Rewrites first paragraph, updates share price, adds comments from earnings call
Soft domestic travel demand impacts American's bookings, shares fall over 9%
American's Q3 loss forecast exceeds analysts' expectations
American's domestic unit revenue expected to remain lower year-over-year in Q3
American's outlook contrasts with Delta, United, and Alaska Air's forecasts
American sees potential for improved performance in August and September
U.S. airlines face uncertainty due to trade war and economic conditions
By Shivansh Tiwary and Rajesh Kumar Singh
July 24 (Reuters) - American Airlines AAL.O restored its full-year financial outlook on Thursday but offered a wide range of forecast, citing broader economic uncertainty that is hobbling consumer spending on travel in the domestic market.
The Fort Worth, Texas-based carrier expects an adjusted loss of 20 cents a share to a profit of 80 cents a share in 2025. The midpoint of the forecast is 30 cents per share, compared with analysts' average estimate of 61 cents a share, according to LSEG data.
American, which generates more than two-thirds of its passenger revenue from the U.S. domestic market, said if domestic travel demand continues to strengthen, it expects to hit the top end of its outlook. But if the economy weakens, it only expects to be at the bottom end of the forecast.
"The domestic network has been under stress because the uncertainty in the economy and the reluctance of domestic passengers to get in the game," CEO Robert Isom told analysts on an earnings call.
American's shares fell more than 9% in morning trade.
The company's outlook contrasts with upbeat forecasts of rival Delta DAL.N and United Airlines UAL.O. Alaska Air Group ALK.N has also reported improvements in passenger traffic and pricing power.
American said tepid domestic travel demand impacted its bookings in July. Isom, however, said the performance is expected to improve sequentially in August and September.
"We expect that July will be the low point," he said.
Still, the company expects its domestic unit revenue, or revenue generated from each seat, to remain lower year-over-year in the third quarter. Its non-fuel operating costs are estimated to be up as much as 4.5% in the September quarter.
American expects an adjusted loss per share in the range of 10 cents to 60 cents in the third quarter, compared with analysts' estimates of a loss of 7 cents, according to data compiled by LSEG.
Most U.S. airlines withdrew their financial forecasts in April as President Donald Trump's trade war created the biggest uncertainty for the industry since the COVID-19 pandemic. While some have reinstated their expectations, there is lingering uncertainty as to how the economy will fare in an ever-evolving tariff landscape.
Demand in the domestic travel market has remained subdued with budget travelers approaching their plans with caution, hurting carriers that primarily service the U.S. domestic market and price-sensitive customers.
Even summer, typically the peak money-making season for airlines, is falling short this year, with unsold standard economy seats forcing carriers to cut fares.
It dented the second-quarter earnings of Southwest Airlines, the largest U.S. domestic airline.
At American, domestic market was the weakest in the second quarter, with its unit revenue declining 6.4% from a year ago. The company's unit revenue in international markets was up, led by a 5% annual jump in the transatlantic market.
The U.S. carrier reported an adjusted profit of 95 cents per share for quarter ended June 30, compared with 78 cents a share expected by analysts.
(Reporting by Shivansh Tiwary in Bengaluru and Rajesh Kumar Singh in Chicago; Editing by Arun Koyyur and Franklin Paul)
((Shivansh.Tiwary@thomsonreuters.com; +91 9708363192; X: @Shivansh_19_;))
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