Management Discussion
Management Discussion
Table of Contents
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of AAG's and American's Annual Report on Form 10-K for the year ended December 31, 2024 (the 2024 Form 10-K). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of AAG and American, but rather updates disclosures made in the 2024 Form 10-K.
Financial Overview
Business and Macroeconomic Conditions
Starting in the first quarter of 2025, the U.S. Government has promoted and implemented plans to place additional tariffs on goods imported into the U.S. from numerous countries and has pursued other trade policies intended to restrict imports and, in response, multiple nations have countered with reciprocal tariffs and other actions.
These or additional changes in U.S. or international trade policies, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for the transportation industry, which may adversely impact our operations through increased supply chain challenges, commodity price volatility and a decline in discretionary spending and consumer confidence, among others. We continue to monitor the situation.
Many aspects of our airline operations depend on the U.S. Government. The current shutdown, if it continues for an extended period of time, could strain air traffic control and security staffing, reduce air traffic capacity at key airports in the U.S. and have a material and adverse impact on our results of operations.
AAG's Third Quarter 2025 Results
The selected financial data presented below is derived from AAG's unaudited condensed consolidated financial statements included in Part I, Item 1A of this report and should be read in conjunction with those financial statements and the related notes thereto.
Three Months Ended September 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Passenger revenue$12,471 $12,523 $(52)(0.4)
Cargo revenue212 202 10 5.0
Other operating revenue1,008 922 86 9.4
Total operating revenues13,691 13,647 44 0.3
Aircraft fuel and related taxes2,767 2,874 (107)(3.7)
Salaries, wages and benefits4,461 4,098 363 8.9
Total operating expenses13,540 13,558 (18)(0.1)
Operating income151 89 62 69.4
Pre-tax loss(142)(256)(114)(44.7)
Income tax benefit(28)(107)(79)(74.1)
Net loss(114)(149)(35)(23.5)
Pre-tax loss - GAAP$(142)$(256)$(114)(44.7)
Adjusted for: pre-tax net special items (1)
3 527 (524)(99.4)
Pre-tax income (loss) excluding net special items$(139)$271 $(410) nm (2)
(1)See "Reconciliation of GAAP to Non-GAAP Financial Measures" below and Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of net special items.
(2)Not meaningful or greater than 100% change.
Pre-Tax Loss and Net Loss
Pre-tax loss and net loss were $142 million and $114 million, respectively, in the third quarter of 2025. This compares to third quarter of 2024 pre-tax loss and net loss of $256 million and $149 million, respectively. The period-over-period decrease in pre-tax loss on a GAAP basis was principally driven by a decrease in pre-tax net special items and lower costs for aircraft fuel and related taxes, offset in part by increases in certain operating expenses including salaries, wages and benefits and regional expenses.
Excluding the effects of pre-tax net special items, pre-tax loss was $139 million in the third quarter of 2025 and pre-tax income was $271 million in the third quarter of 2024. The period-over-period decrease in our pre-tax income excluding pre-tax net special items was principally driven by increases in certain operating expenses including salaries, wages and benefits and regional expenses, offset in part by lower costs for aircraft fuel and related taxes.
Revenue
In the third quarter of 2025, we reported total operating revenues of $13.7 billion, an increase of $44 million, or 0.3%, from the third quarter of 2024. Passenger revenue was $12.5 billion, a decrease of $52 million, or 0.4%, in the third quarter of 2025 from the third quarter of 2024. Our passenger revenue in the third quarter of 2025 was impacted by weakness in international travel, primarily in the Latin America region, offset in part by improvement in domestic revenue.
Cargo revenue increased $10 million, or 5.0%, in the third quarter of 2025 from the third quarter of 2024, primarily due to a 4.3% increase in cargo yield.
Other operating revenue increased $86 million, or 9.4%, in the third quarter of 2025 from the third quarter of 2024, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2025 and 2024, cash payments from co-branded credit card and other partners were $1.5 billion and $1.4 billion, respectively.
Our total revenue per available seat mile (TRASM) was 17.69 cents in the third quarter of 2025, a 1.9% decrease as compared to 18.04 cents in the third quarter of 2024.
Fuel
Aircraft fuel and related taxes was $2.8 billion in the third quarter of 2025, which was $107 million, or 3.7%, lower as compared to the third quarter of 2024. This was primarily due to a 5.5% decrease in the average price per gallon of aircraft fuel including related taxes to $2.37 in the third quarter of 2025 from $2.50 in the third quarter of 2024, offset in part by a 1.9% increase in gallons of fuel consumed due to increased capacity.
As of September 30, 2025, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. See Part I, Item 1A. Risk Factors - "Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity" in our 2024 Form 10-K.
Other Costs
We remain committed to actively managing our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. Additionally, we continue to focus on initiatives to reengineer our business through the use of digital solutions, process enhancements and procurement transformation and we intend to continue to invest in reengineering our business through the remainder of 2025 and beyond to build an even more efficient airline and continue to manage costs while delivering a better experience for our customers and team.
Our 2025 third quarter total operating cost per available seat mile (CASM) was 17.49 cents, a decrease of 2.4% from 17.92 cents in the third quarter of 2024. The decrease in CASM was primarily driven by a decrease in operating net special items and lower aircraft fuel costs, offset in part by higher costs for salaries, wages and benefits and regional expenses.
