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American Airlines Group (AAL) reported a challenging conclusion to 2025, falling significantly short of Q4 earnings expectations due to a $325 mln revenue headwind caused by a prolonged government shutdown. While revenue remained in line with expectations, the company's 1Q26 adjusted EPS guidance of ($0.10) to ($0.50) came in slightly below consensus at the midpoint, tempered by the massive operational disruption of Winter Storm Fern. Despite the quarterly setback, AAL pointed to a powerful surge in January bookings, with revenue intake up double-digits, as a signal that its commercial strategy is gaining traction heading into its centennial year.

• AAL reported Q4 adjusted EPS of $0.16, missing analyst estimates. The miss was primarily attributed to the government shutdown's impact on domestic traffic, particularly at the DCA hub, and softer bookings in late November and December.
• Premium and loyalty segments remained a bright spot, with premium unit revenue outpacing the Main Cabin by seven points in Q4. The company also saw record co-branded credit card spending, up 8% yr/yr, as it transitioned its exclusive partnership to Citi.
• While unit revenues in Latin America remained under pressure, domestic unit revenue had turned positive in September and would have remained so for the quarter if not for the government disruption.
• Corporate business showed renewed strength, with managed corporate revenue rising 12% yr/yr in Q4. Management noted this momentum has continued to strengthen in early 2026 as the airline deepens relationships with agency partners.
• The 1Q26 outlook is heavily influenced by Winter Storm Fern, which forced over 9,000 flight cancellations. AAL expects a $150-$200 mln revenue hit from the storm, though it still projects total 1Q26 revenue to grow 7-10% yr/yr.
• For FY26, AAL provided a wide adjusted EPS guidance range of $1.70 to $2.70. This broad window reflects lingering uncertainty regarding the long-term recovery of government travel and the full impact of extraordinary weather events on the bottom line.

Briefing.com Analyst Insight:

AAL’s Q4 represents a “one step forward, two steps back” dynamic compared to its stronger Q3. The EPS miss and wide FY26 guidance range reflect continued susceptibility to external shocks. However, the “Forever Forward” strategy is delivering top-line results, evidenced by double-digit revenue growth in early January and the successful recapture of indirect share. If AAL navigates the Q1 recovery from Winter Storm Fern while maintaining industry-leading efficiency, targeting $250 mln in additional savings, it could close the valuation gap with rivals by late 2026.