Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, April 23, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Robert D. Isom
  • Chief Financial Officer — Devon E. May
  • Chief Commercial Officer — Nat Pieper

TAKEAWAYS

  • Total Revenue -- American Airlines Group (AAL +4.35%) reported $12.6 billion, up 10.8% year over year, despite a $320 million drag from winter storms.
  • Adjusted EPS -- $(0.40) per diluted share, reflecting a first quarter net loss on an adjusted basis.
  • Pretax Margin -- Improved approximately two points year over year, signaling operational progress.
  • Fuel Expense -- Increased by $400 million relative to the January forward curve, with total annual fuel cost expected to rise by over $4 billion.
  • Premium Cabin Paid Load Factor -- Business and premium economy load factors reached record highs, up about 10 percentage points from 2019.
  • Loyalty Program Growth -- AAdvantage enrollments increased 25%, setting new records in major hubs New York, Chicago, and Los Angeles.
  • Co-branded Card Acquisition -- Acquisitions set an all-time record, with co-branded card spend up 9% year over year.
  • Premium Unit Revenue -- Outpaced main cabin unit revenue by seven percentage points year over year.
  • Domestic PRASM -- Increased 6.6% year over year; international performance led by Atlantic unit revenue up 16.7% and Pacific up 7.8%.
  • Q2 Revenue Guidance -- Projected to rise 13.5%-16.5% over the prior year, primarily driven by domestic and corporate improvements.
  • Q2 Domestic Unit Revenue -- Expected to grow more than 10%, with Atlantic region up high single digits.
  • Q2 Capacity -- Set to be about one point below initial plan, reflecting suspended flights to Tel Aviv and Doha and reductions in Chicago and other areas.
  • Q2 CASM-ex -- Expected to rise 2%-4% year over year due to close-in capacity reductions.
  • Q2 Fuel Price Guidance -- Projected at approximately $4 per gallon.
  • Q2 Adjusted EPS Guidance -- Range between a $(0.20) loss and $0.20 profit per diluted share.
  • Full-Year EPS Guidance -- $0.35 per share at the midpoint, flat with 2025, absorbing more than $4 billion in added jet fuel expense.
  • Capital Expenditures -- Lowered to $4 billion, down by nearly $300 million due to 49 planned aircraft deliveries (previously 55).
  • Total Debt -- $34.7 billion, down $1.8 billion sequentially to the lowest level since mid-2015.
  • Total Liquidity -- Nearly $11 billion in available liquidity, with $27 billion in unencumbered assets and first lien borrowing capacity.
  • Operational Enhancements -- Rebanked DFW hub, leading to higher NPS scores and improved customer connections, and expanded operational buffer in Philadelphia.
  • Managed Corporate Revenue -- Increased 13% year over year; small and medium enterprise revenue rose 28%.
  • Other Revenue -- “Other revenue or the marketing component” projected at about $1 billion per quarter for 2026.
  • Record Revenue Intake Weeks -- Nine of the highest revenue intake weeks in company history occurred in the first quarter.
  • Pillar Strategy Execution -- Management highlighted ongoing progress in elevating customer experience, global network growth, premium revenue focus, and loyalty leadership.
  • Network Expansion Plans -- Projected DFW will become the world’s largest single-airline hub with Terminal F opening in 2027, and Miami Concourse D redevelopment underway.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • First Quarter Net Loss -- CFO Devon E. May said, "While the increase in jet fuel prices kept this from being a profitable quarter," highlighting direct earnings pressure from fuel costs.
  • Fuel Price Volatility -- Management noted year-to-date fuel expense is projected to rise by over $4 billion, requiring ongoing recapture through fares or capacity cuts.
  • Unit Cost Pressures -- CASM-ex rose 5.2% year over year, with winter storms constraining Q1 capacity and increasing costs by about two points.
  • Latin America Unit Revenue -- CFO Devon E. May acknowledged, "unit revenue in Latin America was slightly negative," with short-haul international routes challenged by events in Mexico.

SUMMARY

American Airlines Group demonstrated notable top-line growth against material fuel cost headwinds, reporting double-digit revenue gains and improved pretax margins while guiding for continued demand strength into the second quarter. Management indicated strong momentum in premium travel segments, loyalty enrollments, and co-branded credit card acquisitions, simultaneously advancing a four-pillar strategy centered on customer experience, network expansion, premium revenue, and loyalty leadership. Debt reduction milestones and a moderated capital expenditure plan enhanced balance sheet flexibility, with a disciplined approach to capacity and margin management confirmed for the year ahead.

  • CFO Devon E. May provided full-year guidance reflecting, "The midpoint of the full-year earnings guidance is $0.35 per share, approximately flat to 2025 despite jet fuel prices increasing fuel expense by over $4 billion year over year."
  • Chief Commercial Officer Nat Pieper outlined fuel recapture objectives, with Q2 targeted at roughly 40%-50% of fuel recapture, ramping to year—75%-85% in Q3, and then ultimately in Q4, with fuel still at this level and with capacity reductions, "I think our recapture rate would be in the 90s."
  • CFO Robert D. Isom noted, "our pretax margin improved approximately two points year over year," demonstrating ongoing margin progress despite cost inflation.
  • CEO Robert D. Isom confirmed American Airlines Group will operate 500 flights per day at Chicago O’Hare for the summer, crediting regulatory actions for removing potential network disruption risk.
  • Management linked operational initiatives—such as DFW and Philadelphia rebanking—to increases in net promoter scores, improved connections, and higher revenue retention per customer.

INDUSTRY GLOSSARY

  • Pillar Strategy: American Airlines Group’s framework focused on four key objectives—customer experience, network growth, premium revenue, and loyalty leadership—used to guide commercial and operational decisions.
  • Rebanking: Redesigning hub flight scheduling into multiple distinct arrival/departure “banks” to increase connecting opportunities, regulatory compliance, and operational resilience.
  • DFW: Dallas/Fort Worth International Airport, the carrier’s largest hub and primary operational focus.
  • PRASM: Passenger Revenue per Available Seat Mile, a measure of unit revenue generation based on flown passenger miles and seat capacity.
  • CASM-ex: Cost per Available Seat Mile excluding fuel and special items, a benchmark for tracking underlying unit cost trends.
  • Flagship Suite: American Airlines Group’s premium international long-haul cabin product, offering lie-flat seats and enhanced amenities.
  • AAdvantage: The company’s proprietary frequent flyer and loyalty program, recognized as the largest of its kind in the airline industry.