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Our 2025 third quarter CASM excluding net special items and fuel was 13.91 cents, an increase of 3.9% from 13.39 cents in the third quarter of 2024, which was primarily driven by higher costs for salaries, wages and benefits and regional expenses.
For a reconciliation of CASM to CASM excluding net special items and fuel, see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
Liquidity
As of September 30, 2025, we had $10.3 billion in total available liquidity, consisting of $6.9 billion in unrestricted cash and short-term investments, and $3.4 billion in total undrawn capacity under revolving credit and other facilities.
During the first nine months of 2025, we completed the following financing transactions (see Note 1 and Note 5 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on 2025 financing activities):
•amended the AAdvantage term loan credit and guaranty agreement to reduce the applicable interest rate margin and to reduce the scheduled quarterly principal amortization amount;
•issued $1.0 billion of incremental term loans pursuant to the AAdvantage term loan credit guaranty agreement (2025 AAdvantage Term Loan Facility), as amended;
•prepaid $487 million of the outstanding principal amounts of certain equipment notes issued under enhanced equipment trust certificates (EETCs);
•increased the aggregate revolving commitments under the 2013, 2014 and 2023 Revolving Facilities from $2.9 billion to $3.0 billion;
•received $432 million of gross proceeds pursuant to special facility revenue bonds issued by the Tulsa Municipal Airport Trust (TMAT), of which a portion was used to fund the redemption of other bonds related to TMAT and the remaining amount will be used to finance the cost of improvements at American's overhaul and maintenance base at Tulsa International Airport;
•prepaid $308 million toward portions of the outstanding principal amounts of the 10.75% senior secured IP notes (the IP Notes) and the 10.75% senior secured LGA/DCA notes (LGA/DCA Notes); and
•issued $1.2 billion of equipment loans and other notes payable in connection with the financing of certain aircraft.
American Eagle Flight 5342
On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ700 aircraft operated by PSA Airlines, Inc. was en route to Washington, D.C. from Wichita, Kansas when it was involved in a midair collision near Ronald Reagan Washington National Airport. We estimate that the accident reduced first quarter 2025 total operating revenues by approximately $200 million, of which the impacted revenue is not covered by insurance. In September 2025, the families of two passengers on flight 5342 filed complaints against the U.S. Government, PSA Airlines, Inc. and American seeking unspecified damages, and we currently expect that additional lawsuits will be filed. While we cannot predict the outcome of these lawsuits, American has industry standard insurance coverage for this incident and is continuing to assess the full impact on its business resulting from the accident.
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Reconciliation of GAAP to Non-GAAP Financial Measures
We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
The following table presents the reconciliation of pre-tax income (loss) (GAAP measure) to pre-tax income (loss) excluding net special items (non-GAAP measure). Management uses this non-GAAP financial measure to evaluate our current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items provides management with an additional tool to understand our core operating performance.
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
(In millions)
Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items:
Pre-tax income (loss) - GAAP$(142)$(256)$48 $359
Pre-tax net special items (1):
Mainline operating special items, net7 554 125 625
Nonoperating special items, net(4)(27)28 30
Total pre-tax net special items3 527 153 655
Pre-tax income (loss) excluding net special items$(139)$271 $201 $1,014
(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
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Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and CASM to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel provides management with an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Reconciliation of CASM Excluding Net Special Items and Fuel:
(In millions)
Total operating expenses - GAAP$13,540 $13,558 $39,619 $39,071
Operating net special items (1):
Mainline operating special items, net
(7)(554)(125)(625)
Aircraft fuel and related taxes(2,767)(2,874)(8,017)(8,916)
Total operating expenses, excluding net special items and fuel$10,766 $10,130 $31,477 $29,530
Total available seat miles (ASM)77,400 75,665 224,939 221,445
(In cents)
CASM17.49 17.92 17.61 17.64
Operating net special items per ASM (1):
Mainline operating special items, net (0.01)(0.73)(0.06)(0.28)
Aircraft fuel and related taxes per ASM(3.58)(3.80)(3.56)(4.03)
CASM, excluding net special items and fuel13.91 13.39 13.99 13.34
(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
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AAG's Results of Operations
Operating Statistics
The table below sets forth selected operating data for the three and nine months ended September 30, 2025 and 2024. Amounts may not recalculate due to rounding.
Three Months Ended September 30,Increase(Decrease)Nine Months EndedSeptember 30,Increase(Decrease)
2025202420252024
Revenue passenger miles (millions) (a)
66,580 65,502 1.6%188,698 188,120 0.3%
Available seat miles (millions) (b)
77,400 75,665 2.3%224,939 221,445 1.6%
Passenger load factor (percent) (c)
86.0 86.6 (0.6)pts83.9 85.0 (1.1)pts
Yield (cents) (d)
18.73 19.12 (2.0)%19.60 19.77 (0.8)%
Passenger revenue per available seat mile (cents) (e)
16.11 16.55 (2.7)%16.44 16.79 (2.1)%
Total revenue per available seat mile (cents) (f)
17.69 18.04 (1.9)%18.06 18.31 (1.4)%
Fuel consumption (gallons in millions)
1,169 1,147 1.9%3,375 3,322 1.6%
Average aircraft fuel price including related taxes (dollars per gallon)
2.37 2.50 (5.5)%2.38 2.68 (11.5)%
Total operating cost per available seat mile (cents) (g)
17.49 17.92 (2.4)%17.61 17.64 (0.2)%
Aircraft at end of period (h)
1,555 1,546 0.6%1,555 1,546 0.6%
Full-time equivalent employees at end of period
136,900 134,200 2.0%136,900 134,200 2.0%
(a)Revenue passenger mile (RPM) - A basic measure of sales volume. One RPM represents one passenger flown one mile.
