American Airlines beats revenue record despite earnings miss
2026 guidance of up to $2.70 EPS signals turnaround after debt reduction of $2.1 billion
American Airlines reported record fourth-quarter revenue of $14 billion while missing earnings expectations, though the carrier issued bullish 2026 guidance that signals a potential turnaround in its financial performance.
The Fort Worth-based carrier delivered adjusted earnings per share of 16 cents for the final quarter of 2025, falling short of analyst estimates that ranged from 35 to 38 cents. Despite the earnings shortfall, revenue slightly missed projections at $14 billion compared with the $14.03 billion consensus, according to data from Nasdaq. Shares declined 0.7% in Tuesday morning trading to $14.57.
The earnings miss represents a significant year-over-year decline from the 86 cents per share reported in the fourth quarter of 2024. However, investors appear focused on the company's forward-looking statements rather than the quarterly shortfall.
Chief Executive Officer Robert Isom told analysts that "American Airlines is positioned for significant upside in 2026 and beyond," highlighting the carrier's strengthened balance sheet and strategic investments. The company reduced its total debt by $2.1 billion during 2025 and now expects to achieve its goal of reducing debt to less than $35 billion by the end of 2026—a year ahead of schedule.
For the full year 2026, American Airlines forecast adjusted earnings per share between $1.70 and $2.70, with free cash flow expected to exceed $2 billion. That guidance represents a substantial improvement from 2025, when the carrier generated adjusted net income of just $36 million, or 36 cents per share, on record annual revenue of $54.6 billion.
The positive outlook comes as Susquehanna Financial upgraded American Airlines to a "Positive" rating from "Neutral" and raised its price target to $20 from $14. Analyst Christopher Stathoulopoulos cited a "constructive fundamental backdrop" for airlines heading into fiscal year 2026, pointing to American's revenue growth initiatives including enhanced premium products and a new co-branded credit card partnership with Citibank.
American's first-quarter 2026 guidance reflects some near-term challenges, with the carrier projecting an adjusted loss per share of 10 to 50 cents. The company said that guidance incorporates an estimated negative revenue impact of $150 million to $200 million from Winter Storm Fern, which has disrupted flight operations across U.S. airlines in recent days.
Despite the seasonal headwinds, analysts see opportunity in American's forward multiples. The stock currently trades at a forward price-to-earnings ratio of 7.4 times 2026 earnings, significantly below the broader market and many airline peers, with the average analyst price target at $17.46, according to market data.
The carrier's 2026 capital expenditure plan of $4 billion to $4.5 billion signals continued investment in its fleet and network, even as debt reduction remains a priority. American operates 977 mainline aircraft across its global network, with major hubs including Dallas/Fort Worth, Charlotte, Miami and Phoenix.
Investors will be watching whether American can deliver on its ambitious 2026 guidance amid broader industry challenges, including staffing constraints and volatile fuel prices. The airline sector has faced pressure from higher operating costs in recent quarters, though demand for travel has remained resilient through the holiday season.