Full Conference Call Transcript

Neil Russell: Hey. Thanks, Latif. Good morning, everyone, and welcome to the American Airlines Group Inc. earnings conference call. On the call with prepared remarks, we have our CEO, Robert D. Isom and our CFO, Devon E. May. In addition, we have a number of senior executives in the room this morning for the Q&A session. After our prepared remarks, we will open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow-up. Before we begin, please note that today's call contains forward-looking statements, including statements concerning future events, costs, forecasts of capacity, and fleet plans.

These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings press release that was issued earlier this morning, Form 10-Ks for the year ended 12/31/2025, and subsequent quarterly reports on Form 10-Q. Unless otherwise specified, all references to earnings per share are on an adjusted and diluted basis. Additionally, we will be discussing certain non-GAAP financial measures, which exclude the impact of unusual items.

Reconciliation of those numbers to the GAAP financial measures is included in the earnings press release and investor presentation, each of which can be found in the Investor Relations section of our website. A webcast of this call will be archived on our website. The information we are giving you on the call this morning is as of today's date, and we undertake no obligation to update the information subsequently. Thank you for your interest in American Airlines Group Inc. and for joining us this morning. With that, I will turn the call over to our CEO, Robert D. Isom.

Robert D. Isom: Thanks, Neil, and good morning, everyone. I would like to start my comments this morning by saying that American Airlines Group Inc. continues to make significant progress on our objectives to deliver for our investors. American Airlines Group Inc. is a premium global airline that is positioned to win for the long term. Our focus on delivering on our revenue potential this year is guided by our four pillars: elevating our customer experience, growing our global network, driving premium revenue, and leading in loyalty. We are seeing the benefits of our multiyear commercial initiatives come through in our revenue performance.

Demand for American Airlines Group Inc.'s product continues to grow, and during the quarter, we recorded the nine highest revenue intake weeks in our history. First quarter revenue grew 10.8%, and we expect this demand strength to continue, as we anticipate the second quarter will deliver revenue growth of approximately 15%. The first quarter also included a few challenges, including a $320 million revenue impact from winter storms, and a $400 million increase in fuel expense versus the forward curve in January. Even with those headwinds, our pretax margin improved approximately two points year over year.

I am proud of how our team has managed the business through these disruptions with a focus on safety and delivering a world-class customer experience. Thank you to the American Airlines Group Inc. team for your resilience and continued commitment to excellence. It is this dedication that makes American Airlines Group Inc. the premium global airline that our customers trust. Moving forward, we are working to take the appropriate actions to drive revenue to offset the increases in fuel costs. Assuming the current forward fuel curve, we expect to be profitable in 2026. Devon E. May will provide an update on our second quarter and full-year outlook in a few minutes.

But I would like to quickly summarize the progress that we have made on our four pillars and my perspective on how these initiatives will drive American Airlines Group Inc. forward. Our first pillar, elevating our customer experience, is centered on delivering a consistent and premium experience across every step of the travel journey. We are increasing the number of premium seats across our fleet through new deliveries and fleet retrofits. In the first quarter, lie-flat and premium economy seats grew more than twice as fast as main cabin seats. American Airlines Group Inc.'s Flagship Suite offers customers a luxurious flying experience, and we are expanding this product across our international-capable fleet.

The Flagship Suite has delivered leading net promoter scores since its introduction. We are also investing in the customer experience both on the ground and in the air. American Airlines Group Inc. offers the industry's leading lounge network with new Flagship Lounges planned for Miami and Charlotte, bringing our total to 10 premium lounges, the most of any airline. We are investing in new and expanded Admirals Club lounges across our network and have announced 12 new or refreshed lounges over the past year, and there is more to come. We are enhancing our onboard experience through upgraded food and beverage offerings and luxury onboard items, including bedding and duvets, and our Centennial-themed products such as amenity kits and sleepwear.

Connectivity in flight is critical to the customer journey. Today, AAdvantage members enjoy complimentary high-speed satellite Wi-Fi sponsored by AT&T, on more aircraft than any other carrier globally. Finally, reliability and disruption management are among the most important drivers of customer satisfaction. We are making intentional investments in our schedule and technology to deliver more on-time arrivals, fewer missed connections, and a smoother travel experience. Our largest investment started earlier this month in the form of a new 13-bank structure at DFW. We expect the new structure will support an even more reliable operation as approximately one third of our aircraft touch DFW every day. Since the rebanking, we have seen improvements in customer connection rates and NPS scores.

The DFW operation running smoothly is critical to the success of our entire system, and we anticipate this structure will help to enable effective future growth at our largest and most impactful hub. All of this will result in improved customer satisfaction scores and an even more reliable operation. Our second pillar is growing our global network. American Airlines Group Inc. is a premium global airline with the most comprehensive North American network in the industry. In 2026, we are prioritizing growth in hubs where we can improve both our local share and hub profitability as we efficiently utilize existing infrastructure, particularly in Philadelphia, Miami, and Phoenix.

Later this year, we also expect to add flights at DFW to take advantage of new gate expansions at Terminal A and Terminal C. We will, of course, adjust our growth rate depending on factors including demand and fuel price. However, our long-term network objectives stay the same. Finally, we are grateful to Secretary Duffy, Administrator Bedford, and their leadership teams for acting swiftly to minimize flight disruptions at Chicago O'Hare during the upcoming summer travel season. We expect to operate 500 flights per day this summer and look forward to continuing to grow local share, deepening loyalty, and increasing co-brand credit card acquisitions. We are excited about our strategic growth opportunities in future years.