(b)Available seat mile (ASM) - A basic measure of production. One ASM represents one seat flown one mile.
(c)Passenger load factor - The percentage of available seats that are filled with revenue passengers.
(d)Yield - A measure of airline revenue derived by dividing passenger revenue by RPMs.
(e)Passenger revenue per available seat mile (PRASM) - Passenger revenue divided by ASMs.
(f)Total revenue per available seat mile (TRASM) - Total revenues divided by ASMs.
(g)Total operating cost per available seat mile (CASM) - Total operating expenses divided by ASMs.
(h)Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excluded from the aircraft count above as of September 30, 2025 are aircraft in temporary storage including two mainline Airbus A321XLR aircraft as well as four regional aircraft as follows: three Bombardier CRJ900 and one Embraer ERJ145.
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Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Operating Revenues
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Passenger$12,471 $12,523 $(52)(0.4)
Cargo212 202 10 5.0
Other1,008 922 86 9.4
Total operating revenues$13,691 $13,647 $44 0.3
This table presents our passenger revenue and the period-over-period change in certain operating statistics:
Increase (Decrease)
vs. Three Months Ended September 30, 2024
Three Months EndedSeptember 30, 2025RPMsASMsLoad
Factor
Passenger
Yield
PRASM
(In millions)
Passenger revenue$12,471 1.6%2.3%(0.6)pts(2.0)%(2.7)%
Passenger revenue decreased $52 million, or 0.4%, in the third quarter of 2025 from the third quarter of 2024. Our passenger revenue in the third quarter of 2025 was impacted by weakness in international travel, primarily in the Latin America region, offset in part by improvement in domestic revenue.
Cargo revenue increased $10 million, or 5.0%, in the third quarter of 2025 from the third quarter of 2024, primarily due to a 4.3% increase in cargo yield.
Other operating revenue increased $86 million, or 9.4%, in the third quarter of 2025 from the third quarter of 2024, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2025 and 2024, cash payments from co-branded credit card and other partners were $1.5 billion and $1.4 billion, respectively.
Operating Expenses
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Aircraft fuel and related taxes$2,767 $2,874 $(107)(3.7)
Salaries, wages and benefits4,461 4,098 363 8.9
Regional expenses1,370 1,264 106 8.4
Maintenance, materials and repairs1,028 989 39 3.9
Other rent and landing fees906 861 45 5.3
Aircraft rent310 303 7 2.4
Selling expenses483 468 15 3.2
Depreciation and amortization474 479 (5)(1.1)
Mainline operating special items, net7 554 (547)(98.7)
Other1,734 1,668 66 4.0
Total operating expenses$13,540 $13,558 $(18)(0.1)
Aircraft fuel and related taxes decreased $107 million, or 3.7%, in the third quarter of 2025 from the third quarter of 2024, primarily due to a 5.5% decrease in the average price per gallon of aircraft fuel including related taxes to $2.37 in the third quarter of 2025 from $2.50 in the third quarter of 2024, offset in part by a 1.9% increase in gallons of fuel consumed due to increased capacity.
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Salaries, wages and benefits increased $363 million, or 8.9%, in the third quarter of 2025 from the third quarter of 2024, primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in our other labor agreements.
Regional expenses increased $106 million, or 8.4%, in the third quarter of 2025 from the third quarter of 2024, primarily due to an increase in regional flight operations as regional capacity, as measured by ASMs, increased 7.6% in the third quarter of 2025 from the third quarter of 2024.
Maintenance, materials and repairs increased $39 million, or 3.9%, in the third quarter of 2025 from the third quarter of 2024, primarily due to increased costs for component part repairs and airframe heavy checks driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $45 million, or 5.3%, in the third quarter of 2025 from the third quarter of 2024, primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
Operating Special Items, Net
Three Months Ended September 30,
20252024
(In millions)
Severance expenses$3 $-
Labor contract expenses (1)
- 516
Other operating special items, net4 38
Mainline operating special items, net$7 $554
(1)Labor contract expenses for the three months ended September 30, 2024 included one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline flight attendants, including a one-time payment of $514 million.
Nonoperating Results
Three Months Ended September 30,Increase(Decrease)Percent Increase (Decrease)
20252024
(In millions, except percentage changes)
Interest income$90 $117 $(27)(22.8)
Interest expense, net(432)(480)48 (10.0)
Other income, net49 18 31 nm
Total nonoperating expense, net$(293)$(345)$52 (15.3)
Interest income decreased $27 million, or 22.8%, in the third quarter of 2025 from the third quarter of 2024, primarily due to lower interest rates that reduced returns on our short-term investments. Interest expense, net decreased $48 million, or 10.0%, in the third quarter of 2025 from the third quarter of 2024, primarily due to lower interest rates on our variable-rate debt instruments and lower outstanding debt subsequent to the third quarter of 2024, as we continue our efforts to strengthen the balance sheet.
