American Airlines Group (AAL:NASDAQ) announced Q4 and full-year 2025 earnings on January 27, 2026, reporting record revenue of $14 billion (up 2.5% YoY, in line with estimates) but adjusted EPS of $0.16 (missing consensus of $0.35-$0.38 due to a $325M government shutdown hit). Following the announcement, AAL stock declined 5.66% to $13.745 (previous close $14.57), reducing market cap to about $9.07 billion.
Quarterly Results
American Airlines reported record fourth-quarter revenue of $14.0 billion, representing a 2.5% increase year-over-year despite a $325 million negative impact from a federal government shutdown. GAAP net income for the period was $99 million, or $0.15 per diluted share. Excluding net special items, the company achieved a net income of $106 million, or $0.16 per diluted share.
Domestic passenger unit revenue declined 2.5% during the quarter, largely attributed to the government shutdown. International passenger unit revenue performance showed sequential improvement over the third quarter in all entities. Total operating expenses for the quarter rose 8.2% to $13.5 billion, driven by higher salaries and fuel costs.
Annual Performance Context
For the full year 2025, American Airlines generated record revenue of $54.6 billion. GAAP net income totaled $111 million, while adjusted net income was $237 million. The company reduced its total debt by $2.1 billion during the year, ending with a total debt balance of $36.5 billion.
Net debt at year-end was $30.7 billion, and total available liquidity stood at $9.2 billion. Total operating expenses for 2025 were $53.2 billion, a 3.0% increase over the previous year. Salaries, wages, and benefits rose 9.6% to $17.6 billion, while aircraft fuel and related taxes decreased 6.1% to $10.7 billion.
Business and Operations Update
Premium product revenue continued to outperform main cabin offerings, with loyalty members contributing approximately 75% of premium revenue. AAdvantage program enrollments grew 7% year-over-year, and spending on co-branded credit cards increased 8%. In January 2026, the airline launched an expanded exclusive partnership with Citi for credit card acquisition.
The company introduced its Flagship Suite product and announced plans to retrofit Boeing 777-300ER, 777-200ER, Airbus A319, and A320 aircraft to increase premium seating. At Dallas Fort Worth International Airport, the airline is re-banking operations to a 13-bank structure. Investment continues in Terminal F at DFW to enhance hub connectivity.
Forward Outlook
Management expects full-year 2026 adjusted earnings per diluted share between $1.70 and $2.70. Free cash flow for 2026 is projected to exceed $2 billion. The company aims to reduce total debt below $35 billion by the end of 2026, reaching its target one year earlier than originally planned.
For the first quarter of 2026, total revenue is projected to grow 7.0% to 10.0%. These projections include the estimated impact of Winter Storm Fern, which resulted in 9,000 flight cancellations. The storm is expected to reduce first-quarter capacity by 1.5 points and revenue by $150 million to $200 million.
Performance Summary
Financial results in 2025 were defined by record revenues and a significant reduction in total debt obligations. While the domestic entity faced pressure from external disruptions, international performance and premium product growth remained resilient. The company maintains more than $14 billion in unencumbered assets and plans for 55 new aircraft deliveries in 2026. Strategic focus remains on balance sheet deleveraging and the expansion of the premium fleet throughout the decade.