We have hubs in some of the fastest growing economic regions in the country, and construction projects are underway to enable growth. We expect our operation at DFW to become the largest single-airline hub in the world once the new Terminal F is operational in 2027. During the quarter, we also announced plans to further invest in Miami by redeveloping Concourse D, which we expect to enhance operations, elevate the customer experience, and improve regional and international travel. And in 2028, upon completion of our investments in Terminals 4 and 5 at LAX, we will have a significantly expanded operation with the newest facility offering a modern, convenient customer experience.

We remain on track to increase our international-capable fleet to approximately 200 aircraft by the end of the decade and plan to continue to grow alongside our joint business and oneworld partners. We are launching new service to destinations such as Budapest and Prague, as well as to Caracas and Maracaibo, where American Airlines Group Inc. will be the first U.S. airline to reconnect service to Venezuela in seven years. Our third pillar is driving premium revenue. We continue to deepen the relationships we have with our corporate and agency partners and are capturing greater share among high-value customers.

Our customer base skews higher-end, and our customers have shown that they are willing to spend more for an improved travel experience. We are focused on improving our revenue mix through better segmentation and redefining our fare products. We have already seen the impact of these efforts in our premium cabins, with paid load factors in business and premium economy at the highest levels in our history, up approximately 10 points versus 2019. This reflects both strong demand and improved commercial execution, and it highlights the opportunity we see across the premium segment. We also think there is significant opportunity in upselling in the main cabin.

Last year, we began sharpening the differentiation between Basic Economy and Main Cabin, and that strategy is working. These targeted changes have led to increased demand for our extra-legroom product, Main Cabin Extra. Loyalty is our fourth and final pillar. American Airlines Group Inc. invented airline loyalty. And today, the AAdvantage program is the largest airline loyalty program in the world. We offer more value per mile, countless ways to earn and redeem miles, and more engagement opportunities for AAdvantage members. During the quarter, we redesigned the loyalty experience in our mobile app, enhancing the AAdvantage activity screen to improve performance, clarity, and engagement.

These efforts, combined with the introduction of free Wi-Fi, produced record AAdvantage enrollments in the first quarter, up 25% year over year, led by customers in New York, Chicago, and Los Angeles. Our new co-branded card partnership with Citi plays a critical role in our loyalty strategy and offers our customers the most straightforward and seamless path to status in the industry. This partnership has significant upside, as it is designed to drive long-term growth in credit card acquisitions, spend, and member engagement. The first quarter got off to a fast start, with card acquisition setting all-time records, while spend on our co-branded cards increased 9% year over year. Now I will turn the call over to Devon E.

May to share more about our first quarter financial results and outlook for the second quarter and full year.

Devon E. May: Thank you, Robert D. Isom. Excluding net special items, American Airlines Group Inc. reported a first quarter adjusted loss per diluted share of $0.40. While the increase in jet fuel prices kept this from being a profitable quarter, we were able to improve our pretax margin by nearly two points year over year. Revenue performance in the quarter exceeded our initial expectation. Total revenue grew 10.8% year over year, reflecting strong demand for our product and the continued returns of our multiyear commercial initiatives.

Premium demand continued to perform well throughout the quarter, with year-over-year premium unit revenue growth seven points higher than main cabin, extending the momentum we saw last year and underscoring the strength of both our premium customer base and the products we offer. At the same time, we saw a meaningful improvement in main cabin revenue performance following the economic uncertainty that affected last year's results. This strength was further supported by continued momentum in managed corporate; revenue increased 13% year over year. Domestic year-over-year PRASM increased 6.6% in the quarter, and we expect domestic year-over-year performance to accelerate in the second quarter. Our international entities exceeded our initial expectations.

Atlantic unit revenue was up 16.7% year over year, with London up 25%. Pacific unit revenue increased 7.8% year over year. Finally, unit revenue in Latin America was slightly negative, but excluding Mexico, performance was nicely positive in the quarter. Our unit cost, excluding net special items, fuel, and profit sharing, was up 5.2% year over year. The severe winter storms lowered our Q1 capacity production and pressured CASM-ex by approximately two points. As we previously discussed, additional cost pressure came from staffing the operation in advance of the upcoming summer season.

We are continuing to see the results of our multiyear effort to reengineer the business and expect over $200 million of incremental savings from these efforts in 2026, bringing our total annual operating savings to approximately $1 billion since this initiative was launched. This transformation leverages procurement excellence, technology investments, and process improvements to improve the customer and team member experience while driving a more efficient business. Looking ahead to the second quarter, demand across all cabins and entities remains robust. We expect domestic unit revenue to grow more than 10% in the second quarter.

Internationally, we expect all entities to deliver positive unit revenue performance, led by continued strength in the Atlantic region, which we expect to be up high single digits. Our capacity for the second quarter is about a point below our initial plan, as we have suspended flying to Tel Aviv and Doha, have reduced planned capacity in Chicago, and have further decreased some other marginal flying in the face of higher fuel. Further reductions in the very near term do not make economic sense, given the current demand environment as we enter our summer peak. But as we move beyond the summer peak, we will be sharp with capacity in light of the current fuel environment.

We expect second quarter revenue to be up between 13.5%–16.5% year over year, driven primarily by continued improvements in the domestic entity, growth in corporate customer volumes, and our ability to recapture elevated fuel costs. Second quarter CASM-ex is anticipated to be up 2%–4% year over year, slightly elevated due to the close-in reductions in capacity. Based on the forward fuel curve from April 20, we expect a fuel price of approximately $4 per gallon in the quarter. With this second quarter guidance, we expect to deliver adjusted earnings per diluted share of between a loss of $0.20 and a profit of $0.20.

We are also updating our full-year outlook to reflect our current revenue expectations and the forward fuel curve. The midpoint of the full-year earnings guidance is $0.35 per share, approximately flat to 2025 despite jet fuel prices increasing fuel expense by over $4 billion year over year. Turning now to our fleet and capital expenditures. We now expect delivery of 49 new aircraft this year, down from our initial estimate of 55 aircraft, reducing CapEx by nearly $300 million. Our deliveries this year include the twelfth Boeing 787-9 aircraft in our premium configuration and a continued expansion of our Airbus A321XLR fleet. Based on these deliveries, we now expect total capital expenditures to be $4 billion.