In the third quarter of 2025, other nonoperating income, net primarily included $31 million of net earnings related to our equity investments accounted for under the equity method and $17 million of non-service related pension and other postretirement benefit plan income.
In the third quarter of 2024, other nonoperating income, net primarily included $27 million of non-service related pension and other postretirement benefit plan income and $27 million of net special credits for mark-to-market net unrealized gains associated with certain equity investments, offset in part by $21 million of foreign currency losses.
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Income Taxes
In the third quarter of 2025, we recorded an income tax benefit of $28 million. Substantially all of our loss before income taxes is attributable to the United States.
See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Operating Revenues
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Passenger$36,985 $37,184 $(199)(0.5)
Cargo612 584 28 4.8
Other3,037 2,783 254 9.1
Total operating revenues$40,634 $40,551 $83 0.2
This table presents our passenger revenue and the period-over-period change in certain operating statistics:
Increase (Decrease)
vs. Nine Months Ended September 30, 2024
Nine Months EndedSeptember 30, 2025RPMsASMsLoad
Factor
Passenger
Yield
PRASM
(In millions)
Passenger revenue$36,985 0.3%1.6%(1.1)pts(0.8)%(2.1)%
Passenger revenue decreased $199 million, or 0.5%, in the first nine months of 2025 from the first nine months of 2024. Our passenger revenue in the first nine months of 2025 was impacted by softness in domestic demand for air travel and the American Eagle Flight 5342 accident, offset in part by strength in international air travel, particularly in the Atlantic and Pacific regions.
Cargo revenue increased $28 million, or 4.8%, in the first nine months of 2025 from the first nine months of 2024, primarily due to a 4.2% increase in cargo yield.
Other operating revenue increased $254 million, or 9.1%, in the first nine months of 2025 from the first nine months of 2024, driven primarily by higher revenue associated with our loyalty program. During the nine months ended September 30, 2025 and 2024, cash payments from co-branded credit card and other partners were $4.7 billion and $4.4 billion, respectively.
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Operating Expenses
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Aircraft fuel and related taxes$8,017 $8,916 $(899)(10.1)
Salaries, wages and benefits13,065 11,917 1,148 9.6
Regional expenses4,053 3,733 320 8.6
Maintenance, materials and repairs2,876 2,823 53 1.9
Other rent and landing fees2,627 2,514 113 4.5
Aircraft rent910 945 (35)(3.8)
Selling expenses1,467 1,331 136 10.2
Depreciation and amortization1,418 1,424 (6)(0.3)
Mainline operating special items, net125 625 (500)(80.0)
Other5,061 4,843 218 4.5
Total operating expenses$39,619 $39,071 $548 1.4
Aircraft fuel and related taxes decreased $899 million, or 10.1%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an 11.5% decrease in the average price per gallon of aircraft fuel including related taxes to $2.38 in the first nine months of 2025 from $2.68 in the first nine months of 2024, offset in part by a 1.6% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.1 billion, or 9.6%, in the first nine months of 2025 from the first nine months of 2024, primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in our other labor agreements.
Regional expenses increased $320 million, or 8.6%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an increase in regional flight operations as regional capacity, as measured by ASMs, increased 11.3% in the first nine months of 2025 from the first nine months of 2024. In addition, higher maintenance, materials and repair costs driven by an increase in the volume of airframe heavy checks and engine overhauls also contributed to the increase in regional expenses.
Maintenance, materials and repairs increased $53 million, or 1.9%, in the first nine months of 2025 from the first nine months of 2024, primarily due to increased costs for component part repairs and airframe heavy checks driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $113 million, or 4.5%, in the first nine months of 2025 from the first nine months of 2024, primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
Selling expenses increased $136 million, or 10.2%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an increase in commissions expense, driven by higher costs resulting from renegotiated agency contracts, as well as an increase in advertising expenses. Higher credit card fees driven by higher rates also contributed to the increase in selling expenses.
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Operating Special Items, Net
Nine Months Ended September 30,
20252024
(In millions)
Litigation reserve adjustments$77 $-
Labor contract expenses (1)
31 573
Severance expenses8 13
Other operating special items, net9 39
Mainline operating special items, net$125 $625
(1)Labor contract expenses for the nine months ended September 30, 2025 included a one-time charge for adjustments to vacation accruals resulting from pay rate increases effective January 1, 2025, related to the ratification of the contract extension in the fourth quarter of 2024 with our mainline maintenance and fleet service team members.
Labor contract expenses for the nine months ended September 30, 2024 included one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline flight attendants, including a one-time payment of $514 million, and from the ratification of a new collective bargaining agreement with our mainline passenger service team members.
Nonoperating Results
Nine Months Ended September 30,Increase(Decrease)Percent Increase(Decrease)
20252024
(In millions, except percentage changes)
Interest income$285 $363 $(78)(21.5)
Interest expense, net(1,294)(1,464)170 (11.6)
Other income (expense), net42 (20)62 nm
Total nonoperating expense, net$(967)$(1,121)$154 (13.7)
Interest income decreased $78 million, or 21.5%, in the first nine months of 2025 from the first nine months of 2024, primarily due to lower interest rates that reduced returns on our short-term investments. Interest expense, net decreased $170 million, or 11.6%, in the first nine months of 2025 from the first nine months of 2024, primarily due to lower interest rates on our variable-rate debt instruments and lower outstanding debt subsequent to the third quarter of 2024, as we continue our efforts to strengthen the balance sheet.
