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.