American Airlines Group Inc Q1 2026 Earnings Call Transcript

Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.

American Airlines Group Inc (NASDAQ: AAL) Q1 2026 Earnings Call dated Apr. 23, 2026

Presentation

Operator

Thank you for standing by and welcome to American Airlines Group’s first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Neil Russell, Vice President, Investor Relations. Please go ahead.

Neil Russell — Vice President, Investor Relations

Hey. Thanks Lateef. Good morning everyone and welcome to the American Airlines Earnings Conference Call. On the call with prepared remarks, we have our CEO Robert Isom and our CFO Devin May. In addition, we have a number of senior executives in the room this morning for the Q and A session. After our prepared remarks, we will open the call for analyst questions followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow up. Before we begin, please note that today’s call contains forward looking statements including statements concerning future events, costs, forecasts of capacity and fleet plans.

These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings press release that was issued earlier this morning, Form 10K for the year ended December 31, 2025 and subsequent quarterly reports on Form 10Q. Unless otherwise specified, all references to earnings per share are on an adjusted and diluted basis.

Additionally, we will be discussing certain non GAAP financial measures which exclude the impact of unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings press release and investor presentation, each of which can be found in the Investor Relations section of our website. A webcast of this call will be archived on our website. The information we are giving you on the call this morning is as of today’s date and we undertake no obligation to update the information subsequently.

Thank you for your interest in American and for joining us this morning. With that, I’ll turn the call over to our CEO Robert Ice.

Robert Isom — Chief Executive Officer

Thanks Neil and good morning everyone. I’d like to start my comments this morning by saying that American continues to make significant progress on our objectives to deliver for our investors. American Airlines is a premium global airline that is positioned to win for the long term. Our focus on delivering on our revenue potential this year is guided by our four elevating our customer experience, growing our global network, driving premium revenue and leading in loyalty. We’re seeing the benefits of our multi year commercial initiatives come through in our revenue performance.

Demand for American’s product continues to grow and during the quarter we recorded the nine highest revenue intake weeks in our history. First quarter revenue grew 10.8% and we expect this demand strength to continue as we anticipate the second quarter will deliver revenue growth of approximately 15%. The first quarter also included a few challenges including a $320 million revenue impact from winter storms and a $400 million increase in fuel expense versus the forward curve in January. Even with those headwinds, our pre tax margin improved approximately 2 points year over year.

I’m proud of how our team has managed the business through these disruptions with a focus on safety and delivering a world class customer experience. Thank you to the American Airlines team for your resilience and continued commitment to excellence. It’s this dedication that makes American the premium global airline that our customers trust. Moving forward, we’re working to take the appropriate actions to drive revenue to offset the increases in fuel costs. Assuming the current forward fuel curve, we expect to be profitable in 2026.

Devon will provide an update on our second quarter and full year outlook in a few minutes, but I’d like to quickly summarize the progress that we’ve made on our four pillars and my perspective on how these initiatives will come to drive American forward. Our first pillar elevating our customer experience is centered on delivering a consistent and premium experience across every step of the travel journey. We’re increasing the number of premium seats across our fleet through new deliveries and fleet retrofits.

In the first quarter lie flat and premium economy seats grew more than twice as fast as main cabin seats. American’s flagship suite offers customers a luxurious flying experience and we’re expanding this product across our international capable fleet. The flagship suite has delivered leading net promoter scores since its introduction. We’re also investing in the customer experience both on the ground and in the air. American offers the industry’s leading lounge network with new flagship lounges planned for Miami and Charlotte, bringing Our total to 10 premium lounges, the most of any airline.

We’re investing in new and expanded Admirals Club lounges across our network and have announced 12 new or refreshed lounges over the past year. And there’s more to come. We’re enhancing our onboard experience through upgraded food and beverage offerings and luxury onboard items including bedding and duvets and our centennial themed products such as amenity kits and sleepwear. Connectivity in flight is critical to the customer journey today. Advantage members enjoy complimentary high speed satellite wi fi sponsored by AT&T on more aircraft than any other carrier globally.

