American Airlines Updates Full-Year Outlook Amid Economic Uncertainty

American Airlines has recently announced that it is restoring its full-year forecast, following a period of suspended financial guidance due to economic uncertainty. The airline, based in Fort Worth, Texas, cites the current state of the broader economy as a major factor negatively impacting consumer spending within the travel industry.

According to the company’s earnings report, American Airlines is offering a wide range for its full-year forecast, predicting an adjusted loss per share of 20 cents to a profit of 80 cents in 2025. The midpoint of this forecast is 30 cents per share, which falls below analysts’ average estimate of 61 cents per share, as reported by LSEG data.

With more than two-thirds of its passenger revenue coming from the US domestic market, American Airlines acknowledges the challenges posed by the current economic uncertainty. CEO Robert Isom addressed this issue during an earnings call, stating that “the domestic network has been under stress because of the uncertainty in the economy and the reluctance of domestic passengers to get in the game.

Due to tepid domestic travel demand in July, American Airlines saw a decline in bookings during the summer months. However, Isom remains optimistic and expects a sequential improvement in August and September. “We expect that July will be the low point,” he said.

The company also forecasts a decrease in domestic unit revenue, or revenue generated from each seat, in the third quarter. Additionally, non-fuel operating costs are expected to rise by up to 4. 5 percent in the September quarter.

In contrast to American Airlines’ outlook, rival carriers Delta and United Airlines have reported more positive forecasts. Furthermore, Alaska Air Group has seen improvements in passenger traffic and pricing power.

After withdrawing their financial forecasts in April due to President Donald Trump’s trade war, most US airlines have reinstated their expectations. However, there is still lingering uncertainty surrounding the economy as it continues to face challenges in an ever-evolving tariff landscape.

The domestic travel market remains subdued, with budget travelers approaching their plans with caution, which has negatively affected carriers that primarily service the US domestic market and price-sensitive customers. This has also impacted the peak money-making season for airlines, as summer travel falls short this year and unsold standard economy seats force carriers to cut fares.

This trend was evident in the second-quarter earnings of Southwest Airlines, the largest US domestic airline. At American Airlines, the domestic market was the weakest, with a 6. 4 percent decline in unit revenue from the previous year. However, the company saw an increase in unit revenue in international markets, particularly in the transatlantic market with a 5 percent annual jump.

On Wall Street, American Airlines’ stock has taken a hit and was down 7. 2 percent from the market open as of 11:30 am in New York (15:30 GMT).