We ended the first quarter with nearly $11 billion in total available liquidity, and we have more than $27 billion in unencumbered assets and first lien borrowing capacity. We continue to make significant progress on our financial priorities, ending the quarter with total debt of $34.7 billion, a reduction of $1.8 billion in the quarter. This is the first time our total debt has been below $35 billion since mid-2015. The improvements we have made on the balance sheet provide significant flexibility as we navigate the current environment, and reflect the disciplined approach we have taken to capital allocation. I will now hand over the call to Robert D. Isom for closing remarks.

Robert D. Isom: Thanks, Devon E. May. We officially celebrated our 100th anniversary this month, a remarkable milestone that reflects a legacy of innovation, resilience, and caring for people on life's journey. American Airlines Group Inc. is positioned to win by delivering sustainable growth and creating long-term value for shareholders, team members, and customers. Our focus remains on executing our commercial initiatives while managing cost efficiently to deliver results and expand our margins. There is tremendous upside ahead for American Airlines Group Inc.

From elevating our customer experience and growing our global network to driving premium revenue and leading in loyalty, we are executing on a strategy and initiatives that will drive value and shape our next 100 years as a premium global airline. Operator, open the line for questions.

Operator: Thank you. Star 11 on your telephone. To remove yourself from the queue, you will need to press star 11 again. To allow everyone the opportunity to participate, you will be limited to one question and one follow-up. Please standby while we compile the Q&A roster. Our first question comes from the line of Katie O'Brien of Goldman Sachs.

Katie O'Brien: Hey. Good morning, everyone. Thanks so much for the time. Just a higher-level industry one first. I understand that the recent fare increases are driven by the spike in jet fuel. I think it is interesting that there has been no demand impact as of yet. If you are seeing something different, please correct me. But even before the spike in fuel, there was quite a bit of pricing momentum. Do you think something has changed structurally in the industry where there has been a shift towards better pricing discipline over the last several months? Is it competition or product changes playing a role? I would just love to hear your take.

Robert D. Isom: Hey, Katie O'Brien. Thanks for the question. I have our Chief Commercial Officer, Nat Pieper, here with me to help out as well. I will start with this. I think that travel is a good deal. If you take a look at pricing today in real terms versus where we were almost a decade ago, it is just catching up to where we were. So I think people realize that. And then, on top of that, we have given them good reason to actually want to spend more. There has been a drive to a premium product. American Airlines Group Inc. has been a big part of that.

And I think what you are seeing is recognition that travel is still a good deal. There is an experience-based consumer dynamic going on in the industry, and we benefit from that. We have a great product out there, a great network, and feel really good about demand as we go forward in the future.

Nat Pieper: Hi, Katie O'Brien. Thanks for the question. I think a couple of things are interesting. Number one, is there a long-term resetting in terms of consumer spending hierarchy? We all remember revenge travel from COVID, and people got tired of buying TVs and wanted to go see the world. I think some of that has continued and extended. For us, we have had nine weeks so far in the first quarter that were company record-setting from a revenue intakes perspective, prior to any of the hostilities in the Middle East that drove fuel where it is. So there is something going on there from a long-term spending standpoint. And then as Robert D.

Isom referenced, we think the American Airlines Group Inc. offering is really resonating with consumers as well. The investments we have made in customer experience, our network and focusing on local market share—which are our highest-yielding customers—and then lastly, on the loyalty side. There is also a piece with getting the right product into the right hands of the right people at the right price, delivering value to consumers. Part of it is bundling. Part of it is segmenting. We are making good progress on that. So I think that is a component as well.

Katie O'Brien: That is great. Really helpful. And maybe just for my second question, can you walk us through the assumptions behind your full-year revenue outlook? Is there a fuel recapture expectation there? Are you assuming demand is steady or improves, or there is ultimately some demand elasticity? Really trying to understand the puts and takes and how they may or may not be different at either end of the share guidance. Thanks so much for the time.

Nat Pieper: Sure. Certainly, the second quarter revenue estimation for us—plus 15%—is an eye-popping number, and we feel good about it. I will start with we have booked 65% of the second quarter, and it obviously is a strong performance based on the trends that we are seeing in our hubs, and a lot of the American Airlines Group Inc.-specific pieces that are in place. We did incorporate, as you would expect, some fuel recapture in the plan. When we built our plan at the outset, we had significant margin expansion due to a lot of American Airlines Group Inc.-specific improvements that I referenced earlier and as Robert D. Isom talked about in our four pillars.

Since we shared that plan, fuel has risen an incremental $4 billion of fuel expense for American Airlines Group Inc. in the year. Historically, airlines recover that additional fuel expense either by increasing revenue or by reducing marginal capacity. We have been encouraged so far by the pace with which revenue has been recaptured. Obviously, if fuel continues through the third quarter into the fourth quarter, we are going to see some more broad industry capacity reductions.

But as we think about it and what we have incorporated: in the second quarter, roughly 40% to 50% of fuel recapture, and we would expect that to grow through the balance of the year—75% to 85% in Q3, then ultimately in Q4, with fuel still at this level and with capacity reductions, I think our recapture rate would be in the 90s.

Operator: Thank you. Our next question comes from the line of Scott Group of Wolfe Research. Please go ahead, Scott.

Scott Group: Hey. Thanks. Good morning. We have seen some more material capacity reductions from others. I think you guys will lead the industry on capacity in Q2. How are you thinking about capacity in the back half of the year, now that you have got more time to plan for a higher fuel price environment? And just to be clear on the answer to that last question, is there an assumption in the guide that RASM growth accelerates further in the back half of the year—in the third quarter—as we get a full quarter of this higher fare environment?