Finally, reliability and disruption management are among the most important drivers of customer satisfaction. We’re making intentional investments in our schedule and technology to deliver more on time arrivals, fewer missed connections and a smoother travel experience. Our largest investment started earlier this month in the form of a new 13 bank structure at DFW. We expect the new structure will support an even more reliable operation as approximately one third of our aircraft touch DFW every day.

Since the rebanking, we’ve seen improvements in customer connection rates and NPS scores. The DFW operation running smoothly is critical to the success of our entire system and we anticipate this structure will help to enable effective future growth at our largest and most impactful hub. All of this will result in improved customer satisfaction scores and an even more reliable operation. Our second pillar is growing our global network. American is a premium global airline with the most comprehensive North American network in the industry.

In 2026, we’re prioritizing growth in hubs where we can improve both our local share and hub profitability as we efficiently utilize existing infrastructure, particularly in Philadelphia, Miami and Phoenix. Later this year, we also expect to add flights at DFW to take advantage of new gate expansions at Terminal A and Terminal C. We’ll of course adjust our growth rate depending on factors including demand and fuel price. However, our long term network objectives stay the same. Finally, we’re grateful to Secretary Duffy, Administrator Bedford and their leadership teams for acting swiftly to minimize flight disruptions at Chicago o’ Hare during the upcoming summer travel season.

We expect to operate 500 flights per day this summer and look forward to continuing to grow local share, deepening loyalty and increasing co brand credit card acquisitions. We’re excited about our strategic growth opportunities in future years. We have hubs in some of the fastest growing economic regions in the country and construction projects are underway to enable growth. We expect our operation at DFW to become the largest single airline hub in the world once the new Terminal F is operational in 2027.

During the quarter, we also announced plans to further invest in Miami by redeveloping Concourse D, which we expect to enhance operations, elevate the customer experience and improve regional and international Travel. And in 2028, upon completion of our investments in Terminals 4 and 5 at LAX, we’ll have a significantly expanded operation with the newest facility offering a modern, convenient customer experience. We remain on track to increase our international capable fleet to approximately 200 aircraft by the end of the decade and plan to continue to grow alongside our joint business and One World partners.

We’re launching new service to destinations such as Budapest and Prague as well as to Caracas and Marcaibo, where American will be the first US Airline to reconnect service to Venezuela in seven years. Our third pillar is driving premium revenue. We continue to deepen the relationships we have with our corporate and agency partners and are capturing greater share among high value customers. Our customer base skews higher end and our customers have shown that they’re willing to spend more for an improved travel experience.

We’re focused on improving our revenue mix through better segmentation and redefining our fare products. We’ve already seen the impact of these efforts in our premium cabins with paid load factors in business and premium economy at the highest levels in our history, up approximately 10 points versus 2019. This reflects both strong demand and improved commercial execution and it highlights the opportunity we see across the premium segment. We also think there’s significant opportunity in upselling in the main cabin.

Last year we began sharpening the differentiation between basic economy and main cabin and that strategy is working. These targeted changes have led to increased demand for our extra legroom products. Main Cabin Extra loyalty is our fourth and final pillar. American invented airline loyalty and today the Advantage Program is the largest airline loyalty program in the world. We offer more value per mile, countless ways to earn and redeem miles, and more engagement opportunities for Advantage members.

During the quarter we redesigned the loyalty experience in our mobile app Enhancing the Advantage Activity Screen to improve performance, clarity and engagement. These efforts combined with the introduction of free WI Fi produced record Advantage enrollments in the first quarter up 25% year over year led by customers in New York, Chicago and Los Angeles. Our new co branded card partnership with Citi plays a critical role in our loyalty strategy and offers our customers the most straightforward and seamless path to status in the industry.

This partnership has significant upside as it is designed to drive long term growth in credit card acquisitions, spend and member engagement. The first quarter got off to a fast start with card acquisitions setting all time records while spend on our co branded cards increased 9% year over year. Now I’ll turn the call over to Devin to share more about our first quarter financial results and outlook for the second quarter and full year.

