American Airlines Group NASDAQ: AAL reported a first-quarter 2026 adjusted loss as higher-than-expected fuel prices and severe winter storms offset strong demand and double-digit revenue growth, executives said on the company’s earnings call.
Chief Executive Officer Robert Isom told analysts the carrier is “making significant progress” against its commercial plan, pointing to record booking trends during the quarter and an expectation for another step-up in revenue in the current period. Chief Financial Officer Devon May said revenue exceeded the company’s initial expectations, while costs were pressured by storms and staffing ahead of the summer peak.
First-quarter results: revenue up 10.8% amid storms and fuel headwinds
Excluding net special items, American posted an adjusted loss per diluted share of $0.40, May said. Total revenue increased 10.8% year over year, supported by premium demand and improved main cabin performance.
Isom said the quarter included “a $320 million revenue impact from winter storms” and “a $400 million increase in fuel expense versus the forward curve in January.” Despite those headwinds, he said the company’s pre-tax margin improved by “approximately 2 points” from the prior year, and May similarly said the pre-tax margin improved by nearly two points.
May highlighted that premium unit revenue growth outpaced main cabin performance by seven points year over year, while managed corporate revenue increased 13%. Domestic PRASM rose 6.6% and, May said, domestic performance is expected to accelerate in the second quarter.
Across international markets, May said results exceeded initial expectations:
- Atlantic unit revenue increased 16.7% year over year, with London up 25%.
- Pacific unit revenue increased 7.8%.
- Latin America unit revenue was “slightly negative,” but excluding Mexico, performance was “nicely positive.”
On costs, May said first-quarter unit cost excluding net special items, fuel, and profit sharing rose 5.2%. Winter storms reduced capacity production, pressuring CASM ex by roughly two points, and staffing ahead of summer added additional cost pressure.
Commercial strategy: premium seats, network build, and loyalty gains
Isom reiterated the company’s commercial focus around four pillars: “elevating our customer experience, growing our global network, driving premium revenue, and leading in loyalty.” He said demand for American’s product continues to grow and that the airline recorded “the nine highest revenue intake weeks in our history” during the quarter.
On the product side, Isom said American is increasing premium seating through new aircraft deliveries and retrofits, noting that lie-flat and premium economy seats grew “more than twice as fast as main cabin seats” in the first quarter. He also cited expansion of the Flagship Suite product across the international-capable fleet and said the product has delivered “leading net promoter scores” since introduction.
Isom also outlined airport and lounge investments, including new Flagship lounges planned for Miami and Charlotte, which he said would bring the total to 10 premium lounges. He added that American has announced “12 new or refreshed lounges over the past year” across its Admirals Club network.
Operational reliability was another focus. Isom said a major investment began earlier this month with a new “13-bank structure at DFW,” which he said is already showing improved customer connection rates and NPS scores. In Q&A, he said the changes help smooth operations and speed recovery during weather events, adding that employees have noticed fewer customers “running from gate to gate.”
On network plans, Isom said American is prioritizing 2026 growth in hubs where it can improve local share and profitability, specifically citing Philadelphia, Miami, and Phoenix, and later-year additions at DFW tied to gate expansions at Terminals A and C. He also said American expects to operate 500 flights per day from Chicago O’Hare this summer and credited the U.S. Department of Transportation and Federal Aviation Administration for steps aimed at limiting disruptions.
Internationally, Isom said American remains on track to increase its international-capable fleet to approximately 200 aircraft by the end of the decade and plans to grow alongside joint business and Oneworld partners. He highlighted new service to Budapest and Prague and announced routes to Caracas and Maracaibo, describing American as the “first U.S. airline to reconnect service to Venezuela in seven years.”
Loyalty also featured prominently. Isom said record AAdvantage enrollments were up 25% year over year, helped by a redesigned loyalty experience in the mobile app and the introduction of free Wi-Fi. He said enrollments were led by customers in New York, Chicago, and Los Angeles. Nat Pieper, the company’s Chief Commercial Officer, said co-branded card acquisitions set all-time records in the first quarter, while co-branded card spend rose 9% year over year.