Devon E. May: Hey, Scott Group. I will just start on the capacity discussion. I think Nat Pieper’s answer on our expectations for fuel recapture effectively already answers your question on RASM: we do expect higher yields going forward as we pass through more of the higher fuel expense. But on capacity for the second quarter, we had planned for slightly higher capacity than what we are putting out there right now. A couple of months ago, we were at about 6% for Q2. Since that time, we have reduced some flying in obvious places like Tel Aviv and Doha. We have also pulled back a little bit domestically with some marginal flying as well as some reductions in Chicago.

I would just say if you look back at our capacity, we have tended to be very conservative with capacity growth for the past, I do not know, half decade or so. But if you just look at the last couple of years: in 2024, we found ourselves in an oversupply environment, and we quickly pulled capacity on the back half of the year. In 2025, we had a handful of different demand shocks. We did the same thing. We will do the same thing here.

We are going to keep a close eye on fuel and demand over the next four to six weeks as we are planning for the off-peak period in August, September, and beyond, and we will make capacity adjustments accordingly.

Scott Group: Okay. And then maybe secondly, Robert D. Isom, I have asked some of the others, but I will ask you as well. Historically, when fuel prices eventually normalize, the industry sort of gives back a bunch of the pricing increases that it has gotten. Is there any reason to think it can be different this time and we can hold on to more of this higher price?

Robert D. Isom: Scott Group, two things. First off, as Nat Pieper alluded to, we had already seen a lot of traction in our efforts in the first quarter before any run-up in fuel prices. On top of that, I am confident in the initiatives that we are pursuing—whether it is from a customer experience perspective, our network, the initiatives we have to drive premium revenue and loyalty—those are going to pay off. We are giving people good reason to want to engage with American Airlines Group Inc. more fully and to spend. I view that as a good sign for us.

I go back to the first quarter: 10.8% revenue improvement, and that includes a really big hit from the worst storms in terms of impact to our operation that we have ever seen in our history. And as we look to the second quarter, as Nat Pieper said, a lot of that is on the books. We are anticipating 15% growth. I am bullish on what that means for our business.

Operator: Our next question comes from the line of Brandon Oglenski of Barclays. Please go ahead, Brandon.

Brandon Oglenski: Hi, good morning, and thanks for taking the question. Robert D. Isom, I will pose one question with two parts. It has been about two years now since you made a pretty sizable pivot and then repivoted back on your commercial business travel strategy. Where are you in that journey? I think you said you were fully recaptured on share at the end of last year, but what is next on corporate and business strategy at American Airlines Group Inc.? Second, you were hinting earlier—how are you thinking incrementally about upselling or getting incremental rebranded fares on your premium products and maybe within that corporate strategy as well? Thank you.

Robert D. Isom: Thanks, Brandon Oglenski. I am going to let Nat Pieper help me out with this. But I will say that we did pivot, and I am really pleased with what the team has been able to do over the last year. We fully engaged in the marketplace. We have deployed our sales team everywhere, and they have accomplished the objectives that we set out to achieve. We have recaptured the share that we lost. We have gained a little bit since then, and we are going to continue to be very active at improving from there. Nat Pieper?

Nat Pieper: Hi, Brandon Oglenski. Just some numbers to back up the evidence that Robert D. Isom is seeing. Managed corporate revenue for us is up 13% year over year, and our unmanaged business—small and medium enterprises, our AAdvantage Business product—is up 28% per year with really exceptional yields on both of those products. Further example, our TMC performance is up 11% thanks to our partnerships with AmexGBT and BCD and their support of American Airlines Group Inc. I look at all of those results along with the feedback we are getting. One of the wonderful things when you make a distribution change is that everybody gives you feedback—some of it loud, some you maybe do not want to hear.

But over time, as that feedback has moderated and become more productive, we are getting a good sense that what we are offering and what we are putting on the shelf is resonating—our network, our customer experience, the loyalty program—and delivering value to guests. All of those things: yes, we feel good about recovering the share that we had lost, but we see runway there as well. It is a core part of the positive American Airlines Group Inc. revenue story that you are seeing and that we see for the rest of the year.

Operator: Thank you. Our next question comes from the line of Ravi Shanker of Morgan Stanley. The question please, Ravi.

Ravi Shanker: Great. Thanks. Good morning, everyone. Can you unpack the FAA decision and Chicago O’Hare a little bit more? How did that compare versus your expectations? And how should we think about the incremental steps from here?

Robert D. Isom: Sure. Ravi Shanker, thanks for the question. American Airlines Group Inc. has been serving Chicago for 100 years. Our very first flight, flown by Charles Lindbergh, included Chicago. We are going to be in Chicago for another 100 years. We had flown about 500 flights a day out of Chicago prior to the pandemic, and it has taken us some time to build back up to that. We are going to be able to fly 500 flights as a result of the initiatives that have been put in place to address overflying. I want to give a shout out to the DOT and FAA.

Secretary Duffy and Administrator Bedford got in front of what would have been a real issue in Chicago. Chicago O'Hare would likely have been in a delay program from the very first flight of the day if something had not been done. I am pleased we are going to avoid an issue of having too much flying in Chicago for the airspace and ground capacity. That is good news not just for American Airlines Group Inc.; it is good news for the entire system. Real compliments to the administration—Secretary Duffy and Administrator Bedford—for that. In terms of what we end up with, again, we are going to fly what we had hoped to fly: 500 departures.

That will allow us to continue to build in Chicago with our customers. Our product is resonating—local passenger growth, business passenger growth, AAdvantage enrollments, our co-branded credit card enrollments—all are meeting and exceeding our expectations. No one is going to kick us out of Chicago. That is something that everybody is going to have to get used to, including our biggest competitor. We are going to be roommates, and roommates for a long, long time.

Ravi Shanker: Understood. Very clear. And maybe as a follow-up, Robert D. Isom, there has been a lot of industry speculation about M&A and such. Can you address that directly in addition to what you put out over the weekend? Also, your views on what you think is the ideal industry structure over time? I think you put in that press release that you think some things needed to change. What might those things be?

