MW American Airlines adds gourmet coffee and champagne to its premium offerings, and its stock rises

By Steve Gelsi

Investors are rewarding the carrier's emphasis on luxury amenities as 'people are willing to pay for experience'

American Airlines' stock was rising Thursday after its full-year profit outlook was raised.

American Airlines Group Inc.'s stock gained altitude Thursday after the air carrier boosted its profit view for the coming quarter above Wall Street estimates, as it benefits from an emphasis on upscale services such as premium coffee and Champagne on flights.

Unit revenue - how much the company receives per seat - improved through the quarter amid strong demand for premium-seating options that continue to outperform its main cabin, part of an increased emphasis on luxury amenities by the carrier.

"We feel really excited about it, and it all plays into what we're seeing in the marketplace - that people are willing to pay for experience," Chief Executive Robert Isom said Thursday on the company's call with analysts. "We're going to make sure that we have a hard product that they enjoy."

American Airlines' stock $(AAL)$ was up 6.4% in afternoon trading to $12.48 a share, its highest level since Sept. 18.

The carrier said it expects fourth-quarter earnings of 45 cents a share to 75 cents a share, ahead of the FactSet analyst consensus estimate of 30 cents a share.

The airline said it managed through a difficult operating environment due to bad weather and the Federal Aviation Administration's technology outage in September, but it "quickly recovered from irregular operations in the quarter and successfully mitigated the impact to customers."

Wall Street analysts praised the results.

"Near term, American sees a nice sequential uptick in unit revenue (+2 pts), which still leaves room to the upside depending on how the holidays play out," said Melius Research analyst Conor Cunningham, who reiterated a buy rating and a $16 price target on the stock. "When thinking about 2026, the improvement in the main cabin will be an added tailwind for American."

TD Cowen analyst Tom Fitzgerald reiterated a buy rating for American Airlines and cited its new sole-issuer, co-branded credit card with Citigroup Inc. (C) as a positive for the company.

"We believe American should have strong momentum into 2026 as it sees the benefit of indirect share regains, positive mix shifts from more premium seating and international capable aircraft," Fitzgerald said in a research note.

American narrowed its third-quarter loss to $114 million, or 17 cents a share, from a loss of $149 million, or 23 cents a share, in the year-ago quarter.

Its adjusted loss of 17 cents a share in the latest quarter, which excludes nonrecurring items, was narrower than the analyst estimate for a loss of 28 cents a share.

Third-quarter revenue edged up to $13.69 billion from $13.65 billion in the year-ago period, and beat the analyst projection of $13.63 billion.

The carrier said it continues to build up its higher-margin offerings for passengers, including plans for new Flagship lounges in Charlotte, N.C., and Miami, along with expanding its Admirals Club lounges in the two cities.

It has also teamed up with Lavazza for coffee and began its first Champagne partnership with Bollinger.

The carrier's third-quarter update came after Southwest Airlines Co. $(LUV)$ reported a third-quarter profit late Wednesday, with help from future premium-seat bookings as the no-frills airline pivots to offer more higher-end options. Southwest's stock was down 5% on Thursday.

Meanwhile, rival United Airlines Holdings Inc. $(UAL)$, which reported earnings last week, missed Wall Street's revenue estimate for its third straight quarter, but said it's seeing strong demand from fliers seeking premium services and from members of its frequent-flier programs. United's stock was dipping 1.7% Thursday.

Fellow rival Delta Air Lines Inc.'s $(DAL)$ third-quarter report, released earlier this month, delivered an upside surprise for investors, as profit and revenue rose well above expectations - and there were signs of a strong holiday travel season. Delta's stock was falling 1.6% Thursday.

As of Wednesday's close, American Airlines' stock had fallen 36% in 2025, while the S&P 500 SPX had gained 13.9% and the U.S. Global Jets ETF JETS has slipped 0.6%.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 23, 2025 14:07 ET (18:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.