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Here is a fun thing about running an airline: you can post the best revenue growth of your entire career and still lose money, because jet fuel does not care about your commercial strategy.
American Airlines Group Inc. (AAL) reported better-than-expected third-quarter earnings and revenue Thursday, but soaring fuel costs widened its losses and prompted the airline to cut its full-year outlook.
American reported an adjusted loss of 28 cents per share, narrower than analysts' consensus estimate of a 35-cent loss.
Revenue jumped 19.3% year over year to $16.335 billion, beating the $16.216 billion consensus estimate.
The airline's GAAP net loss widened to $269 million, or 41 cents per share, from $114 million, or 17 cents per share, a year earlier.
Passenger revenue climbed 19.5% to $14.9 billion, while cargo revenue increased 29.1% to $274 million.
Operating income fell 23.4% to $115 million, while operating margin narrowed to 0.7% from 1.1%.
During Thursday's earnings call, CEO Robert Isom said American's 19.3% revenue growth marked the strongest quarterly increase of his career, excluding the post-pandemic recovery years, but soaring fuel costs more than offset those gains, adding $1.9 billion to expenses and pushing the airline into a loss.
Isom said investments across the airline's four-part commercial strategy were delivering results, positioning American for another quarter of record revenue growth to close out the year.
“While historically high fuel prices significantly impacted our financial results, our focus remains on restoring profitability and building a stronger American for the long term,” Isom said.
Managed corporate revenue surged 27.6%, marking the sixth consecutive quarter of double-digit growth. Premium revenue climbed 22.9%.
Premium passenger unit revenue increased 18.5%, outpacing Main Cabin growth of 14.4%.
Total revenue per available seat mile rose 14.5% to 20.25 cents, while passenger revenue per available seat mile increased 14.6% to 18.47 cents.
Passenger yield climbed 18.3% to 22.15 cents.
Capacity, measured in available seat miles, increased 4.2% to 80.68 billion. Revenue passenger miles rose 1% to 67.27 billion.
However, passenger load factor declined 2.6 percentage points to 83.4%.
Chief Commercial Officer Nathaniel Pieper said during the earnings call that American deliberately prioritized higher ticket yields over filling more seats.
“We prioritized yield over load factor, proactively securing meaningfully higher yields in exchange for slightly lower loads,” Pieper said.
He also highlighted improvements at American's Dallas-Fort Worth hub, where revised flight schedules helped deliver record passenger volumes, fewer missed connections and mishandled bags, and stronger unit revenue growth than the broader network.
Fuel expense surged 67.5% to $4.635 billion as the average fuel price jumped 62.7% to $3.85 per gallon.
Cost per available seat mile, excluding fuel, profit sharing and net special items, increased 3% to 14.34 cents.
The sharp rise in fuel prices is also forcing American to reconsider its expansion plans.
“And given today's elevated fuel prices, we now expect our growth rate in 2027 to decelerate considerably,” Isom said.
Chief Financial Officer Devon May acknowledged that slower capacity growth could increase unit costs but emphasized the airline's ongoing efforts to improve efficiency.
“By the end of this year, we expect to have achieved nearly $1 billion in annual run-rate savings and more than $900 million in working capital improvements through these efforts,” May said.
American generated $4.541 billion in operating cash flow during the first nine months of 2026.
The airline ended the quarter with $11.8 billion in available liquidity. Total debt stood at $36.366 billion, including net debt of $28.079 billion.
American expects a fourth-quarter adjusted loss of 50 cents to $1.10 per share, compared with analysts' consensus estimate of a 51-cent loss.
The airline forecasts fourth-quarter revenue of $16.729 billion to $17.149 billion, above the $16.618 billion consensus estimate.
Capacity is expected to increase 5.5% to 6.5%, while revenue is projected to grow 19.5% to 22.5%.
Unit costs, excluding fuel, profit sharing and net special items, are expected to rise 2.5% to 3.5%.
The forecast assumes an average fuel price of about $4.70 per gallon, with fuel expense expected to increase roughly $2.8 billion from a year earlier.
American also lowered its full-year 2026 adjusted earnings forecast to a loss of $1 to $1.60 per share, compared with its previous outlook ranging from a 65-cent loss to a 65-cent profit.
Analysts had expected a full-year loss of $1.03 per share.
The airline expects higher jet fuel prices to create a year-over-year cost headwind exceeding $7 billion in 2026, underscoring the pressure on profitability despite record revenue growth.
AAL Price Action: American Airlines Group shares were up 2.62% at $11.72 at the time of publication on Thursday, according to market data.
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