American Airlines reported much lower profits than expected in the last quarter. The airline’s earnings fell far short of what analysts had predicted. This surprised the market and led to a small drop in the company’s share price. At 11:00 AM ET, it is trading at about $14.19 per share, down 2.6% during the session. We take a look at the factors that led to the lower profits:
How the government shutdown hurt revenue
One major reason for the weaker results was a government shutdown. The company said this directly reduced its fourth-quarter revenue by about $325 million. Fewer government-related trips and disruption in travel demand made it harder for the airline to meet expectations, even though overall revenue still reached a quarterly record.
A severe winter storm added new pressure
After the quarter ended, a powerful winter storm created fresh problems. Winter Storm Fern forced the airline to cancel more than 9,000 flights, the worst weather-related disruption in its history. These cancellations caused heavy losses from missed ticket sales, higher rebooking costs, and the challenge of getting planes and crews back into position.
“The storm has resulted in more than 9,000 flight cancellations to date, making it the largest weather-related operational disruption in American’s history,” the carrier said in a statement.
Premium travel demand is supporting future profits
American’s confidence comes mainly from stronger demand for premium and corporate travel. As some budget-conscious travellers cut back, wealthier customers continue to pay more for better seats and services.
The airline has been investing in premium offerings to capture this demand, helping it stay positive about profits in 2026 even after a difficult quarter and a disruptive start to the year.
Why earnings missed expectations
Adjusted earnings per share came in at $0.16, much lower than the expected $0.38. This gap shows that costs and lost revenue had a bigger impact than anticipated. Even though sales were close to forecasts, profits suffered because the airline could not fully offset the revenue loss and operational challenges during the quarter.
Full-year performance was stronger than the quarter suggests
Looking at the full year, American Airlines had a better story. It reported record annual revenue of $54.6 billion and managed to stay profitable overall. The airline also reduced its total debt by $2.1 billion, strengthening its financial position regardless a tough operating environment.
Short-term pain, but management expects recovery
The airline said the storm could cost up to $200 million, but it sees this as temporary. CEO Robert Isom told CNBC the airline will get “back on track” over the next two to three days. Industry experts added that the storm could lead to billions of dollars in insured losses across multiple sectors, not just aviation.
American Airlines still optimistic about 2026
American Airlines gave a strong profit forecast for 2026. It expects adjusted earnings of $1.70 to $2.70 per share, higher than what analysts were expecting on average. The company believes the storm and shutdown effects are one-time issues, not long-term problems.
“American Airlines is positioned for significant upside in 2026 and beyond,” said CEO Robert Isom. “We have built a strong foundation, and we look forward to taking advantage of the investments we have made in our customer experience, network, fleet, partnerships and loyalty program.”
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