American Airlines has raised its 2025 profit forecast, signaling that capacity cuts implemented after a demand slump earlier this year are beginning to yield stronger pricing power. Shares of the Fort Worth-based carrier rose 6% by market close after hitting nearly 8% gains intraday.

Earlier this year, domestic travel had slowed due to economic uncertainty, pushing airlines to lower fares to fill seats. Since then, major carriers have scaled back capacity, restoring pricing power and safeguarding margins. American Airlines reported sequential improvement in unit revenue, with September marking a return to positive growth. By year-end, the carrier expects to fully restore indirect revenue, which had previously been affected by renegotiations with corporate travel agencies that reduced perks and discounts.

The airline now forecasts full-year adjusted profit per share in the range of 65 cents to 95 cents, a significant turnaround from its July forecast of a 20-cent loss to an 80-cent profit. For the quarter through September, American reported a smaller-than-expected adjusted loss of 17 cents per share, beating analysts’ expectation of a 28-cent loss. Total operating revenue rose marginally to approximately $13.69 billion, surpassing estimates of $13.63 billion.

High-margin premium services remain robust, with affluent travelers continuing to pay for upgraded experiences. American Airlines plans to expand premium seating at nearly twice the pace of main cabin seats and invest in airport infrastructure, including new lounges and facilities. The airline aims to close the margin gap with rivals United Airlines and Delta Air Lines, emphasizing the importance of premium cabin and loyalty revenues.

Additionally, Nathaniel Pieper, CEO of the oneworld alliance, has been appointed as American Airlines’ Chief Commercial Officer, effective November 3.

Tom Fitzgerald from TD Cowen noted, "We are encouraged by American’s results and view it as another indication of the importance of premium cabin and loyalty revenues."

As travel demand recovers, American Airlines continues to focus on premium services and strategic capacity management to strengthen profitability and market share in 2025.