Robert D. Isom: I will start out with this, and again, on the heels of the Chicago question: we are going to be roommates, and we are not getting married. I want to stress that the idea of the two largest airlines in the world getting together is something that we have viewed as being anticompetitive. Obviously, everybody that has weighed in suggests the same thing—bad for customers, bad for the industry, and ultimately that would be bad for American Airlines Group Inc. In regard to consolidation in the industry, we are focused on American Airlines Group Inc. We are focused on delivering on our core initiatives, and part of that is building out our network.

We already have the most comprehensive network in North America. That allows us to really pursue opportunities organically, internationally, and also with our partners—some of which are part of oneworld, others that are part of oneworld and also joint businesses. All those are accretive to American Airlines Group Inc., and we really look to continue focusing on all those partnerships, whether those be domestic or international. Of course, if there are opportunities from a consolidation perspective or if there are assets that become available in the marketplace, American Airlines Group Inc. has a long history of being aggressive. We have a lot of experience.

Whether it is the potential for M&A, or the work that we have done to pioneer partnerships, we are going to be on the forefront of that.

Operator: Thank you. Our next question comes from the line of Jamie Nathaniel Baker of JPMorgan. Your line is open, Jamie.

Jamie Nathaniel Baker: Hey. Good morning, everybody. Probably for Nat Pieper. The question about yield stickiness when fuel prices recede has become a conference call staple this season; it came up yesterday on United’s call. I found the commentary there to be interesting—basically the suggestion that historically, marketing and government affairs had some degree of influence over pricing decisions; it was not unilaterally left up to revenue management. So that is my question for American Airlines Group Inc. First, do you agree with that broader premise? More importantly, do you think the industry and/or American Airlines Group Inc. specifically has evolved to a point where going forward pricing and revenue management wields more influence than in the past? Any thoughts there?

Nat Pieper: Jamie Nathaniel Baker, thanks for the question. I will start with praising my colleague Nate Gatten, who has government affairs responsibility here. He has zero appetite at American Airlines Group Inc. to dabble in revenue management. I saw the transcript and, frankly, it was interesting just from a team perspective and the organizational structure that we have here. We are pretty well aligned, and revenue management is one of those functions core to the airline—core to the assets and experience that American Airlines Group Inc. has. We are emphasizing it tremendously. We are investing resources. We are investing people on top of our very experienced people that are here.

As technology evolves—and, Jamie Nathaniel Baker, we referenced it a little bit—we call it the Revenue Growth Program within American Airlines Group Inc. That is a sound bite on really being able to effectively segment and bundle one’s products: getting the right product into people’s hands at the right price. I think the capabilities that we have, and really across the industry, are just going to continue to evolve in a positive way at a number of different price points. Ultimately, the goal is to maximize revenue across the enterprise.

Jamie Nathaniel Baker: Yep. Okay. Interesting. Second, probably for Robert D. Isom. The news that you might look to pursue more of an NEA-type relationship with Alaska—maybe that is not the way to convey it—but my question relates to pilots. My understanding is that the current scope allows for code sharing with international partners, but not the type of Alaska-Hawaiian long-haul flying that they have started adding post-merger. I am just trying to understand what scope impediments might stand between you and a potentially closer relationship with Alaska. Maybe the answer is not black and white; I get that as well. Any thoughts there? Thanks.

Robert D. Isom: Thanks, Jamie Nathaniel Baker. I will start with this. We have been working with Alaska for well over a decade. I remember working with Ben Minicucci to talk about sponsoring them to come into the oneworld relationship, which we successfully executed. It has been a terrific enhancement to Alaska and has enabled oneworld and their customers greater access to travel just about anywhere people want to go. We were also able to do great things with the West Coast International Alliance, which has been hugely beneficial—doing things that benefit our consumers, things that we really could not have done on our own. I feel good about where our relationship is and what happens next. The Alaska team is fiercely independent.

They are a very, very successful airline. We are the same. As we go forward, we will make sure that anything that we do works within our scope clauses, and we are going to make sure that we really take care of our customers and do what is right for both companies and our customers. I will leave it at that.

Operator: Our next question comes from the line of Conor T. Cunningham of Melius Research. Please go ahead, Conor.

Conor T. Cunningham: Hi, everyone. Thank you. Maybe a point of clarity before I get into another question. On the yield progression throughout the year, I just want to make sure that I understand: Is it that you assume that yields will essentially be flat from here to get to your recapture target by the end of the year—i.e., you do not need additional fare increases to get to that 90-plus percent come fourth quarter? Thank you.

Devon E. May: Yes. I think roughly in line, that is right. We do not need enormous increases to hit our targets as it works through, because it balances with the recapture assumptions. If the jet fuel forward curve comes down, you are currently exposed at the higher fares. That is the construct.

Conor T. Cunningham: Makes sense. Then, Devon E. May, maybe on the cost side. Clearly some challenges in Q1 given weather—everyone had those problems as well—but your Q2 guide is actually pretty good, and it seems like the setup for the second half is also in pretty good standing. Can you give some puts and takes you see moving throughout the year on cost? I think that would be helpful. Again, I think it sticks out relative to a lot of what we are hearing so far. Thank you.

Devon E. May: Sure. It has been a long-term effort on driving efficiencies in the business. It is something we have been at for three years. You do not see it every single year because some of these initiatives are long-term in nature. We have had a handful of new CBAs that have driven some cost pressure. But we are seeing it this year. If it were not for the storms in the first quarter, our cost performance would have been really nice. Up 2% to 4% in the second quarter feels pretty good. Obviously, it would have been a little bit lower had we flown the entirety of our schedule. For the back half of the year, we are set up well.

We are going to see pressure in some areas that end up being good pressure, things like selling expense. Unit cost is going to be dependent on how much capacity we produce. If we produce a similar amount of capacity to what we are doing in the second quarter, I would expect unit cost to be in the low single digits. If we pull back on capacity given the higher fuel, we are going to see some cost pressure there. But we do a nice job getting out of any sort of volume-related costs. We will continue to do that, and we will continue to focus on driving an efficient business.

