American Airlines closed FY2025 with record revenue—but far slimmer profitability than its two largest U.S. network peers. Delta and United, meanwhile, translated “premium + loyalty + operational reliability” into meaningfully stronger earnings and cash flow.
At-a-glance: FY2025 snapshot (AAL vs DAL vs UAL)
| Metric (FY2025) | American (AAL) | Delta (DAL) | United (UAL) |
|---|---|---|---|
| Revenue / Operating revenue | $54.6B (record) | $63.4B operating revenue (record) | $59.1B total operating revenue (record) |
| Profitability headline | GAAP net income: $111M | GAAP operating margin: 9.2% (op income $5.8B) | Pre-tax earnings: $4.3B (pre-tax margin 7.3%) |
| EPS (headline) | GAAP EPS: $0.17 | GAAP EPS: $7.66 | Diluted EPS: $10.20 |
| Free cash flow (FCF) | FY2026E: >$2B (guidance) | $4.6B (FY2025) | $2.7B (FY2025) |
| Leverage / debt (selected disclosures) | Total debt: $36.5B; net debt: $30.7B | Total debt & finance leases: $14.1B; adjusted debt/EBITDAR: 2.4x | Total debt: $25B; net leverage: 2.2x |
| 2026 EPS guidance (selected) | Adjusted EPS: $1.70–$2.70 | EPS: $6.50–$7.50 | Market-reported FY2026 adj. EPS: $12–$14 |
Important note on comparability: airlines mix GAAP and non-GAAP measures (adjusted EPS, adjusted debt/EBITDAR, etc.). Treat cross-carrier comparisons as directional unless you normalize definitions and one-time items.
1) American Airlines (AAL): record revenue, but profitability still lagging
What AAL reported
- Record revenue: $14.0B in Q4 and $54.6B for FY2025.
- Profitability: GAAP net income of $99M (Q4) and $111M (FY). Excluding special items, net income of $106M (Q4) and $237M (FY).
- Disruption impact: management cited an approximate $325M negative revenue impact in Q4 tied to a government shutdown.
- Deleveraging progress: total debt reduced by $2.1B in 2025; year-end total debt of $36.5B and net debt of $30.7B.
Why margins are the real story
American’s record top line did not translate into commensurate earnings. That gap versus Delta and United reflects a few structural issues that AAL has been actively working to close:
- Domestic unit revenue pressure (with part of Q4 pressure attributed to the shutdown’s impact on domestic performance).
- Higher relative leverage than peers, which matters in a capital-intensive, operationally volatile industry.
- Operational volatility (weather and air traffic constraints hit everyone, but the financial sensitivity differs by network design, schedule padding, and disruption recovery playbooks).
Strategy moves AAL is leaning into (and why they matter)
American’s narrative for 2026 is consistent with the industry playbook—premium, loyalty, reliability—but it’s also more “catch-up mode” than “defend-the-lead mode.” Key initiatives highlighted include:
- Premium product: Flagship Suite rollout (introduced mid-2025) and continued investment in premium lounges.
- Connectivity as a loyalty lever: free high-speed Wi-Fi for AAdvantage members sponsored by AT&T.
- Operational reliability: schedule strengthening and re-banking DFW to a 13-bank structure to reduce misconnections and cascading delays.
- Network and fleet: upgrades at DFW (Terminal F), aircraft retrofits, and premium seating growth via 787-9 and A321XLR deliveries.
- Loyalty engine: AAdvantage enrollments +7% YoY; co-brand credit card spending +8% YoY; and a channel transition to Citi in inflight/airport acquisition as the partnership expanded.
What AAL guided for 2026
- FY2026 adjusted EPS: $1.70–$2.70
- FY2026 free cash flow: >$2B
- Q1 2026: revenue up 7%–10% YoY; ASMs up 3%–5%; adjusted loss per share ($0.10)–($0.50)
Bottom line for AAL: the strategy is directionally right. The execution challenge is to convert premium and loyalty improvements into durable margin expansion while continuing to de-risk the balance sheet.
2) Delta (DAL): “premium + diversified revenues + cash flow” at scale
What DAL reported
Delta’s full-year numbers underline why it’s often viewed as the profitability benchmark among U.S. network carriers:
- FY2025 operating revenue: $63.4B
- FY2025 operating income: $5.8B (GAAP operating margin 9.2%)
- FY2025 pre-tax income: $6.2B (pre-tax margin 9.8%)
- FY2025 EPS: $7.66 (GAAP)
- Cash generation: operating cash flow $8.3B; free cash flow $4.6B
Delta’s structural advantage: the “60% diversified revenue” model
Delta emphasizes that high-margin, diversified revenue streams—premium, loyalty, cargo, and MRO—collectively represent a large share of total revenue and are growing faster than the base ticket business. This matters because it lowers earnings volatility and makes margin resilience more achievable even when economy leisure demand is uneven.
