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AAL Q3 Earnings Meet Estimates, Revenues Beat on Premium Demand
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Key Takeaways
AAL's Q3 loss of 28 cents per share met estimates, while record revenues of $16.34B beat expectations.
Premium revenues jumped 22.9%, but a 67.5% surge in fuel expenses weighed on American Airlines' margins.
AAL expects a Q4 adjusted loss of 50 cents to $1.10 per share amid elevated fuel prices and rising costs.
American Airlines (AAL - Free Report) reported a third-quarter 2026 loss (excluding 13 cents from non-recurring items) of 28 cents per share, wider than the year-ago loss of 17 cents. However, the figure was in line with the Zacks Consensus Estimate. Results were hurt by elevated fuel expenses.
Operating revenues surged 19.3% year over year to a record $16.34 billion and surpassed the consensus mark of $16.20 billion by 0.8%. Revenue growth was supported by strong premium demand, higher passenger yields and robust corporate travel. Total revenue per available seat mile increased 14.5%.
AAL's Passenger Revenues Gain on Strong Pricing
Passenger revenues climbed 19.5% year over year to $14.90 billion. Cargo revenues increased 29.1% to $274 million, while other revenues advanced 15.2% to $1.16 billion.
Passenger yield rose 18.3% to 22.15 cents, reflecting stronger pricing. Passenger revenue per available seat mile increased 14.6% to 18.47 cents. Revenue passenger miles grew 1%, while capacity, measured in available seat miles, expanded 4.2%. The passenger load factor (% of seats filled with passengers) declined 2.6 percentage points to 83.4%, just ahead of our estimate of 83%.
American Airlines Price, Consensus and EPS Surprise
American Airlines Sees Broad Premium and Regional Strength
Premium revenues increased 22.9% year over year, outperforming the 19.5% rise in Main Cabin revenues. Premium passenger unit revenues advanced 18.5%, compared with 14.4% growth in Main Cabin. Managed corporate revenues jumped 27.6%, marking the sixth consecutive quarter of double-digit growth.
Domestic passenger revenues rose 20.2% to $10.49 billion, supported by a 13.6% increase in passenger unit revenues. International passenger revenues grew 17.7% to $4.41 billion. Latin America revenues climbed 20.7%, while Atlantic and Pacific revenues increased 15.6% and 18.5%, respectively.
AAL Faces a Sharp Increase in Fuel Expenses
Total operating expenses rose 19.8% year over year to $16.22 billion. Aircraft fuel and related taxes surged 67.5% to $4.64 billion, reflecting a 62.7% increase in the average fuel price to $3.85 per gallon.
Salaries, wages and benefits increased 5.7% to $4.71 billion. Maintenance, materials and repairs rose 6.2% to $1.09 billion, while regional operating expenses increased 5.5% to $1.36 billion. CASM excluding special items, fuel and profit sharing advanced 3% to 14.34 cents.
American Airlines' Margins Shrink Despite Revenue Growth
GAAP operating income declined 23.4% year over year to $115 million. The reported operating margin narrowed to 0.7% from 1.1%, as higher fuel expenses more than offset the benefits of record revenues.
Adjusted operating income declined 16.2% to $132 million, while the adjusted operating margin contracted to 0.8% from 1.2%. GAAP net loss widened to $269 million, or 41 cents per share, compared with a loss of $114 million, or 17 cents, a year earlier.
AAL Expands Loyalty and Enhances Customer Experience
AAdvantage enrollments increased 27.4% year over year, while spending on the company's co-branded Citi credit cards grew nearly 10%. Commercial initiatives contributed to a 6-percentage-point increase in the upsell rate from Basic Economy to Main Cabin.
American also announced plans to extend Starlink Wi-Fi installations across its entire mainline fleet, covering more than 1,000 aircraft. The carrier continues investing in premium lounges, seatback entertainment and fleet modernization. Its narrowbody retrofit program is expected to increase premium seating to 40% in the coming years.