Devon May — Chief Financial Officer

Thank you Robert. Excluding net special items, American reported a first quarter adjusted loss per diluted share of $0.40. While the increase in jet fuel prices kept this from being a profitable quarter, we were able to improve our pre tax margin by nearly 2 points year over year. Revenue performance in the quarter exceeded our initial Expectations total revenue grew 10.8% year over year, reflecting strong demand for our product and the continued returns of our multi year commercial initiatives.

Premium demand continued to perform well throughout the quarter with year over year premium Unit revenue growth 7 points higher than main cabin, extending the momentum we saw last year and underscoring the strength of both our premium customer base and the products we offer. At the same time, we saw a meaningful improvement in main cabin revenue performance following the economic uncertainty that affected last year’s results. This strength was further supported by continued momentum in managed corporate revenue which increased 13% year over year domestic year over year.

PRASM increased 6.6% in the quarter and we expect domestic year over year performance to accelerate in the second quarter. Our international entities exceeded our initial expectations. Atlantic unit revenue was up 16.7% year over year with London up 25%. Pacific unit revenue increased 7.8% year over year. Finally, unit revenue in Latin America was slightly negative, but excluding Mexico performance was nicely positive in the quarter. Our unit cost, excluding net special items, fuel and profit sharing was up 5.2% year over year.

The severe winter storms lowered our Q1 capacity production which pressured CASM X by approximately 2 points. As we previously discussed, additional cost pressure came from staffing the operation in advance of the upcoming summer season. We are continuing to see the results of our multi year effort to re engineer the business and expect over $200 million of incremental savings from these efforts in 2026, bringing our total annual operating savings to approximately a billion dollars since this initiative was launched.

This transformation leverages procurement excellence, technology investments and process improvements to improve the customer and team member experience while driving a more efficient business. Looking ahead to the second quarter, demand across all cabins and entities remains robust. We expect domestic unit revenue to grow more than 10% in the second quarter. Internationally, we expect all entities to deliver positive unit revenue performance led by continued strength in the Atlantic region which we expect to be up high single digits.

Our capacity for the second quarter is about a point below our initial plans as we have suspended flying to Tel Aviv and Doha, have reduced planned capacity in Chicago and have further decreased some other marginal flying in the face of higher fuel. Further reductions in the very near term don’t make economic sense given the current demand environment as we enter our summer peak. But as we move beyond the summer peak, we will be sharp with capacity in light of the current fuel environment. We expect second quarter revenue to be up between 13.5% and 16.5% year over year, driven primarily by continued improvements in the domestic entity, growth in corporate customer volumes and our ability to recapture elevated fuel costs.

Second quarter CASM X is anticipated to be up 2% to 4% year over year, slightly elevated due to the close in reductions in capacity. Based on the forward fuel curve from April 20, we expect a fuel price of approximately $4 per gallon in the quarter. With this second quarter guidance, we expect to deliver adjusted earnings per diluted share of between a loss of 20 cents and a profit of 20 cents. We are also updating our full year outlook to reflect our current revenue expectations and the forward fuel curve.

The midpoint of the full year Earnings guidance is $0.35 per share, approximately flat to 2025. Despite jet fuel prices increasing fuel expense by over $4 billion year over year. Turning now to our fleet and capital expenditures, we now expect delivery of 49 new aircraft this year, down from our initial estimate of 55 aircraft, reducing CapEx by nearly $300 million. Our deliveries this year include the 12th Boeing 787, nine aircraft in our premium configuration and the continued expansion of our Airbus A321XLR fleet.

Based on these deliveries, we now expect total capital expenditures to be approximately $4 billion. We ended the first quarter with nearly $11 billion in total available liquidity and we have more than $27 billion in unencumbered assets and first lien borrowing capacity. We continue to make significant progress on our financial priorities, ending the quarter with total debt of $34.7 billion, a reduction of $1.8 billion in the quarter. This is the first time our total debt has been below $35 billion since mid-2015.