What DAL guided for 2026
- FY2026 EPS: $6.50–$7.50
- FY2026 free cash flow: $3–$4B
- Q1 2026 revenue growth: +5% to +7% YoY (with operating margin 4.5%–6%)
Bottom line for DAL: Delta’s 2025 results show a mature “premium airline economics” model: strong cash flow, controlled leverage, and commercial strength that’s not solely reliant on base fares.
3) United (UAL): record revenue, improving operation, and aggressive premium/network expansion
What UAL reported
- FY2025 total operating revenue: $59.1B (+3.5% YoY)
- FY2025 profitability: pre-tax earnings $4.3B (pre-tax margin 7.3%); net income $3.4B
- FY2025 EPS: $10.20 diluted (adjusted $10.62)
- Cash generation: operating cash flow $8.4B; free cash flow $2.7B
- Customer mix: premium revenue +11% YoY for the full year; loyalty revenue +9% YoY for the full year (per company disclosure).
Operational reliability as a commercial weapon
United has been explicit that reliability (cancellations, misconnections, recovery speed) is not just a cost topic—it’s a revenue topic. In a world where business travelers and premium leisure travelers pay for certainty, operational performance becomes a pricing and loyalty advantage.
Fleet and product investments
- Starlink Wi-Fi: rolling out across regional and starting on mainline, positioned as a loyalty/experience differentiator.
- Premium capacity growth: continued investment in premium cabins and new interiors.
- 2026 deliveries: plans to take delivery of 100+ narrowbodies and ~20 Boeing 787s (a major capacity and product lever if executed on time).
2026 outlook (market-reported)
United’s earnings materials reference an investor update for detailed guidance; market reporting following the release pointed to an FY2026 adjusted EPS outlook of $12–$14 and a positive Q1 profitability range—signaling confidence in ongoing premium and corporate demand.
Bottom line for UAL: United looks like a carrier still in “profitable growth mode” (capacity, international breadth, premium upsell), while continuing to tighten the operation.
What the comparison really says (beyond the headlines)
1) Premiumization is the industry’s center of gravity—but starting points differ
All three carriers are chasing high-yield demand. The difference is how much of that premium flywheel is already embedded in performance:
- Delta: premium + diversified streams already underpin margins and cash flow.
- United: premium + network expansion is translating into strong EPS and record revenue.
- American: product investments are real, but the financial conversion into margins is still catching up.
2) Balance sheet flexibility matters more than ever
When disruptions hit (weather, ATC constraints, supply chain, geopolitical shocks), liquidity and leverage shape how quickly an airline can adapt—whether through schedule changes, fleet decisions, or opportunistic investments. American’s deleveraging progress is meaningful, but the gap remains visible versus peers.
3) Operational reliability is no longer “nice to have”
Reliability is becoming a core commercial KPI: it supports NPS, corporate share, premium upsell, and ultimately pricing power. Each airline is investing here, but consistency is what turns that into sustainable revenue quality.
What to watch in 2026
- Corporate demand durability: does the rebound persist across sectors, or remain uneven?
- Premium cabin supply: how quickly does added premium capacity dilute yields (or does it unlock incremental demand)?
- Fleet delivery risk: aircraft availability and retrofit timelines can make or break growth plans.
- Cost creep: labor, airport costs, MRO, and irregular operations can erode margin gains fast.
- Distribution and revenue management: restoring/defending indirect channel economics while pushing modern retailing (and doing it without demand leakage).
Conclusion
American’s FY2025 headline is “record revenue, modest profits”—and that combination is exactly why 2026 execution matters. AAL is investing in the right pillars (premium product, loyalty, reliability, fleet) and making progress on debt reduction, but investors will look for visible margin expansion and more resilient cash generation to narrow the gap with Delta and United.
Delta remains the cash-flow and durability benchmark; United continues to combine growth with strong earnings momentum. For American, the opportunity is real—but the standard it’s chasing is being set by peers that are already operating closer to “premium airline economics” at scale.
Disclosure: This is an independent analysis based on public company disclosures and market reporting. It is not investment advice.
Olivier Delestre-Levai 