In the first nine months of 2025, other nonoperating income, net included $46 million of net earnings related to our equity investments accounted for under the equity method and $39 million of non-service related pension and other postretirement benefit plan income, offset in part by $28 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and debt refinancings and extinguishments.
In the first nine months of 2024, other nonoperating expense, net included $31 million of foreign currency losses, $30 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and $27 million of net losses related to our equity investments accounted for under the equity method, offset in part by $76 million of non-service related pension and other postretirement benefit plan income.
Income Taxes
In the first nine months of 2025, we recorded an income tax provision of $36 million. Substantially all of our income before income taxes is attributable to the United States.
See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.
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American's Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Operating Revenues
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Passenger$12,471 $12,523 $(52)(0.4)
Cargo212 202 10 5.0
Other1,005 920 85 9.4
Total operating revenues$13,688 $13,645 $43 0.3
Passenger revenue decreased $52 million, or 0.4%, in the third quarter of 2025 from the third quarter of 2024. American's passenger revenue in the third quarter of 2025 was impacted by weakness in international travel, primarily in the Latin America region, offset in part by improvement in domestic revenue.
Cargo revenue increased $10 million, or 5.0%, in the third quarter of 2025 from the third quarter of 2024, primarily due to an increase in cargo yield.
Other operating revenue increased $85 million, or 9.4%, in the third quarter of 2025 from the third quarter of 2024, driven primarily by higher revenue associated with American's loyalty program. During the three months ended September 30, 2025 and 2024, cash payments from co-branded credit card and other partners were $1.5 billion and $1.4 billion, respectively.
Operating Expenses
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Aircraft fuel and related taxes$2,767 $2,874 $(107)(3.7)
Salaries, wages and benefits4,459 4,096 363 8.9
Regional expenses1,353 1,268 85 6.7
Maintenance, materials and repairs1,028 989 39 3.9
Other rent and landing fees906 861 45 5.3
Aircraft rent310 303 7 2.4
Selling expenses483 468 15 3.2
Depreciation and amortization473 477 (4)(0.9)
Mainline operating special items, net7 554 (547)(98.7)
Other1,735 1,665 70 4.2
Total operating expenses$13,521 $13,555 $(34)(0.3)
Aircraft fuel and related taxes decreased $107 million, or 3.7%, in the third quarter of 2025 from the third quarter of 2024, primarily due to a 5.5% decrease in the average price per gallon of aircraft fuel including related taxes to $2.37 in the third quarter of 2025 from $2.50 in the third quarter of 2024, offset in part by a 1.9% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $363 million, or 8.9%, in the third quarter of 2025 from the third quarter of 2024, primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in American's other labor agreements.
Regional expenses increased $85 million, or 6.7%, in the third quarter of 2025 from the third quarter of 2024, primarily due to an increase in regional flight operations and costs at American's regional carriers.
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Maintenance, materials and repairs increased $39 million, or 3.9%, in the third quarter of 2025 from the third quarter of 2024, primarily due to increased costs for component part repairs and airframe heavy checks driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $45 million, or 5.3%, in the third quarter of 2025 from the third quarter of 2024, primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
Operating Special Items, Net
Three Months Ended September 30,
20252024
(In millions)
Severance expenses$3 $-
Labor contract expenses (1)
- 516
Other operating special items, net 4 38
Mainline operating special items, net$7 $554
(1)Labor contract expenses for the three months ended September 30, 2024 included one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline flight attendants, including a one-time payment of $514 million.
Nonoperating Results
Three Months Ended September 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Interest income$249 $268 $(19)(7.1)
Interest expense, net(450)(505)55 (10.8)
Other income, net49 18 31 nm
Total nonoperating expense, net$(152)$(219)$67 (30.5)
Interest income decreased $19 million, or 7.1%, in the third quarter of 2025 from the third quarter of 2024, primarily due to lower interest rates that reduced returns on American's short-term investments. Interest expense, net decreased $55 million, or 10.8%, in the third quarter of 2025 from the third quarter of 2024, primarily due to lower interest rates on its variable-rate debt instruments and lower outstanding debt subsequent to the third quarter of 2024, as American continues its efforts to strengthen the balance sheet.
In the third quarter of 2025, other nonoperating income, net primarily included $31 million of net earnings related to American's equity investments accounted for under the equity method and $17 million of non-service related pension and other postretirement benefit plan income.
In the third quarter of 2024, other nonoperating income, net primarily included $27 million of non-service related pension and other postretirement benefit plan income and $27 million of net special credits for mark-to-market net unrealized gains associated with certain equity investments, offset in part by $21 million of foreign currency losses.
Income Taxes
American is a member of AAG's consolidated federal and certain state income tax returns.
In the third quarter of 2025, American recorded an income tax provision of $5 million. Substantially all of American's income before income taxes is attributable to the United States.
See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.