The improvements we have made on the balance sheet provide significant flexibility as we navigate the current environment and reflect the disciplined approach we’ve taken to capital allocation. I’ll now hand over the call to Robert for closing remarks.

Robert Isom — Chief Executive Officer

Thanks, Devin. We officially celebrated our 100th anniversary this month, a remarkable milestone that reflects a legacy of innovation, resilience and caring for people on life’s journey. American is positioned to win by delivering sustainable growth and creating long term value for shareholders, team members and customers. Our focus remains on executing our commercial initiatives while managing cost efficiently to deliver results and expand our margins. There’s tremendous upside ahead for American.

From elevating our customer experience and growing our global network to driving premium revenue and leading in loyalty. We’re executing on the strategy and initiatives that will drive value and shape our next 100 years as a premium global airline operator. Please open the line for questions.

Question & Answers

Operator

Thank you. As a reminder to ask a Question. You will need to press Star 11 on your telephone to remove yourself from the queue. You’ll need to press star 11 again to allow everyone the opportunity to participate. You will be limited to one question and one follow up. Please stand by while we compile the Q and A roster. Our first question comes from the line of Katie o’ Brien of Goldman Sachs. Your line is open, Katie.

Catherine O’Brien

Hey, good morning everyone. Thanks so much for the time. Maybe just a higher level industry. One first. Obviously I understand that the recent fare increases are driven by the spike in jet fuel, but I think it’s interesting that there’s been no demand impact as of yet. Unless you’re seeing something different, which please correct me. But even before the spike in fuel there was quite a bit of pricing momentum. Do you think something has changed structurally in the industry? Whether it has been a shift towards better pricing discipline over the last several months?

Is it competition or product changes playing a role? We’d love to hear your take.

Robert Isom — Chief Executive Officer

Hey Katie, thanks for the question. I have our Chief Commercial Officer Nat Pieper here with me to help out as well. I’ll just start with this. I think that travel’s a good deal. If you take a look at pricing today on real terms versus where we were almost a decade ago, we’re just catching up to where we were. So I think people realize that. And then on top of that we’ve given them good reason to actually want to spend more. There’s been a drive to a premium product. American has been a big part of that and I think that what you’re seeing is recognition that travel’s still a good deal.

There’s an experience based consumer dynamic going on in the industry and we benefit from that. We’ve got a great product out there, a great network and feel really good about demand as we go forward in the future.

Nat Pieper — Chief Commercial Officer

Hi Katie, it’s Nat. Thanks for the question. I think the thing that a couple things that are interesting. Number one, is there a long term resetting in terms of consumer spending hierarchy? There’s a lot we all remember revenge travel from COVID and people got tired of buying TVs and wanted to go see the world. And I think some of that has continued and extended for us. A lot of we’ve had nine weeks so far in the first quarter that were company record setting from a revenue intakes perspective prior to any of the hostilities in the Middle east that drove fuel where it is.

So there’s something going on there from a long term spending perspective. And then as Robert referenced, we think the American offering is really resonating with consumers as well. The investments we’ve made in customer experience, our network and focusing on local market share which are our highest yielding customers. And then lastly on the loyalty side and then there’s also a piece of it with getting the right product into the right hands of the right people at the right price, delivering value to consumers.

Part of it’s bundling, part of it is segmenting and we’re making good progress on that. So I think that’s a component as well.

Catherine O’Brien

That’s great. Really helpful. Maybe just for my second question, can you walk us through the assumptions behind your full year revenue outlook? Is there a fuel recapture expectation there? Are you assuming demand is steady or improves or there’s ultimately some demand elasticity. Just really trying to understand the puts and takes and how they may or may not be different at either end of the per share guidance. Thanks so much for the time.

