American Airlines Group, Inc. (NASDAQ:AAL) reported first-quarter 2026 results on Thursday. The company posted record revenue of $13.9 billion, up 10.8% year over year and above estimates of $13.794 billion.

GAAP net loss was $382 million, or 58 cents per diluted share, compared with a loss of $473 million, or 72 cents per share, a year earlier.

Adjusted net loss was $267 million, or 40 cents per share, beating estimates of a 47-cent loss.

Margins Improve, Loss Narrows

Margins improved, with operating loss narrowing to $41 million from $270 million and operating margin improving to negative 0.3% from negative 2.2%.

Pretax loss narrowed to $476 million from $648 million, with pretax margin improving to negative 3.4% from negative 5.2%.

CEO Robert Isom said, “Even in a volatile operating environment, our pretax margin improved by nearly 2 points year over year, and we still anticipate modest profitability for the year assuming the current forward fuel curve.”

Revenue Strength Driven by Demand and Pricing

Passenger revenue rose 9.7% to $12.5 billion, with cargo revenue up 12.9% and other revenue increasing 23.9%.

Revenue passenger miles grew 3.9%, and total revenue per available seat mile rose 7.6%, reflecting strong demand and pricing.

Regionally, domestic passenger revenue increased 10.6% to $9.0 billion. Atlantic revenue rose 14.2%, with passenger revenue per ASM up 16.7%, while Pacific revenue increased 12.1%.

Latin America revenue grew 3.0%, while unit revenue was slightly lower.

Operational Metrics

Revenue passenger miles rose 3.9% to 58.6 billion, while available seat miles increased 3.0% to 72.0 billion. Passenger load factor improved 0.7 points to 81.3%.

Yield increased 5.6% to 21.34 cents, and passenger revenue per ASM rose 6.5% to 17.35 cents. Total revenue per ASM climbed 7.6% to 19.32 cents.

Cargo ton miles increased 9.0% to 527 million, while cargo yield rose 3.6%. Passenger enplanements grew 1.4% to 51.8 million, and total departures increased 1.1% to 534,000.

Cash Flow and Balance Sheet

Operating cash flow was $4.2 billion, and free cash flow totaled $3.4 billion. The company ended the quarter with $10.8 billion in liquidity and total debt of $34.7 billion, its lowest since mid-2015.

Higher fuel costs weighed on expenses, with aircraft fuel costs rising 13.2% as the average fuel price increased 10.7% year over year.

Earnings Call Takeaways

American Airlines reported a 10.8% revenue growth in the first quarter, despite challenges like winter storms and increased fuel expenses, and anticipates a 15% revenue growth in the second quarter.

The company is focusing on strategic initiatives such as elevating customer experience, expanding its global network, and driving premium revenue, with significant investments in fleet upgrades and lounge expansions.

Management remains optimistic about profitability in 2026, even with increased fuel costs, aided by cost savings initiatives and a strong demand environment, particularly in premium segments.

Outlook Hit by Fuel Costs

For the second quarter, American expects revenue of $16.344 billion to $16.776 billion, roughly in line with estimates of $16.436 billion.

The company expects adjusted EPS between a 20-cent loss and a 20-cent profit, versus estimates of a 5-cent loss.

Operationally, the company expects available seat miles to grow 4.0% to 6.0% year over year, and cost per available seat mile, excluding fuel and special items, to increase 2.0% to 4.0%.

The company lowered its full-year 2026 adjusted EPS outlook to a 40-cent loss, down from prior guidance of $1.70 to $2.70.

The updated outlook compares with estimates of a 37-cent loss and reflects a more than $4 billion increase in fuel expense.

AAL Price Action: American Airlines Group shares were up 5.30% at $12.11 at the time of publication on Thursday, according to Benzinga Pro data.

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