American Airlines Maintains Liquidity, Issues Cautious Outlook
AAL ended the third quarter with $11.8 billion in total available liquidity. Cash totaled $1.12 billion, while short-term investments stood at $7.16 billion at September-end.
Operating cash flow for the first nine months of 2026 increased to $4.54 billion from $3.37 billion a year ago. Capital expenditures and aircraft purchase deposits totaled $2.73 billion. The company repaid $5.35 billion in long-term debt and finance leases while issuing $5.93 billion of long-term debt.
For the fourth quarter, AAL expects revenues to increase 19.5-22.5% year over year, with capacity growth of 5.5-6.5%. CASM, excluding special items, fuel and profit sharing, is projected to rise 2.5-3.5%.
Management expects fourth-quarter adjusted loss between 50 cents and $1.10 per share. The Zacks Consensus Estimate is currently pegged at a loss of 40 cents per share. The outlook assumes an average fuel price of approximately $4.70 per gallon and a $2.8 billion year-over-year increase in fuel expenses.
For full-year 2026, American Airlines anticipates adjusted loss ranging from $1 to $1.60 per share. The Zacks Consensus Estimate is currently pegged at a loss of 94 cents per share. Given elevated fuel prices, the carrier expects network growth in 2027 to slow from 2026 levels.
American Airlines has a Zacks Rank #4 (Sell) at present.
Delta Air Lines (DAL - Free Report) reported third-quarter 2026 earnings (excluding 57 cents from non-recurring items) of $1.72 per share, missing the Zacks Consensus Estimate of $1.80 by 4.44%. Earnings increased year over year despite sharply higher fuel costs and rising non-fuel expenses.
Adjusted revenues climbed 16% year over year to $17.59 billion but missed the consensus estimate of $17.74 billion by 0.9%. Broad demand strength and healthy yields lifted adjusted total revenue per available seat mile, or TRASM, 15%, while premium and diversified revenue streams continued to expand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion by 0.1%. Revenue per available seat mile, or RASM, rose 11.7%, supported by strong yields, premium demand and loyalty revenues.
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AAL Q3 Earnings Meet Estimates, Revenues Beat on Premium Demand
Key Takeaways
American Airlines (AAL - Free Report) reported a third-quarter 2026 loss (excluding 13 cents from non-recurring items) of 28 cents per share, wider than the year-ago loss of 17 cents. However, the figure was in line with the Zacks Consensus Estimate. Results were hurt by elevated fuel expenses.
Operating revenues surged 19.3% year over year to a record $16.34 billion and surpassed the consensus mark of $16.20 billion by 0.8%. Revenue growth was supported by strong premium demand, higher passenger yields and robust corporate travel. Total revenue per available seat mile increased 14.5%.
AAL's Passenger Revenues Gain on Strong Pricing
Passenger revenues climbed 19.5% year over year to $14.90 billion. Cargo revenues increased 29.1% to $274 million, while other revenues advanced 15.2% to $1.16 billion.
Passenger yield rose 18.3% to 22.15 cents, reflecting stronger pricing. Passenger revenue per available seat mile increased 14.6% to 18.47 cents. Revenue passenger miles grew 1%, while capacity, measured in available seat miles, expanded 4.2%. The passenger load factor (% of seats filled with passengers) declined 2.6 percentage points to 83.4%, just ahead of our estimate of 83%.
American Airlines Price, Consensus and EPS Surprise
American Airlines price-consensus-eps-surprise-chart | American Airlines Quote
American Airlines Sees Broad Premium and Regional Strength
Premium revenues increased 22.9% year over year, outperforming the 19.5% rise in Main Cabin revenues. Premium passenger unit revenues advanced 18.5%, compared with 14.4% growth in Main Cabin. Managed corporate revenues jumped 27.6%, marking the sixth consecutive quarter of double-digit growth.