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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Operating Revenues
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Passenger$36,985 $37,184 $(199)(0.5)
Cargo612 584 28 4.8
Other3,031 2,778 253 9.1
Total operating revenues$40,628 $40,546 $82 0.2
Passenger revenue decreased $199 million, or 0.5%, in the first nine months of 2025 from the first nine months of 2024. American's passenger revenue in the first nine months of 2025 was impacted by softness in domestic demand for air travel and the American Eagle Flight 5342 accident, offset in part by strength in international air travel, particularly in the Atlantic and Pacific regions.
Cargo revenue increased $28 million, or 4.8%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an increase in cargo yield.
Other operating revenue increased $253 million, or 9.1%, in the first nine months of 2025 from the first nine months of 2024, driven primarily by higher revenue associated with American's loyalty program. During the nine months ended September 30, 2025 and 2024, cash payments from co-branded credit card and other partners were $4.7 billion and $4.4 billion, respectively.
Operating Expenses
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20252024
(In millions, except percentage changes)
Aircraft fuel and related taxes$8,017 $8,916 $(899)(10.1)
Salaries, wages and benefits13,058 11,911 1,147 9.6
Regional expenses4,027 3,725 302 8.1
Maintenance, materials and repairs2,876 2,823 53 1.9
Other rent and landing fees2,627 2,514 113 4.5
Aircraft rent910 945 (35)(3.8)
Selling expenses1,467 1,331 136 10.2
Depreciation and amortization1,414 1,416 (2)(0.1)
Mainline operating special items, net125 625 (500)(80.0)
Other5,065 4,844 221 4.6
Total operating expenses$39,586 $39,050 $536 1.4
Aircraft fuel and related taxes decreased $899 million, or 10.1%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an 11.5% decrease in the average price per gallon of aircraft fuel including related taxes to $2.38 in the first nine months of 2025 from $2.68 in the first nine months of 2024, offset in part by a 1.6% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.1 billion, or 9.6%, in the first nine months of 2025 from the first nine months of 2024, primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in American's other labor agreements.
Regional expenses increased $302 million, or 8.1%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an increase in regional flight operations and costs at American's regional carriers.
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Maintenance, materials and repairs increased $53 million, or 1.9%, in the first nine months of 2025 from the first nine months of 2024, primarily due to increased costs for component part repairs and airframe heavy checks driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $113 million, or 4.5%, in the first nine months of 2025 from the first nine months of 2024, primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
Selling expenses increased $136 million, or 10.2%, in the first nine months of 2025 from the first nine months of 2024, primarily due to an increase in commissions expense, driven by higher costs resulting from renegotiated agency contracts, as well as an increase in advertising expenses. Higher credit card fees driven by higher rates also contributed to the increase in selling expenses.
Operating Special Items, Net
Nine Months Ended September 30,
20252024
(In millions)
Litigation reserve adjustments$77 $-
Labor contract expenses (1)
31 573
Severance expenses8 13
Other operating special items, net 9 39
Mainline operating special items, net$125 $625
(1)Labor contract expenses for the nine months ended September 30, 2025 included a one-time charge for adjustments to vacation accruals resulting from pay rate increases effective January 1, 2025, related to the ratification of the contract extension in the fourth quarter of 2024 with American's mainline maintenance and fleet service team members.
Labor contract expenses for the nine months ended September 30, 2024 included one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline flight attendants, including a one-time payment of $514 million, and from the ratification of a new collective bargaining agreement with American's mainline passenger service team members.
Nonoperating Results
Nine Months Ended September 30,Increase(Decrease)Percent Increase(Decrease)
20252024
(In millions, except percentage changes)
Interest income$732 $805 $(73)(9.0)
Interest expense, net(1,343)(1,536)193 (12.5)
Other income (expense), net41 (21)62 nm
Total nonoperating expense, net$(570)$(752)$182 (24.2)
Interest income decreased $73 million, or 9.0% in the first nine months of 2025 from the first nine months of 2024, primarily due to lower interest rates that reduced returns on American's short-term investments. Interest expense, net decreased $193 million, or 12.5%, in the first nine months of 2025 from the first nine months of 2024, primarily due to lower interest rates on its variable-rate debt instruments and lower outstanding debt subsequent to the third quarter of 2024, as American continues its efforts to strengthen the balance sheet.
In the first nine months of 2025, other nonoperating income, net included $46 million of net earnings related to American's equity investments accounted for under the equity method and $39 million of non-service related pension and other postretirement benefit plan income, offset in part by $28 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and debt refinancings and extinguishments.
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In the first nine months of 2024, other nonoperating expense, net included $31 million of foreign currency losses, $30 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and $27 million of net losses related to American's equity investments accounted for under the equity method, offset in part by $75 million of non-service related pension and other postretirement benefit plan income.
Income Taxes
American is a member of AAG's consolidated federal and certain state income tax returns.
In the first nine months of 2025, American recorded an income tax provision of $128 million. Substantially all of American's income before income taxes is attributable to the United States.
See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.
Liquidity and Capital Resources
Liquidity
At September 30, 2025, AAG had $10.3 billion in total available liquidity and $760 million in restricted cash and short-term investments. Additional detail regarding our available liquidity is provided in the table below (in millions):
AAGAmerican
September 30, 2025December 31, 2024September 30, 2025December 31, 2024
Cash$835 $804 $825 $795
Short-term investments6,023 6,180 6,020 6,177
Undrawn facilities3,400 3,289 3,400 3,289
Total available liquidity$10,258 $10,273 $10,245 $10,261
In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other factors. The amounts involved may be material.