Nat Pieper — Chief Commercial Officer

Sure. Certainly the second quarter revenue estimation for US/15% is an eye popping number and we feel good about it. I’ll start with, you know, we booked 65% of the second quarter and it obviously is a strong performance based on the trends that we’re seeing in our hubs. A lot of the American specific pieces that are in place. We did incorporate, as you would expect, some fuel recapture in the plan. When we built our plan at the outset we had significant margin expansion due to a lot of American specific improvements that I referenced earlier and as Robert talked about in our four pillars.

And obviously since we shared that plan, fuel has risen an incremental 4 billion of fuel expense for American in the year. Historically, airlines recover that additional fuel expense either by increasing revenue or by reducing marginal capacity. And we’ve been encouraged so far by the pace with which revenue has been recaptured. And obviously if fuel continues through the third quarter into the fourth quarter, we’re going to see some more broad industry capacity reductions. But as we think about it and what we’ve incorporated in second quarter, roughly 40 to 50% of fuel recapture.

And we would expect that to grow through the balance of the year 75 to 85% in Q3 and then ultimately in Q4 if fuel is still at the level with capacity reductions, I think our recapture rate would be in the 90s.

Operator

Thank you. Our next question comes from the line of Scott Group of Wolf Research. Please go ahead. Scott.

Scott Group — Analyst, Wolf Research

Hey, thanks. Good morning. So we’ve seen some more material capacity reductions from others. I think you guys are, I think you’ll lead the industry on Capacity growth in Q2 how are you thinking about capacity in the back half of the year and now that you’ve got more time to plan for a higher fuel price environment? And just to sort of be clear on sort of the answer of that last question, is there an assumption in the guide that RASM growth accelerates further in the back half of the year? In the back half of the year, I guess in third quarter as we get a full quarter of this higher fare environment?

Devon May — Chief Financial Officer

Hey Scott, it’s Devin. I’ll just start on the capacity discussion. I think Nat’s answer on our expectations for fuel recapture effectively already answer your question on rasm, that we do expect higher yields going forward as we pass through more of the higher fuel expense. But on capacity for the second quarter, we had planned for slightly higher capacity than what we’re putting out there right now. So a couple of months ago we were at about 6% for Q2. Since that time we’ve reduced some flying in obvious places like Tel Aviv and Doha.

We’ve also pulled back a little bit domestically with some marginal flying as well as some reductions in Chicago. I’d just say if you look back at our capacity, we have tended to be very conservative with capacity growth for the past, I don’t know, half decade or so. But you just look at the last couple of years. In 2024 we found ourselves in an oversupply environment and we quickly pulled capacity out in the back half of the year. In 2025 we had a handful of different demand shocks. We did the same thing and we’ll do the same thing here.

We’re going to keep a close eye on fuel and demand over the next four to six weeks as we are planning for the off peak period in August, September and beyond. And we’ll make capacity adjustments accordingly.

Scott Group — Analyst, Wolf Research

And then maybe secondly, Robert, I’ve asked some of the others, but I’ll ask you as well. You know, historically when fuel prices eventually normalize, the industry sort of gives back a bunch of the pricing increases that it’s gotten. Is there any reason I think it can be different this time and we can hold on to more of this higher price?

Robert Isom — Chief Executive Officer

Scott, two things. First off, as Nat alluded to, we’d already seen a lot of traction in our efforts in the first quarter before any run up in fuel prices. On top of that, I really am confident in the initiatives that we’re pursuing. Whether it’s from a customer experience perspective, our network, the initiatives we have to drive premium revenue and loyalty, those are going to pay off. We’re giving people good reason to want to engage with American more fully and to spend. And I do view that as a good sign for us.

And I just go back to the first quarter, 10.8% revenue improvement and that includes a really big hit for the worst storms in terms of impact to our operations with Fernand Gianna that we’ve ever seen in our history. And as we look to the second quarter, as Nat said, a lot of that is on the books. We’re anticipating 15% growth. I’m bullish on what that means for our business.

Operator

Thank you. Our next question comes from the line of Brandon Oglensky of Barclays. Please go ahead. Brandon.

