Oct 23 (Reuters) - American Airlines ( AAL ) raised its
2025 profit forecast on Thursday, signaling that industry-wide
capacity cuts following a demand slump earlier this year had
begun to yield pricing gains.
Shares of the carrier were up nearly 4% in premarket
trading.
A slowdown in domestic travel earlier this year, driven by
economic uncertainty stemming from President Donald Trump's
sweeping tariffs, had left airlines in a bind, and pushed them
to cut fares to fill seats.
Since then, major carriers have scaled back capacity to
restore pricing power and safeguard margins.
The Fort Worth, Texas-based carrier said unit revenue, a key
gauge of its ability to charge more for seats on offer, improved
sequentially through the quarter, with September marking a
return to positive growth.
Carriers have also indicated an improvement in domestic
travel demand as Americans show resilience toward economic
uncertainty.
American Airlines ( AAL ) now expects full-year adjusted profit per
share in the range of 65 cents to 95 cents, a sharp turnaround
from its July forecast of a 20-cent loss to an 80-cent profit.
High-margin premium services, meanwhile, have remained
strong, as affluent travelers continue to pay a premium for a
more comfortable journey. A post-pandemic shift has found
airlines firming up their bets on premium services.
"Premium unit revenue growth year over year continues to
outperform the main cabin," American said on Thursday.
For the quarter through September, the U.S. carrier
reported an adjusted per share loss of 17 cents, compared with
analysts' average estimate of a 28 cents loss, according to data
compiled by LSEG.
On Wednesday, domestic peer Southwest reported a surprise
profit, helped by an improvement in travel bookings.
American's total operating revenue marginally rose to about
$13.69 billion, beating expectations of $13.63 billion.