American Airlines fell over 8% during Thursday's U.S. session, after the company forecasted weaker-than-expected profits for 2025, citing higher expenses tied to labour contracts signed last year.
The airline also projected a larger first-quarter loss than analysts anticipated, contrasting with optimistic outlooks from competitors like Delta Air Lines and United Airlines, which are benefitting from stronger winter demand and improved pricing.
The company reported earnings per share (EPS) of $0.86 versus $0.66 expected, while revenues lifted 4.6% to US$13.66 billion versus $13.43 billion expected.
Last year, American Airlines finalised a five-year deal with 28,000 flight attendants, offering pay increases of up to 20.5% alongside retroactive payments.
Additionally, the airline extended a two-year contract with a worker group comprising maintenance technicians, cleaners, and planners.
The company faced challenges in 2024, as it worked to rebuild relationships with corporate travellers following a failed sales strategy that reduced perks and discounts, negatively impacting revenue and market position.
For 2025, American Airlines expects adjusted earnings per share (EPS) between $1.70 and $2.70, below market expectations. The company also anticipates a first-quarter adjusted loss per share of 20 to 40 cents, significantly higher than the estimated 4-cent loss.
Adding to the pressure, jet fuel prices have risen sharply in recent months, driven by higher global crude prices following sanctions on Russian oil and expectations of stronger demand from China.
At the time of writing, American Airlines (NASDAQ: AAL) stock was trading at US$16.99, easing 0.2% from Thursday's close of $17.03. The stock reached a day low of $16.73 and a day high of $17.54. American Airlines' market cap stands at US$11.19 billion (A$17.79 billion).