Unidentified Participant

Hi, good morning and thanks for taking the question. Robert, I’ll probably just pose one question about kind of two parts here for you. It’s been about two years now since you guys made a pretty sizable pivot and then re pivoted back on your commercial business travel strategy. So can you tell us where you are in that journey? I think you guys said you were fully recaptured on share at the end of last year, but what is next on corporate and business strategy at American? And then secondarily, I think you were hinting at this earlier, but how are you thinking incrementally about upselling or getting incremental rebranded fares on your premium products and maybe within that corporate strategy as well?

Thank you.

Robert Isom — Chief Executive Officer

Thanks, Brandon. I’m going to let Matt help me out with this, but I’ll say that, look, we did pivot and I’m really pleased with what the team has been able to do over the last year. We fully engaged in the marketplace, we’ve deployed our sales team everywhere and they have accomplished the objectives that we set out to achieve. We’ve recaptured the share that we’ve lost. We’ve gained a little bit since then and we’re going to continue to be very active at improving from there. Nat

Nat Pieper — Chief Commercial Officer

Hi Brandon. Just some numbers to back up the evidence that Robert’s seeing. Managed corporate revenue for US is up 13% year over year. And our unmanaged business, small and medium enterprises, our advantaged business product is up 28% per year and obviously really exceptional yields on both of those products. Further example, our TMC performance is up 11% thanks to our partnerships with AmExgbt, with BCD and their support of American. I look at all of those results along with the feedback that we’re getting.

One of the wonderful things when you make a distribution change is that everybody gives you feedback. A lot of it loud, a lot of it. Maybe you don’t want to hear. But over time, as that feedback is moderated and become more productive, we’re getting good sense that what we’re offering and what we’re putting on the shelf is resonating with our network, with our customer experience, the loyalty program and delivering value to guests. And so all of those things, yes, we feel good about recovering the share that we had lost, but we see Runway there as well.

And it’s a core part of the positive American revenue story that you’re seeing and that we see for the rest of the year.

Neil Russell — Vice President, Investor Relations

Thank you.

Operator

Thank you. Our next question comes from the line of Ravi Shanker of Morgan Stanley. The question please, Ravi.

Unidentified Participant

Great, thanks. Morning, everyone. Can you unpack the FAA decision in Chicago a little bit more kind of how does that compare versus your expectations? And what do we think about the incremental steps from here?

Robert Isom — Chief Executive Officer

Sure, Robbie, thanks for the question. Look, American’s been serving Chicago for 100 years as our very first flight flown by Charles Lindbergh included Chicago. And we are going to be in Chicago for another hundred years. So we had flown about 500 flights a day out of Chicago prior to the pandemic. And it’s taken us some time to build back up to that. We’re going to be able to fly 500 flights as a result of the initiatives that have been put in place to address over. And so I want to first off, give a shout out to the DOT and FAA Secretary Duffy and Administrator Bedford got in front of what would have been a real issue in Chicago.

Chicago o’ Hare would have likely been in a delay program from the very first flight of the day if something hadn’t been done. So I’m pleased, first off, that we’re going to avoid an issue of having too much flying in Chicago for the airspace and ground capacity. And that’s good news not just for American Airlines, it’s good news for the entire industry. So real compliments to the administration, Secretary Duffy and Administrator Bedford for that. And in terms of what we end up with, again, we’re going to fly what we had hoped to fly, 500 departures.

That will allow us to continue to build in Chicago with our customers. And our product is resonating and whether it’s local passenger growth, our business passenger growth advantage enrollments, our co branded credit card enrollments, all of those are meeting and exceeding our expectations. So, so no one’s going to kick us out of Chicago. That’s something that everybody’s going to have to get used to, including our biggest competitor. We’re going to Be roommates and roommates for a long, long time.

Unidentified Participant

Understood. Very clear. And maybe as a follow up, Robert, there’s been a lot of industry speculation about M and A and such, but can you address that directly? If you can, in addition to what you guys put out over the weekend? But also, I just love your views on what do you think is the ideal industry structure over time? I think you put in that press release that you think some things needed to change. So what might those things be?

