenue trends as core drivers, even after an estimated $320 million revenue impact from winter storms.

AAL’s Commercial Focus Lifts Unit Revenue

AAL highlighted momentum across the multiyear commercial priorities, including elevating the customer experience, expanding its network, driving premium revenues and leaning into loyalty. The company said it recorded the nine highest revenue intake weeks in the 100-year history, underscoring the pace of demand during the quarter.

Unit revenue trends were a key differentiator. Total revenue per available seat mile or TRASM increased 7.6% year over year, with passenger revenue per ASM up 6.5% and yield rising 5.6%. Traffic, measured in revenue passenger miles, grew 3.9%, while available seat miles (a measure of capacity) increased 3%, helping load factor (% of seats filled with passengers) expand 0.7 points to 81.3%. Our estimate for the metric was 82.4%.

American Airlines Price, Consensus and EPS Surprise

American Airlines price-consensus-eps-surprise-chart | American Airlines Quote

AAL Sees Broad Strength Across Regions

On a revenue mix basis, passenger revenues climbed 9.7% year over year to $12.5 billion, lower than our estimate of $12.7 billion. Cargo revenues rose 12.9% to $214 million, higher than our estimate of $197 million. Other revenues increased 23.9% to $1.2 billion, just ahead of our estimate of $1.05 billion. The uptick in other revenues reflects strength across ancillary and related sources.

Regionally, domestic passenger revenues advanced 10.6% to $8.99 billion on 3.7% ASM growth, supported by a 6.6% increase in passenger revenue per ASM. International passenger revenues increased 7.4% to $3.51 billion. Within that, Atlantic passenger revenues rose 14.2% to $1.1 billion, with passenger revenue per ASM up 16.7% and load factor improving 5.2 points to 79.7%. Pacific passenger revenues grew 12.1% to $440 million, while Latin America passenger revenues increased 3% to $1.96 billion.

AAL Battles Higher Fuel and Labor Costs

Expense discipline improved compared with last year’s operating results, but higher costs remained a clear pressure point. Total operating expenses increased 8.8% year over year to $13.95 billion, led by higher aircraft fuel and related taxes and rising labor expenses.

Fuel expense climbed 13.2% to $2.93 billion as the average fuel price (including related taxes) rose 10.7% to $2.75 per gallon. Salaries, wages and benefits increased 10.7% to $4.67 billion. On a unit basis, operating cost per ASM was 19.38 cents, up 5.6%, while CASM excluding net special items, fuel and profit sharing increased 5.2% to 15.29 cents.

American Airlines Lowers Debt, Frames Q2 Outlook

American Airlines, currently carrying a Zacks Rank #3 (Hold), exited the quarter with total debt of $34.7 billion, its lowest level since mid-2015, and liquidity of $10.8 billion. The company also reported $3.41 billion of free cash flow in the quarter, reflecting strong cash generation alongside continued balance-sheet actions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Looking ahead, management expects second-quarter adjusted earnings to range from a loss of 20 cents to earnings of 20 cents per share. The Zacks Consensus Estimate currently highlights a loss of 26 cents per share. The outlook given by AAL assumes fuel price of roughly $4 per gallon and calls for ASMs up 4% to 6% year over year and total revenues up 13.5% to 16.5%, alongside CASM excluding net special items, fuel and profit sharing up 2% to 4%.

2026 Earnings Outlook Trimmed

For full-year 2026, AAL currently guided adjusted earnings to a range of a loss of 40 cents to earnings of $1.10 per share, with the midpoint described as approximately flat to 2025 despite a more than $4 billion increase in expense tied to higher jet fuel prices. The Zacks Consensus Estimate currently highlights a loss of $1.05 per share. Previously, AAL expected earnings per share in the $1.7-$2.7 range.

Q1 Performances of Some Other Airline Companies

Delta Air Lines DAL reported first-quarter 2026 earnings (excluding $1.08 from non-recurring items) of 64 cents per share, which beat the Zacks Consensus Estimate of 61 cents. Earnings increased 39.1% on a year-over-year basis. Revenues in the March-end quarter were $14.2 billion, beating the Zacks Consensus Estimate of $14 billion and increasing on a year-over-year basis. 

Alaska Air Group ALK reported a loss of $1.68 per share, wider than the Zacks Consensus Estimate of a loss of $1.61. In the year-ago quarter, ALK reported a loss of 77 cents per share.

Meanwhile, the operating revenues of $3.3 billion beat the Zacks Consensus Estimate of $3.27 billion. Total revenues jumped 5.2% year over year, with passenger revenues accounting for 88.5% of the top line and increasing 4% to $2.92 billion, but missing our estimate of $2.96 billion.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com