American Airlines Q3 Earnings Beat Despite Loss

American Airlines Q3 earnings beat Wall Street expectations on Oct. 22, though the carrier still posted a quarterly loss as a fuel cost surge erased record revenue gains. The Fort Worth-based airline reported an adjusted loss of $0.28 per share, better than the $0.3610 loss analysts expected, on revenue of $16.34 billion, above the $16.21 billion consensus. Revenue climbed 19.3% from a year earlier, the strongest quarterly growth CEO Robert Isom has recorded outside the pandemic years.

Fuel was the whole story. American paid $3.85 a gallon in the quarter, $1.48 more than the same period last year, which added $1.9 billion to costs, nearly 70% more than a year ago. Devon May, the chief financial officer, said on the American Airlines Q3 earnings call that the quarter would have been solidly profitable without the fuel spike. For the full year, the airline now expects fuel expense to run more than $7 billion above 2025 levels.

On the American Airlines Q3 earnings call, Isom did not sugarcoat the red ink. "We're not satisfied with a loss, no matter the reason, and we will do better," he said. He said the company is moving with urgency to turn strong commercial results into better margins, free cash flow and a stronger balance sheet heading into 2027.

American Airlines Q3 earnings show premium strength

Premium cabins carried the American Airlines Q3 earnings result. Premium unit revenue rose 18.5% from a year earlier, outpacing main cabin results by more than four points. Premium seats generate roughly half of ticket revenue from only about 30% of seats, and American is adding more premium seating with every new aircraft and retrofit.

The AAdvantage program kept growing too. AAdvantage enrollments rose 27% from a year earlier, with growth of 35% to 65% in New York, Los Angeles and Chicago. Spending on co-branded Citi credit cards increased nearly 10%. Managed corporate revenue grew 28%, the sixth straight quarter of double-digit growth. Total unit revenue increased 14.5% across every geography and cabin, led by Latin America at 21.1%.

Fuel costs overwhelm American Airlines revenue records

American Airlines revenue reached $16.3 billion, above the high end of guidance, but airline fuel costs overwhelmed the gains. The $1.9 billion year-over-year rise in fuel expense was the single biggest factor in the quarter. Unit costs excluding fuel rose about 3%, better than the midpoint of guidance, and the airline has now met or beaten that cost target in 14 of the past 15 quarters.

Cost discipline remains a bright spot. By the end of this year, American expects nearly $1 billion in annual run-rate savings from technology investments, procurement and process changes, plus more than $900 million in working capital improvements. Isom said the work now underway is laying the foundation for solid profitability in 2027.

American Airlines Q3 earnings outlook: slower 2027 growth

For the fourth quarter, the American Airlines Q3 earnings call pointed to revenue growth of 19.5% to 22.5% from a year earlier. Fuel will remain a headwind. Based on the forward curve as of Oct. 19, the airline expects to pay about $4.70 a gallon in the fourth quarter, nearly double what it paid last year. With fuel elevated, American now expects its 2027 growth rate to slow considerably.

The AAdvantage program remains one of the company's strongest competitive advantages, Isom said, and premium demand keeps growing. American also kept expanding its network, with new 2027 routes including Chicago to Tokyo and Charlotte to Barcelona, and cargo revenue up 29% in the quarter. The airline is installing Starlink on its entire mainline fleet and plans to open 10 lounges through 2027.

For investors, the American Airlines Q3 earnings report told two stories at once. Commercial execution was strong: unit revenue grew in every geography, loyalty spending rose and corporate demand accelerated. But as long as fuel prices stay elevated, American Airlines revenue records will keep getting swallowed by airline fuel costs. Isom's message on the American Airlines Q3 earnings call was that the strategy is working and the remaining task is to turn it into profit.