American Airlines Group, Inc. (NASDAQ:AAL) reported a narrower third-quarter loss that came in ahead of Wall Street estimates, landing near the stronger end of the company's guidance range.
Goldman Sachs analysts, led by Catherine O’Brien, maintained a Sell rating on American Airlines, with a 12-month price forecast of $10, implying a 17.3% downside from the prior day’s close of $12.09.
The analysts said the company reported a third-quarter adjusted net loss per share of 17 cents, better than Goldman Sachs’ estimate of a 35-cent loss, and near the better end of the company’s guidance of a 10-cent loss to 60-cent loss.
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The beat versus Goldman's forecast was mainly due to stronger-than-expected revenue, with unit revenue (Revenue per Available Seat Mile or RASM) down 1.9% year over year, compared with the firm's estimate of a 2.4% decline.
American Airlines issued fourth quarter EPS guidance of 45 cents to 75 cents, above consensus and Goldman's estimates of 33 cents. American expects revenue to rise 3%-5% on capacity up 3%-5%, which Goldman estimates implies flat unit revenue at the midpoint.
The company guided unit cost (Cost per Available Seat Mile or CASM ex-fuel) up 2.5%-4.5% year over year, in line with the consensus of +3.3%.
The brokerage noted that the company raised its full-year 2025 EPS guidance to 65 cents to 95 cents, from a prior range of a 20-cent loss to a profit of 80 cents, and ahead of the consensus of 42 cents.
The RASM was positive in September, with sequential improvement each month underlying the third-quarter RASM decline of 1.9%. Passenger unit revenue (Passenger Revenue per Available Seat Mile or PRASM) fell 2.7%, with domestic routes performing best, down 1.6%, versus a 5.0% decline in international routes.
Goldman said investors will look for geographical and cabin-level detail behind the revenue guidance and any preliminary commentary on the 2026 financial outlook during the company's conference call.
The $10 price forecast is based on a normalized EBITDAR valuation, applying a 3.6x EV/EBITDAR multiple to Goldman's $11.2 billion normalized EBITDAR estimate.
Key upside risks include the faster recovery of indirect revenue, quicker deleveraging that reduces interest costs, and stronger-than-expected domestic demand driving higher unit revenue through year-end 2025.
Price Action: AAL shares were trading higher by 6.45% to $12.87 at last check Thursday.
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