American Airlines Group Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jamie Baker - JPMorgan Securities - Analyst : So Robert, you and I had a constructive exchange, in my opinion, back at the March Industrials Conference. So I wanted to kind of stick to that theme following some of the more recent OA disclosures. What we heard from a competitor when discussing the industry landscape is that several airlines are operating a double-digit percentage of their flights at a loss. So I guess my question for you, Robert, is twofold. First, can you give us an approximation maybe on a full year basis to adjust for seasonality, what overall percentage of American flying loses money and maybe how that's changed and evolved in recent years? And then second, is there a path towards a more modest percentage of loss producing flying? How do you accomplish that? What are the upside drivers?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Two questions. First one, a bit of a follow-up to Conor's. Can you just speak on how you're thinking about capacity and unit costs versus January? Within the low single-digit and mid-single-digit ranges you're expecting, have things shifted at all? And then I know this is early, but this year, I think you had a couple of points of pressure from new labor contracts. Can you just speak to like headwinds and tailwinds we should be thinking about into next year?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Great. And then maybe just one on the indirect revenue share, if I could. I saw that came in better than expected in the second quarter. But on an operating margin basis, the gap to peers is about the same this quarter. It was in the second quarter of last year with indirect revenue much more recovered. Is there an element where revenue share is getting close to historical levels that's more volume driven than it was before the distribution strategy change and there's some element of pricing that recovers over time in those contracts? Or is it the margin pressure is coming from the relatively REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, AAL.OQ - Q2 2025 American Airlines Group Inc Earnings Call higher domestic exposure and maybe more market labor rates versus one of your peers you spoke about earlier in the call. Just would love to unpack that.

Question: Atul Maheswari - UBS AG - Analyst : This is Atul Maheswari on from Tom Wadewitz. Robert, if I heard you right, did you say that you're expecting a full recovery in indirect channel market share as you exit 2025? So if you could please confirm that? And related to that, are you able to quantify what would be the revenue lift that we should expect for 2026 as you run rate the 2025 exit rate to all of next year?

Question: Atul Maheswari - UBS AG - Analyst : Okay. And then as my follow-up, just following up on some of the questions that have been asked already. But if we look at your profit margins, relative to your network peers, just it would seem based on the outlooks that all of you have provided this year that your margin gap even at the EBITDAR level is likely to widen this year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, AAL.OQ - Q2 2025 American Airlines Group Inc Earnings Call So really, as you look out over the next few years, what do you think American really needs to do to make progress in bridging this gap? And do you think there are any structural impediments to American actually fully bridging this gap over time?

Question: Andrew Didora - Bank of America - Analyst : So Robert, you've been speaking a lot about your revenue share in indirect channels. When I think about share more broadly, right, like your capacity growth has been trailing your network peers for the past six or so quarters. I guess as we move forward from here, are you content with growing less than your peers and driving that RASM outperformance that you've been getting? Or does there comes a time when share matters and you need to maybe at least grow in line with some of your primary competition? Any thoughts around that?

Question: Andrew Didora - Bank of America - Analyst : Got it. And just my second question here. I know you've spoken about kind of your corporate revenues growing 10% in a flattish market. I guess -- can you more quantify the demand improvement you've seen of late that just gives you the confidence to speak to the accelerating revenue growth despite the tougher comps as we head into the back half of the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, AAL.OQ - Q2 2025 American Airlines Group Inc Earnings Call

Question: David Vernon - Sanford C Bernstein & Co LLC - Analyst : So Robert, I wanted to ask you a little bit about the investment in sort of the customer experience. And I want to ask it in kind of two ways. One, first, kind of as you look at yourself relative to your peers, where are the big opportunities for you to improve the customer experience? And as you talk to investors about this, like how are you thinking about measuring this? Is it Net Promoter Scores? How are you going to kind of judge the performance on improving the overall customer experience? Obviously, it will eventually show up in the bottom line. But I'm just wondering how are you thinking about talking about your progress on this journey to improve with investors and analysts?

Question: David Vernon - Sanford C Bernstein & Co LLC - Analyst : And I guess as you think about kind of where you guys stand relative to peers in terms of Net Promoter -- or do you guys benchmark that at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, AAL.OQ - Q2 2025 American Airlines Group Inc Earnings Call

Question: Duane Pfennigwerth - Evercore ISI - Analyst : So depending upon how we interpret the guide for 3Q, maybe there's slight sequential improvement in RASM depending upon how the quarter plays out. But I wonder how would you rank your enthusiasm for sequential improvement by entity, maybe domestic versus Atlantic versus Latin? And do you see a path back to positive RASM for domestic this year?

Question: Duane Pfennigwerth - Evercore ISI - Analyst : And then I may have missed it, apologies if I did, but you guys have been pretty good at keeping your capacity in kind of this 3% range, basically for all the quarters of this year, you made some comments about early deliveries. Does that change the trajectory for the fourth quarter? Or do you lean harder on retirements? Or is it just a rounding error?

Question: Savi Syth - Raymond James - Analyst : Just a clarification there, sorry. So on the domestic capacity side, with the declines, is that solely related to just taking off-peak capacity out. So as you get into the fourth quarter, you'll see that step up again. Is that how you're thinking?

Question: Savi Syth - Raymond James - Analyst : Makes sense. And then on the operations front, it seemed like that was one area that you had really improved kind of versus where you were maybe pre-pandemic over the last few years of this year, clearly, more issues. And I wonder if you can kind of -- is it really down to DCA and weather? And if that's the case, I mean, weather might not change. Like how do you manage through this? Because it seems like the metrics have gotten worse at American versus peers, even though you are kind of recovering better.

Question: Thomas Fitzgerald - TD Cowen - Analyst : Most of might have already been answered, but I'm curious just how you're thinking about the New York market organically now that seemingly a lot of the inorganic growth options there have been closed off.

Question: Thomas Fitzgerald - TD Cowen - Analyst : Okay. That's really helpful. And then just as a follow-up, how -- I don't know if you're able to give us any like sizing or like in terms of like points of RASM, but how are you thinking about, I guess, headwinds from the Wi-Fi for next year and then -- and tailwinds from the improving mix as you take on more premium heavy fleet?

Question: Alison Sider - Wall Street Journal - Analyst : I guess on New York, I was curious what you all made of the United-JetBlue arrangement. How compelling do you think that will be? And how much of a step back is it that American wasn't able to come to some other agreement with JetBlue?

Question: Leslie Josephs - CNBC - Analyst : Just curious if you could talk a little bit more about this weakness you've been seeing with the consumer. Robert, I know that you mentioned the uncertainty going into July. What is that exactly? And what are the signs of that? And just because it differs a bit from what we heard from Delta and American. Sorry, Delta and United.

Question: Leslie Josephs - CNBC - Analyst : Okay. And just one follow-up. One of your competitors was talking about using AI more for pricing. How do you think about that? And is that something that you're considering or already experimenting with?