Operator: Our next question comes from the line of Thomas John Fitzgerald of TD Cowen. Your line is open, Tom.

Thomas John Fitzgerald: Hi, everyone. Thanks very much for the time. Curious within the loyalty program what geographies you are seeing the strongest performance in terms of sign-ups? And within that question, if that $1.2 billion of other revenue is a good run-rate for that line item moving forward?

Nat Pieper: It is Nat Pieper. I will take the first one, and then Devon E. May the second piece of it. From a resonating perspective, from a volume perspective, as you would expect, it would be in our hubs. But what is exciting about loyalty enrollments is the penetration. Our top three markets: New York, Los Angeles, and Chicago. Places that are incredibly competitive hubs for us and for our competitors. Further evidence that the loyalty program—the biggest, the best—continues to resonate with guests.

Devon E. May: On the other revenue or the marketing component of it, we did see an increase that is pretty meaningful year over year. Quarter over quarter versus the fourth quarter was up something less than 10%. As remuneration grows, we expect that line item to grow as well. I would expect less volatility in that line item than what we have had from quarter to quarter in the past. It is probably going to be somewhere around $1 billion a quarter for 2026.

Robert D. Isom: Tom, I just want to underscore one stat. While Chicago, New York, and LA lead overall, loyalty enrollments are up 25% year over year.

Thomas John Fitzgerald: That is all great color. I really appreciate that. And then, similar bucket—on corporate recapture—curious what verticals you are seeing the most momentum in, and places where there is still room to recover versus the last couple of years. Thanks again for the time.

Nat Pieper: The three verticals we have seen the most uptake in are banking, healthcare and pharma, and industrials. That is both domestically and internationally. Encouraged by that performance. Across all verticals, I think there is still opportunity. But those are the big three we are seeing right now.

Operator: Next question comes from the line of Michael Linenberg of BMO Capital Markets. Please go ahead, Michael.

Michael Linenberg: Good morning, and thank you for the question. You have rebanked DFW and now Philadelphia. Can you talk about the operational benefits you expect to get from this? And what other initiatives you are undertaking on the operations front?

Robert D. Isom: Michael Linenberg, thank you. One of the biggest parts of our “elevating the customer experience” initiative is to improve our reliability—one of the biggest investments we are making. The rebanking of DFW really smooths out the operation throughout the entire day. There is never a period during the day where we come close to exceeding the operational capacity of the hub. From what we have seen so far, it is strengthening our operational reliability. When it is stressed—throw a thunderstorm in, which we have had—our ability to recover is so much quicker. Over our Centennial celebration, I was at DFW talking to our team, went to the control center, and asked folks, can you sense something is different?

For the most part, people said you just do not see as many people running from gate to gate. It is an improvement in operation. It takes the stress level down considerably for our customers and for our team members as well. I know Nat Pieper could comment on this, but the good thing we are seeing as well is that revenue is holding and increasing. Two points to that. One is we just do not have as many disconnects. Second is we have not really extended connect times by that much, and so we really have not seen people book away. We are retaining more revenue. It is a better customer experience. NPS scores are higher.

We are taking that, and those results are very promising. We have expanded it and will be expanding it to Philadelphia, and we are taking a look at the potential in other parts of our network as well. We would expect similar results—higher NPS scores, lower misconnections, greater retention of revenue. That is not all. We have taken a look at our schedule to make sure that we have buffered appropriately in terms of travel times outside of connect times in the hubs. That is paying off. We are making good use of contractual changes that have happened, especially with our flight attendants, where we have increased boarding times. All of that has come to fruition.

The airline as a whole—regionals, mainline—we are in good shape and ready for the summer. Thanks for the question.

Michael Linenberg: And then as my follow-up, when you think of industry consolidation, which everyone seems to be in agreement on, if M&A is difficult to pass, do you think airlines will increasingly look domestically for partnerships as another avenue? Thank you.

Robert D. Isom: I appreciate the question. The biggest issue out there today is can the largest airlines in the world get together and do something? The answer to that is it is anticompetitive. Whatever happens next, we look to make sure that anything we do strengthens our network. In many cases, partnerships are the best way to do that. In other cases, it is just organic growth. You will see from us—this year included in our growth plan—to strengthen our hub in Phoenix, make sure that Miami is fully built out. We have a lot of work going on in Chicago as noted, and Philadelphia as well. It really is the most comprehensive network in North America.

We have been pioneers in terms of building partnerships and relationships. We have a tremendous amount of experience here with M&A should that ever come about. I feel really good about where we stand. As dynamics change and the fortunes of other carriers change, we will be ready.

Operator: Thank you. Our next question comes from the line of John Gaudin of Citigroup. Your line is open, John.

John Gaudin: Hey, guys. Thanks for taking my question. This is Max talking for John. I wanted to follow up on the fuel pass-through commentary and getting to a recapture rate in the 90s by the end of the year. Can we get a little bit of how pass-throughs are evolving internationally versus in the domestic market? A little color would be helpful.

Nat Pieper: Okay. I will start and give you the quick entity run-through around the world, and then come back to the other question. First, domestically—65% of American Airlines Group Inc.’s capacity. We have the best network in North America, and it is resonating. Unit revenue of 7% in the quarter, and we saw it increase sequentially up into March for double digits. As mentioned earlier, the second quarter is 65% booked, and we are seeing further acceleration as it goes through. In Q1, stellar performance in Philadelphia and LaGuardia, as we strategically are shifting to deepen our schedule, improving our service to big markets and really generating higher yields that way. Pleased with the improvement in D.C. as well.

In the second quarter, DFW—full implementation of the 13-bank structure—and Los Angeles as that operation straightens out a little bit; we are starting to see traction there as well. In the Atlantic, roughly 15% of our capacity depending on season. It is our best performing international entity. Our quarterly RASM up 17%. March was north of 20%. In the second quarter, as we grow a bit, we will still see high single digits in unit revenue performance. Heathrow a stalwart—RASM up 25% in the first quarter. Not rocket science in our strategy there: we are putting our best, most premium airplane into the world’s most premium market, and we will continue that through the summer.