Certain Covenants
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict our ability and that of our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV or collateral coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities. Our 5.50% senior secured notes due 2026, 5.75% senior secured notes due 2029 and the 2021 and 2025 AAdvantage Term Loan Facilities (collectively, the AAdvantage Financing) contain a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. As of the most recent applicable measurement dates, we were in compliance with each of the foregoing covenants.
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Sources and Uses of Cash
AAG
Operating Activities
Our net cash provided by operating activities was $3.4 billion and $3.6 billion for the first nine months of 2025 and 2024, respectively, a $212 million period-over-period decrease driven primarily by lower profitability in the first nine months of 2025 as compared to the same period in 2024.
Investing Activities
Our net cash used in investing activities was $1.5 billion and $1.8 billion for the first nine months of 2025 and 2024, respectively.
Our principal investing activities in the first nine months of 2025 included $2.1 billion of capital expenditures, which primarily related to the purchase of 13 Boeing 737 MAX aircraft, six Embraer E175 aircraft, five Bombardier CRJ900 aircraft, three Boeing 787-9 aircraft, two Airbus A321XLR aircraft, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and seven aircraft engines. These cash outflows were offset in part by $328 million in net proceeds from the issuance of the TMAT special facility revenue bonds and $243 million in proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at Los Angeles International Airport (LAX). Additionally, we had $143 million in net sales of short-term investments.
Our principal investing activities in the first nine months of 2024 included $1.9 billion of capital expenditures, which primarily related to the purchase of 12 Embraer E175 aircraft, three Boeing 737 MAX aircraft, three Boeing 737-800 aircraft lease repurchases, two Airbus A321neo aircraft, 39 aircraft engines and aircraft purchase deposits. Additionally, we had $627 million in net purchases of short-term investments. These cash outflows were offset in part by $598 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX.
Financing Activities
Our net cash used in financing activities was $1.8 billion and $1.5 billion for the first nine months of 2025 and 2024, respectively.
Our principal financing activities in the first nine months of 2025 primarily included $4.1 billion in debt and finance lease repayments, consisting of $3.3 billion in scheduled repayments, including the $1.0 billion cash settlement of AAG's 6.50% convertible senior notes. Debt and finance lease repayments also included early repayments of $487 million for the outstanding principal amount of equipment notes issued under EETCs and $308 million toward portions of the outstanding principal amounts of the IP Notes and LGA/DCA Notes. These cash outflows were offset in part by $2.2 billion of proceeds from the issuance of long-term debt, consisting of $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $1.2 billion from the issuance of equipment loans and other notes payable in connection with the financing of certain aircraft.
Our principal financing activities in the first nine months of 2024 included $2.7 billion in scheduled repayments of debt and finance lease obligations. These cash outflows were offset in part by $1.3 billion of proceeds from issuance of long-term debt, consisting of $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had been previously delivered and $571 million from the issuance of equipment loans and other notes payable.
American
Operating Activities
American's net cash provided by operating activities was $2.2 billion and $3.5 billion for the first nine months of 2025 and 2024, respectively, a $1.3 billion period-over-period decrease driven by a net increase in receivables from related parties, including the scheduled repayment of AAG's $1.0 billion 6.50% convertible senior notes. Excluding this net increase in receivables from related parties, American's operating cash flow decreased $198 million primarily due to lower profitability in the first nine months of 2025 as compared to the same period in 2024.
Investing Activities
American's net cash used in investing activities was $1.5 billion and $1.8 billion for the first nine months of 2025 and 2024, respectively.
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American's principal investing activities in the first nine months of 2025 included $2.1 billion of capital expenditures, which primarily related to the purchase of 13 Boeing 737 MAX aircraft, six Embraer E175 aircraft, five Bombardier CRJ900 aircraft, three Boeing 787-9 aircraft, two Airbus A321XLR aircraft, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and seven aircraft engines. These cash outflows were offset in part by $328 million in net proceeds from the issuance of the TMAT special facility revenue bonds and $243 million in proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX. Additionally, American had $143 million in net sales of short-term investments.
American's principal investing activities in the first nine months of 2024 included $1.9 billion of capital expenditures, which primarily related to the purchase of 12 Embraer E175 aircraft, three Boeing 737 MAX aircraft, three Boeing 737-800 aircraft lease repurchases, two Airbus A321neo aircraft, 39 aircraft engines and aircraft purchase deposits. Additionally, American had $626 million in net purchases of short-term investments. These cash outflows were offset in part by $598 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX.
Financing Activities
American's net cash used in financing activities was $737 million and $1.5 billion for the first nine months of 2025 and 2024, respectively.
American's principal financing activities in the first nine months of 2025 primarily included $3.1 billion in debt and finance lease repayments, consisting of $2.3 billion in scheduled repayments and early repayments of $487 million for the outstanding principal amount of equipment notes issued under EETCs and $308 million toward portions of the outstanding principal amounts of the IP Notes and LGA/DCA Notes. These cash outflows were offset in part by $2.2 billion of proceeds from the issuance of long-term debt, consisting of $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $1.2 billion from the issuance of equipment loans and other notes payable in connection with the financing of certain aircraft.