Fuel recapture, pricing, and demand outlook
Executives emphasized that demand has remained strong as the company works to offset higher fuel costs. In prepared remarks, Isom said American is “working to take the appropriate actions to drive revenue to offset the increases in fuel costs” and, assuming the current forward fuel curve, “expect to be profitable in 2026.”
In response to questions about pricing discipline and demand, Isom argued that travel remains a good value in real terms and said customers have “good reason” to spend more given product upgrades. Pieper said American’s record revenue intake weeks occurred “prior to any of the hostilities in the Middle East that drove fuel where it is,” and pointed to improved segmentation and bundling capabilities.
Pieper provided specific expectations for fuel-cost pass-through, saying the company assumed fuel recapture in its plan and that, in the second quarter, American expects to recapture roughly 40% to 50% of the higher fuel costs. He said that assumption grows to 75% to 85% in the third quarter and into the 90% range in the fourth quarter if fuel remains elevated and industry capacity reductions materialize.
When asked about demand at higher fares, Isom said the airline is “sharp” in managing load factors and that loads are keeping pace with capacity additions, suggesting strength is showing up in yields.
Second-quarter and full-year guidance; capacity adjustments
May said second-quarter demand “remains robust” and guided to revenue up 13.5% to 16.5% year over year. Domestic unit revenue is expected to rise more than 10%, and the Atlantic region is expected to be up high single digits.
Capacity in the second quarter will be about a point below initial plans, May said, due to suspended flying to Tel Aviv and Doha, reduced planned capacity in Chicago, and other marginal reductions tied to higher fuel. He said further near-term reductions “don’t make economic sense” given the demand backdrop entering summer, but added the airline will be “sharp with capacity” beyond peak season.
May guided to second-quarter CASM ex up 2% to 4% year over year and said that, based on the April 20 forward curve, the company expects fuel at approximately $4 per gallon in the quarter. The company expects second-quarter adjusted earnings per diluted share ranging from a loss of $0.20 to a profit of $0.20.
For the full year, May said the midpoint of earnings guidance is $0.35 per share, “approximately flat to 2025,” despite jet fuel prices increasing fuel expense by “over $4 billion year-over-year.”
Fleet, liquidity, and debt reduction
May said American now expects delivery of 49 new aircraft in 2026, down from an initial estimate of 55, reducing capital expenditures by nearly $300 million. Total 2026 CapEx is expected to be approximately $4 billion, including continued deliveries of Boeing 787-9 aircraft in a premium configuration and expansion of the Airbus A321XLR fleet.
The company ended the quarter with nearly $11 billion in total available liquidity and more than $27 billion in unencumbered assets and first-lien borrowing capacity, May said. Total debt fell to $34.7 billion, a reduction of $1.8 billion during the quarter, marking the first time debt has been below $35 billion since mid-2015.
In media questions, Isom said the company is “really excited” about being the official North American airline of the FIFA World Cup and said it is not seeing bookings “away at this time.” He also addressed industry consolidation speculation, saying the two largest airlines “getting together” would be “anti-competitive,” while adding the company would remain alert for consolidation opportunities or assets that may become available, though he said there is “nothing to report” currently.
Closing the call, Isom said he was encouraged by first-quarter revenue growth and the company’s second-quarter outlook, despite fuel prices rising by more than $4 billion year over year. “We’re still anticipating to be able to produce a profit here,” he said.
About American Airlines Group NASDAQ: AAL
American Airlines Group Inc is a leading global airline holding company headquartered in Fort Worth, Texas. Formed in December 2013 through the merger of AMR Corporation (parent of American Airlines) and US Airways Group, the company operates one of the world's largest passenger and cargo networks. Its subsidiaries include American Airlines, which provides mainline service, and American Eagle, a network of regional carriers operating short- and medium-haul routes on behalf of the mainline carrier.
The company offers scheduled air transportation for passengers and cargo to more than 350 destinations in over 50 countries.
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