British Airways is a terrific partner for us in Heathrow and, obviously, the IAG group across the Transatlantic as well. The rest of Europe remains strong. We have four new routes coming online here in May—two out of Philadelphia to Prague and Budapest, two out of Dallas to Athens and Zurich—and bookings there look terrific. Latin America, roughly 15%. Mixed bag with breakeven RASM in the quarter. Short-haul international was challenged due to the events in Mexico, but that is starting to turn positive as we get to May and into June bookings. In the Deep South, that has been strong—Brazil was the stalwart. In 2Q, as we grow, Argentina will see better revenue performance.

Another highlight for Latin America for American Airlines Group Inc., we are excited to restart Venezuela service next week. We will be the first U.S. carrier to do that, and it further enhances our industry-leading Latin American operation out of Miami. Lastly, in the Pacific, roughly 5% of our capacity. Unit revenue growth of 8% in the first quarter and a little bit higher expectation in the second quarter. In the first quarter, Oceania performance was great and will stay decent in the second quarter, but Japan really becomes a stalwart as we fold into May and June. No coincidence: we have two terrific joint business partners in each of those arenas—Qantas in Australia and Japan Airlines across the Pacific.

A good story around the entities; it is a terrific demand environment both for the domestic and the international.

John Gaudin: Great. Thank you. That was great color. As my follow-up, every airline has a bit of a different philosophy guiding its capacity decisions. Can you help us understand what yours is if the macro situation continues and you revisit second-half capacity growth plans? Are you managing to margin neutrality, an ROIC target, or any other targets guiding this decision? Thanks.

Devon E. May: We touched on capacity earlier. I would just say we are always going to be sharp on capacity. When we had a supply issue in 2024, we pulled capacity pretty quickly. In 2025, we had different demand shocks. We pulled capacity to get supply more in line with demand as well. This year, we have this fuel increase, and we are going to do what is needed on capacity to make sure that we are passing on as much of that fuel increase to customers as possible. We will be watching for the next four to six weeks before we have to make some capacity decisions for August and September, and we will adjust accordingly.

Operator: Thank you. Ladies and gentlemen, at this time, the Q&A queue is open to media questions. Press 11 on your telephone. Again, the line is open for media questions. Our first question comes from the line of Alison Sider of Wall Street Journal. Your line is open, Alison.

Alison Sider: Hi. Curious what you are seeing for World Cup bookings—if those are coming in as you had hoped, or if there are any concerns about people not wanting to travel to the U.S.

Nat Pieper: Hi, Alison Sider. We are really excited about the World Cup event. I personally am super excited—any event with a ball and a scoreboard is worth it. The globalization and what that event really means—we are thrilled to be the official North American airline of the FIFA World Cup, and it is something we can work on with Qatar Airways as well. We have the best network in North America to get global fans where they want to go. Huge loyalty benefits for us here as well. We are really excited to see it.

It is a great event because it is not focused geographically on one city like the Olympics, but you get the entire North America region with matches in Canada and Mexico in addition to double-digit cities in the U.S. We are really excited about the event and not seeing book-away at this time.

Operator: Thank you. Our next question comes from the line of Leslie Josephs of CNBC. Leslie, your line is open.

Leslie Josephs: Hi. Good morning. My question is about demand. With fares going up, are you seeing the same or growing number of bookings at a higher rate, or fewer people booking but they appear to be willing to pay more to fly? And then my second question is about VFR travel—whether you are seeing any change in that this year. Thanks.

Robert D. Isom: Leslie Josephs, thanks. In terms of demand, we have always been really sharp in terms of managing our load factors. We see our loads keeping pace with the capacity adds. That would suggest that we are seeing the real benefit in yields right now. From a VFR perspective, I do not have a lot of detail at hand, but we have held pretty true to where we have been historically. VFR traffic—we are really excited about what Nat Pieper mentioned with our return to Venezuela. My guess is that is going to be a real factor in the development of that marketplace. Thank you.

Operator: Our next question comes from the line of Rajesh Singh of Reuters.

Rajesh Singh: Thanks. Hi, Robert D. Isom. Can you comment on reports of talks with Alaska to join your transatlantic joint venture? How far those discussions have progressed, and what scope you are considering?

Robert D. Isom: Thanks for the question. We have a great relationship with Alaska. We look forward to building on a history that dates back a long time—not just to oneworld when we sponsored Alaska into oneworld, but then developed the WCIA. As their business has changed and ours has too, we look for opportunities going forward. They have been fiercely independent, but at the same time, we have been able to cooperate for the good of consumers on a number of fronts, and we look forward to doing more with Alaska going forward.

Rajesh Singh: And if I can squeeze in one more question. You said that if there are any consolidation opportunities you will be interested in looking at that. Is there anything out there that you think might be the best fit for American Airlines Group Inc.?

Robert D. Isom: On consolidation, we are always on the lookout for opportunities. But right now, nothing to report. American Airlines Group Inc. is long experienced in making sure that we take care of our customers, our network, our company. We have been really creative over the years in being able to do that—whether it was the creation of today’s American Airlines Group Inc. back in 2013 in the combination of US Airways and American, all the way to things that have worked really well like our relationship with Alaska, the WCIA, or our joint businesses with IAG and JAL. We will continue to be creative and do what is right for our company and our customers. Thanks.

Operator: Thank you. This concludes the Q&A portion of the call. I would now like to turn the conference back to Robert D. Isom for closing remarks. Sir?

Robert D. Isom: Thanks, Latif, and thanks, everybody, for listening in today. We are encouraged by our revenue growth in the first quarter and anticipated growth in the second quarter. It is all due to what we are focused on: elevating our customer experience, growing our global network, driving premium revenue, and leading in loyalty. We have a fantastic team. I would like to thank them for everything that they do. I am very encouraged by what we are projecting for the year. With fuel prices up by over $4 billion, we are still anticipating being able to produce a profit here. It gives testament to what we will be able to do when those fuel prices moderate in the future.

Thank you for listening in, and we are going to get back to work.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.