American Airlines Group (NASDAQ:AAL) reported record quarterly revenue in the second quarter of 2026, as executives said gains from commercial initiatives helped offset a sharp year-over-year increase in fuel costs.
Chief Executive Officer Robert Isom said the airline delivered revenue growth of more than 16% from a year earlier, with improvement across every region served and every cabin offered. He attributed the results to American’s four-part commercial strategy: improving the customer experience, growing the global network, driving premium revenue and leading in loyalty.
The company ended the quarter with more than $11 billion in available liquidity, and Chief Financial Officer Devon May said American finished the period with $11.3 billion of liquidity. May said the airline expects to produce positive free cash flow for the full year at the midpoint of its current guidance and to end 2026 with lower net debt than at the start of the year.
Fuel Costs Pressure Outlook
Fuel was the central challenge discussed on the call. May said second-quarter fuel expense increased more than $2.2 billion, or 83%, from a year earlier. He said fuel forecasts had worsened quickly in recent weeks, with expected third-quarter fuel expense rising more than $700 million since the beginning of July and nearly $230 million in the prior week alone.
Based on the forward curve as of July 21, American expects an average fuel price of about $3.75 per gallon in the third quarter, which would result in a $1.7 billion year-over-year increase in fuel expense for the quarter.
As a result, American now expects third-quarter capacity to rise 3% to 5% year-over-year, about two percentage points lower at the midpoint than originally planned. May said the company will continue to evaluate capacity based on fuel prices and demand trends.
The airline guided to a third-quarter adjusted loss per diluted share of $0.70 to $0.10. For the full year, American adjusted its guidance to a range between a loss of $0.65 and a profit of $0.65 per diluted share. Isom said the company expects full-year adjusted earnings to be breakeven at the midpoint despite an anticipated nearly $6 billion year-over-year fuel headwind.
Revenue Strength Broad-Based Across Regions
Chief Commercial Officer Nat Pieper said total revenue increased 16.3% year-over-year in the quarter, reaching the high end of the airline’s initial guidance. He said all geographic regions exceeded the company’s initial expectations.
- Domestic unit revenue increased nearly 11%, with Washington National, Dallas Fort Worth and Los Angeles cited as standouts.
- Atlantic unit revenue rose about 9%, led by London.
- Pacific unit revenue increased 15%, with Japan described as noteworthy.
- Latin America unit revenue rose about 7%, supported by a recovery in Mexico beach demand.
Pieper said customer experience metrics also improved. Total Net Promoter Score increased five points year-over-year, and for on-time flights, NPS improved for the 15th time in 17 months. He also cited a 7% year-over-year improvement in the ACSI survey.
The airline plans to install Starlink high-speed Wi-Fi on its fleet beginning in 2027. Pieper said connectivity is increasingly important to customers and that such investments strengthen American’s competitive position.
Premium and Loyalty Remain Key Priorities
American emphasized premium demand as a key driver of its strategy. Pieper said premium unit revenue increased more than 13% year-over-year, driven by strong leisure and corporate demand. Main cabin unit revenue increased nearly 9% and accelerated during the quarter.
In response to an analyst question, Pieper said premium revenue rose 19% in the quarter, compared with a 15% increase in non-premium revenue. He said premium accounts for nearly half of ticketed revenue on roughly 30% of seats. He also said nearly 60% of American’s revenue comes from households earning $150,000 or more, which he described as demand more likely to hold up during economic uncertainty.
The airline is expanding premium capacity through new Boeing 787-9 and Airbus A321XLR deliveries, as well as retrofit programs on 777-300ER, 777-200ER, A320 and A319 aircraft. Pieper said lie-flat and premium economy capacity grew nearly twice as fast as main cabin capacity during the quarter.
Corporate demand was another area of strength. Pieper said managed corporate revenue rose 26% from a year earlier, marking the fifth consecutive quarter of double-digit growth. In response to a media question about Southwest Airlines’ efforts to attract corporate customers, Pieper said American’s managed corporate revenue, small and medium business product and travel management company business were all growing, adding, “We’re not losing it.”
The AAdvantage loyalty program also posted growth. Pieper said enrollments increased more than 30% year-over-year in the second quarter, surpassing the record growth achieved in the first quarter. He said the largest enrollment gains occurred in New York City, Chicago and Los Angeles, with international growth also strong. Co-branded card spending across American’s Citi portfolio grew 8% year-over-year.
Network, Fleet and Balance Sheet Plans
American executives said the airline is focused on improving hub performance and selectively growing its network. Pieper said a new bank structure at Dallas Fort Worth, implemented in April, has reduced systemwide misconnects by nearly 25% year-over-year and helped DFW unit revenue outperform the system average by about four points.
The airline also launched new routes from Philadelphia to Budapest and Prague, and from Dallas Fort Worth to Athens. Pieper said American resumed service to Venezuela with flights to Caracas and Maracaibo, describing the airline as the first U.S. carrier to do so.
May said American expects to take delivery of 48 new aircraft this year and continues to expect about $4 billion in capital expenditures for 2026. In response to an analyst question, he said 2027 capital expenditures are likely to be around $4.5 billion, while noting that some delivery schedules later in the decade still need smoothing.
On the balance sheet, May said American completed about $1.3 billion in incremental financings during the second quarter, bolstering liquidity and addressing its only meaningful 2027 maturity. He said the company’s longer-term goals remain reducing total debt to inside $35 billion, bringing net debt well inside $30 billion and achieving a double-B credit rating, which would require net debt to EBITDA inside three turns.
Isom closed by saying American remains focused on execution, customer service and long-term value creation. He said the company still has work to do but is seeing momentum from its strategy and expects additional progress in 2027 and beyond.
About American Airlines Group (NASDAQ:AAL)
American Airlines Group Inc is a leading global airline holding company headquartered in Fort Worth, Texas. Formed in December 2013 through the merger of AMR Corporation (parent of American Airlines) and US Airways Group, the company operates one of the world’s largest passenger and cargo networks. Its subsidiaries include American Airlines, which provides mainline service, and American Eagle, a network of regional carriers operating short- and medium-haul routes on behalf of the mainline carrier.
The company offers scheduled air transportation for passengers and cargo to more than 350 destinations in over 50 countries.
