0000006201-25-000038
SEC filingRevenue grew 0.4% to $14.4B, but net income fell 16.4% to $599M as higher salaries outpaced fuel cost savings.
In the second quarter of 2025, AAG reported total operating revenues of $14.392 billion, a modest 0.4% increase from $14.334 billion in the same period last year. The growth was driven by a 13.0% surge in other revenue (primarily loyalty program) to $1.058 billion and an 8.2% increase in cargo revenue to $211 million. However, passenger revenue, the largest component, slipped 0.6% to $13.123 billion due to softness in domestic demand, partially offset by strong international travel, particularly in the Atlantic region where PRASM rose 5.0%.
On the cost side, total operating expenses increased 2.4% to $13.257 billion. The most significant factor was a 10.9% rise in salaries, wages and benefits to $4.382 billion from contractual wage increases and new labor agreements. This was partially offset by a 13.0% decline in aircraft fuel and related taxes to $2.663 billion, as the average fuel price dropped 15.3% to $2.29 per gallon. Selling expenses also increased 17.5% due to higher commissions and credit card fees.
As a result, operating income decreased 18.0% to $1.135 billion, and operating margin contracted from 9.7% to 7.9%. Net income fell 16.4% to $599 million. On an adjusted basis (excluding net special items), pre-tax income was $869 million, down 16.4% from $1.040 billion.
Revenue dynamics across segments highlight a mixed picture. Passenger revenue, which accounts for over 91% of total, was pressured by domestic weakness. However, international markets, especially the Atlantic, showed resilience with a 5.0% PRASM improvement. Cargo revenue growth was driven by a 6.9% yield increase, while other revenue benefitted from the loyalty program, with cash payments from co-branded partners rising to $1.41 billion from $1.36 billion. Regional capacity increased 11.7% as measured by ASMs, supporting regional expenses which rose 5.0%.
Management’s commentary points to continued uncertainty from U.S. trade policies and tariff implementation, which could weaken business conditions and discretionary spending. The company remains focused on cost management through digital solutions and process enhancements, but does not provide quantitative guidance. Fuel hedging remains absent, exposing the company to price volatility. The American Eagle Flight 5342 accident impacted first-quarter revenues by $200 million, but the full-year impact is still being assessed. Liquidity remains strong at $12.0 billion, and the company continues to manage its debt through refinancing and prepayments.