American Airlines (AAL) has withdrawn its 2025 financial forecast, following similar moves by its competitors. The airline cited concerns over fluctuating travel demand due to the impact of President Donald Trump’s tariffs and the broader economic uncertainty surrounding government spending and global trade tensions.
Tariff Pressures and Unpredictable Demand Impact Airline Forecasts
Trump’s trade policies and sweeping tariffs have sparked a global trade war, which, according to analysts, increases the likelihood of a global recession. This economic instability has led to hesitancy among consumers and businesses when it comes to discretionary spending, particularly on travel. As a result, U.S. airlines, including American Airlines, are facing significant challenges in forecasting future demand.
Travel, often considered a discretionary expense, is highly sensitive to shifts in economic conditions. With tariffs and the potential for a slowing economy, airlines are grappling with unpredictable consumer behavior. This uncertainty has left major carriers, such as American Airlines, unable to project their performance for 2025.
Airline Industry Struggles Amid Economic Headwinds
Just two months ago, U.S. airlines were experiencing strong travel demand and healthy pricing across their networks. However, the current economic downturn has caused significant headwinds for major carriers, including American Airlines. The airline industry is facing increasing uncertainty, especially as consumers and businesses reassess their travel plans amid a potential economic downturn.
Financial Impact and Losses for American Airlines
American Airlines reported a net loss of $473 million, or 72 cents per share, for the quarter ending March 2025. This loss is a significant increase compared to the $312 million loss, or 48 cents per share, reported in the same period last year.
The airline had previously projected an annual adjusted profit per share between $1.70 and $2.70 but has now withdrawn that forecast due to the ongoing economic uncertainty.
In addition to tariff pressures, American Airlines is dealing with higher operational costs, particularly those linked to labor contracts signed in the previous year. Despite these challenges, the airline reported a total operating revenue of $12.55 billion, which, although slightly down from the previous year, reflects the ongoing volatility in the airline sector.
Industry-Wide Volatility Affects Airlines
American Airlines’ forecast revision comes just one day after Southwest Airlines, the largest U.S. domestic carrier, also withdrew its financial projections for 2025 and 2026. The airline industry as a whole is experiencing significant volatility, reminiscent of the disruptions caused by the COVID-19 pandemic.
Smaller carriers like Alaska Air have followed suit, scrapping their profit outlooks for the year in light of the unpredictable market conditions. This widespread uncertainty highlights the challenges faced by airlines as they navigate fluctuating demand and rising operational costs.