Domestic passenger revenues rose 20.2% to $10.49 billion, supported by a 13.6% increase in passenger unit revenues. International passenger revenues grew 17.7% to $4.41 billion. Latin America revenues climbed 20.7%, while Atlantic and Pacific revenues increased 15.6% and 18.5%, respectively.
AAL Faces a Sharp Increase in Fuel Expenses
Total operating expenses rose 19.8% year over year to $16.22 billion. Aircraft fuel and related taxes surged 67.5% to $4.64 billion, reflecting a 62.7% increase in the average fuel price to $3.85 per gallon.
Salaries, wages and benefits increased 5.7% to $4.71 billion. Maintenance, materials and repairs rose 6.2% to $1.09 billion, while regional operating expenses increased 5.5% to $1.36 billion. CASM excluding special items, fuel and profit sharing advanced 3% to 14.34 cents.
American Airlines' Margins Shrink Despite Revenue Growth
GAAP operating income declined 23.4% year over year to $115 million. The reported operating margin narrowed to 0.7% from 1.1%, as higher fuel expenses more than offset the benefits of record revenues.
Adjusted operating income declined 16.2% to $132 million, while the adjusted operating margin contracted to 0.8% from 1.2%. GAAP net loss widened to $269 million, or 41 cents per share, compared with a loss of $114 million, or 17 cents, a year earlier.
AAL Expands Loyalty and Enhances Customer Experience
AAdvantage enrollments increased 27.4% year over year, while spending on the company's co-branded Citi credit cards grew nearly 10%. Commercial initiatives contributed to a 6-percentage-point increase in the upsell rate from Basic Economy to Main Cabin.
American also announced plans to extend Starlink Wi-Fi installations across its entire mainline fleet, covering more than 1,000 aircraft. The carrier continues investing in premium lounges, seatback entertainment and fleet modernization. Its narrowbody retrofit program is expected to increase premium seating to 40% in the coming years.
American Airlines Maintains Liquidity, Issues Cautious Outlook
AAL ended the third quarter with $11.8 billion in total available liquidity. Cash totaled $1.12 billion, while short-term investments stood at $7.16 billion at September-end.
Operating cash flow for the first nine months of 2026 increased to $4.54 billion from $3.37 billion a year ago. Capital expenditures and aircraft purchase deposits totaled $2.73 billion. The company repaid $5.35 billion in long-term debt and finance leases while issuing $5.93 billion of long-term debt.
For the fourth quarter, AAL expects revenues to increase 19.5-22.5% year over year, with capacity growth of 5.5-6.5%. CASM, excluding special items, fuel and profit sharing, is projected to rise 2.5-3.5%.
Management expects fourth-quarter adjusted loss between 50 cents and $1.10 per share. The Zacks Consensus Estimate is currently pegged at a loss of 40 cents per share. The outlook assumes an average fuel price of approximately $4.70 per gallon and a $2.8 billion year-over-year increase in fuel expenses.
For full-year 2026, American Airlines anticipates adjusted loss ranging from $1 to $1.60 per share. The Zacks Consensus Estimate is currently pegged at a loss of 94 cents per share. Given elevated fuel prices, the carrier expects network growth in 2027 to slow from 2026 levels.
American Airlines has a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Other Airline Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2026 earnings (excluding 57 cents from non-recurring items) of $1.72 per share, missing the Zacks Consensus Estimate of $1.80 by 4.44%. Earnings increased year over year despite sharply higher fuel costs and rising non-fuel expenses.
Adjusted revenues climbed 16% year over year to $17.59 billion but missed the consensus estimate of $17.74 billion by 0.9%. Broad demand strength and healthy yields lifted adjusted total revenue per available seat mile, or TRASM, 15%, while premium and diversified revenue streams continued to expand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion by 0.1%. Revenue per available seat mile, or RASM, rose 11.7%, supported by strong yields, premium demand and loyalty revenues.