Trade and macro turbulence have clouded the runways for America’s airlines.
The operator American Airlines, which is the largest airline in the world by passengers carried and daily flights, told investors on Thursday’s (April 24) first-quarter 2025 earnings call that the company is bracing for a year of macroeconomic uncertainty, with management withdrawing full-year guidance amid persistent softness in domestic demand and broader economic headwinds.
CEO Robert Isom opened the call by acknowledging the rapid shift in economic conditions, which have dampened travel demand and pressured financial results. Other airlines have been similarly concerned about the macro turbulence, with United and Delta both choosing not to reaffirm their own respective full year 2025 financial guidance, deciding instead to provide an update later in the year.
“We’re in a challenging economic environment which has had a significant impact on the industry,” Isom said, noting that while the airline industry historically thrives in periods of economic growth, the positive momentum seen at the end of 2024 faded quickly in early 2025.
Three more airlines — American Airlines, Southwest Airlines and United — have also made similar comments about the macroeconomic environment and revised their outlooks downward.
“We’ll remain nimble and take action as conditions warrant,” Isom said, referencing levers such as reducing off-peak flying, returning leased aircraft or deferring new deliveries.
See more: Airlines Report Bookings Drop Amid Macroeconomic Uncertainty
The call and American’s latest financials alike revealed stark contrasts in passenger demand across regions and market segments. While long-haul international travel remains robust, domestic main cabin demand is weak, especially among price-sensitive, discretionary travelers.
International passenger revenue, particularly on Atlantic and Pacific routes, provided relative strength. Atlantic passenger revenue per available seat mile (RASM) rose 10.5% year-over-year, and Pacific RASM increased 4.9% amid higher capacity, driven largely by demand for Japan services. Short-haul Latin America RASM also posted gains for the first time in over a year, making the region one of the airline’s most profitable.
The upcoming FIFA World Cup and the 2028 Los Angeles Olympics are also seen as opportunities to stimulate international demand.
Domestically, however, the picture was less encouraging.
“Domestic passenger RASM was down 0.7% year over year in the quarter as U.S. consumer discretionary spending and especially consumer spending on air travel decelerated throughout the quarter,” Isom said.
Executives described “mid- to high-single digit” RASM weakness in the domestic main cabin for summer 2025.
Business travel, especially managed corporate accounts, showed resilience. Managed business revenue was up 8% in Q1, with corporate share recovery tracking “exactly in accordance with our plans,” according to Vice Chair and Chief Strategy Officer Steve Johnson. The company anticipates further progress in Q2, particularly as distribution channels recover from prior disruptions.
Loyalty revenues also grew 5% year-over-year, with co-branded credit card spend up 8%.
Read also: Payment Choice Will Drive Travel Business in 2025
American Airlines reaffirmed its commitment to enhancing the customer experience, both as a differentiator and as a response to intensifying competition. Initiatives include the formation of a centralized customer experience team, new premium product introductions and digital enhancements.
A major announcement during the call was the planned rollout of complimentary high-speed satellite Wi-Fi for Advantage members starting in January, through a new sponsorship with AT&T.
“We’re excited to be able to offer free high-speed satellite wifi on more aircraft than any other carrier,” Isom said.
Management also expressed concern over proposed tariffs on aircraft and parts, signaling resistance to any cost increases on new Airbus deliveries, which could affect A321XLR arrivals at year-end.
Regarding economic outlook, Isom offered a candid assessment: “Right now, we don’t know what is going to happen.”
The company is preparing for both continued uncertainty and the eventual return of robust travel demand, positioning itself with a flexible cost structure, renewed fleet and strong liquidity.