American's principal financing activities in the first nine months of 2024 included $2.7 billion in scheduled repayments of debt and finance lease obligations. These cash outflows were offset in part by $1.3 billion of proceeds from issuance of long-term debt, consisting of $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had been previously delivered and $571 million from the issuance of equipment loans and other notes payable.
Commitments
Significant Indebtedness
As of September 30, 2025, AAG had $28.4 billion in long-term debt, including current maturities of $3.5 billion. As of September 30, 2025, American had $24.6 billion in long-term debt, including current maturities of $3.5 billion. All material changes in our significant indebtedness since our 2024 Form 10-K are discussed in Note 5 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A and Note 4 to American's Condensed Consolidated Financial Statements in Part I, Item 1B.
Aircraft and Engine Purchase Commitments
As of September 30, 2025, we had definitive purchase agreements for the acquisition of the following new aircraft (1):
Remainderof 2025202620272028 and ThereafterTotal
Airbus
A320 Family3 21 24 104 152
Boeing
737 Family9 15 - 115 139
787 Family3 1 3 15 22
Embraer
E1756 16 17 47 86
Total21 53 44 281 399
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(1)Delivery schedule represents our best estimate as of the date of this report as described in footnote (d) to the "Contractual Obligations" table below. Actual delivery dates are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and regulatory concerns. See Part I, Item 1A. Risk Factors - "We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, adversely impacts our business, results of operations and financial condition" in our 2024 Form 10-K.
In addition, we have committed to purchase seven used Bombardier CRJ900 aircraft which are scheduled to be delivered from the fourth quarter of 2025 through 2026. We also have agreements for 49 spare engines to be delivered in the fourth quarter of 2025 and beyond. The "Contractual Obligations" table below reflects these commitments.
We intend to finance future aircraft deliveries and option exercises using long-term debt.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.
There have been no material changes in our off-balance sheet arrangements as discussed in our 2024 Form 10-K.
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Contractual Obligations
The following table provides details of our estimated material cash requirements from contractual obligations as of September 30, 2025 (in millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time and is subject to other conventions as set forth in the applicable accompanying footnotes.
Payments Due by Period
Remainderof 202520262027202820292030 and ThereafterTotal
American
Long-term debt:
Principal amount (a), (c)
$749 $3,611 $4,395 $7,264 $3,985 $4,615 $24,619
Interest obligations (b), (c)
340 1,251 986 690 373 807 4,447
Finance lease obligations37 147 138 100 94 354 870
Aircraft and engine purchase commitments (d)
1,280 2,891 2,784 4,057 4,252 9,847 25,111
Operating lease commitments412 1,572 1,413 1,283 1,175 3,773 9,628
Regional capacity purchase agreements (e)
275 1,051 1,049 976 809 808 4,968
Minimum pension obligations (f)
- 251 157 107 81 46 642
Retiree medical and other postretirement benefits (f)
34 138 135 131 128 615 1,181
Other purchase obligations (g)
1,401 3,122 1,811 1,285 424 3,824 11,867
Total American Contractual Obligations4,528 14,034 12,868 15,893 11,321 24,689 83,333
AAG Parent and Other AAG Subsidiaries
Long-term debt:
Principal amount (a)
- 3,746 3,746
Interest obligations (b)
- 172 194 198 203 214 981
Finance lease obligations3 - - - - - 3
Operating lease commitments4 14 9 8 7 40 82
Minimum pension obligations (f)
- 2 1 1 1 2 7
Other purchase obligations1 14 12 5 2 - 34
Total AAG Contractual Obligations$4,536 $14,236 $13,084 $16,105 $11,534 $28,691 $88,186
(a)Amounts represent contractual amounts due. Excludes $317 million and $2 million of unamortized debt discount, premium and issuance costs as of September 30, 2025 for American and AAG Parent, respectively. For additional information, see Note 5 and Note 4 to AAG's and American's Condensed Consolidated Financial Statements in Part I, Items 1A and 1B, respectively.
(b)For variable-rate debt, future interest obligations are estimated using the current forward rates at September 30, 2025.
(c)Includes $6.2 billion of future principal payments and $664 million of future interest payments as of September 30, 2025, related to EETCs associated with mortgage financings of certain aircraft and spare engines.
(d)See "Aircraft and Engine Purchase Commitments" above for additional information about the firm commitments for the acquisition of aircraft and engines, including the anticipated aircraft delivery schedule. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable equipment manufacturer and certain management assumptions. However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns.
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(e)These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American's actual payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments line above.
(f)Represents minimum pension contributions and expected contributions to our retiree medical and other postretirement plans based on actuarially determined estimates as of December 31, 2024 and is based on estimated payments through 2034. During the first nine months of 2025, we made required contributions of $224 million to our defined benefit pension plans.
(g)Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility.
Capital Raising Activity and Other Possible Actions
In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. For instance, an economic downturn or general global instability caused by governmental actions, military actions, terrorism, disease outbreaks, natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash generated by operations. See Part I, Item 1A. Risk Factors - "Downturns in economic conditions could adversely affect our business" in our 2024 Form 10-K for additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general increase in interest rates, due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, or due to an increase in tariffs, could decrease the amount of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements.
In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts involved may be material.
Critical Accounting Policies and Estimates
For information regarding our critical accounting policies and estimates, see Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies and Estimates" in our 2024 Form 10-K.