Robert Isom — Chief Executive Officer

Well, I’ll just start out with this. And again, on the heels of the Chicago question, look, we’re going to be roommates and we’re not getting married. And so I want to stress this, that the idea of the two largest airlines in the world getting together, that is something that we’ve viewed as being anti competitive. And obviously, everybody that is weighed in suggests the same thing. Bad for customers, bad for the industry. And then ultimately that would be bad for American Airlines. In regard to consolidation in the industry, we’re focused on on American Airlines, we’re focused on delivering on our core initiatives.

And part of that is building out our network. We already have the most comprehensive network in North America that allows us to really pursue opportunities organically, internationally, and then also with our partners, some which are part of one world, others that are part of one world, and also joint businesses. All those are accretive to American Airlines. And we really look to continue to focusing on all those partnerships, whether those be domestic or international. Now, of course, if there are opportunities from a consolidation perspective, or if there’s assets that become available in the marketplace, American has a long history of being aggressive.

We’ve got a lot of experience. And whether it is the potential for material or the work that we’ve done to pioneer partnerships, we’re going to be on the forefront of that.

Operator

Thank you. Our next question comes from the line of Jamie Baker of J.P. Morgan. Your line is open, Jamie.

Jamie Baker — Analyst, J.P. Morgan

Hey, good morning, everybody. So probably for Nat, you know, this question about yields sticking in when fuel prices recede has, you know, sort of become a conference call staple this season. It came up yesterday on United’s call and I found the commentary there to be interesting. Basically, the suggestion was that historically, marketing and government affairs had some degree of influence over pricing decisions. You know, it was not unilaterally left up to revenue management. So. So that’s my question for American.

First, do you sort of agree with that broader premise? But more importantly, do you think the industry and or American specifically has evolved to a point where maybe going forward, pricing and Revenue management exerts, you know, or wields more influence than in the past. Any thoughts there? I realize it’s not quite coming in the form of a question, but I’m trying.

Nat Pieper — Chief Commercial Officer

Jamie, thanks for the question. I guess I’ll start with just praising my colleague Nate Gatton, who has government affairs responsibility here. I think he has zero appetite at American to dabble in revenue management. I saw the transcript and frankly, interesting. Just from a team perspective and kind of the organizational structure that we have here, pretty well aligned. And you know, revenue management is one of those functions core to the airline, core to the assets and experience that American has.

So I think we are emphasizing it tremendously. We are investing resources, we’re investing people on top of our very experienced people that are here. And I think as technology evolves. And Jamie, we referenced it a little bit. We call it the revenue growth program within American. But that’s kind of a sound bite on really being able to effectively segment and bundle one’s products, getting the right product into people’s hands at the right price. And I think the capabilities that we have and really across the industry are just going to continue to evolve in a positive way at a number of different price points.

But ultimately the goal is to maximize revenue across the enterprise.

Jamie Baker — Analyst, J.P. Morgan

Okay, interesting. And second, probably for Robert, the news that you might look to pursue more of an NEA type relationship with Alaska and. Well, actually maybe that’s not the way to convey it, but my question relates to pilots. My understanding is that the current scope allows for code sharing with international partners, but not the type of Alaska wine long haul flying that they’ve started adding, you know, post merger. I’m just trying to understand what scope impediments might stand between you and a potentially closer relationship with Alaska.

And maybe the answer is not black and white and that’s. I get that as well. Any thoughts there? Thanks.

Robert Isom — Chief Executive Officer

Thanks, Jamie. I’ll just start with this. We’ve been working with Alaska for well over a decade and I remember working with Ben Minicucci to talk about sponsoring them to come into the one world relationship, which we successfully executed. And I think it’s been a terrific enhancement to Alaska and has enabled One World and their customers greater access to travel, just about anywhere people want to go. We were able to also do great things with the West Coast International alliance, which has been hugely beneficial, doing things that benefit our consumers, things that we really couldn’t have done on our own.

And I feel good about where our relationship is and what happens next. The Alaska team is fiercely Independent, a very, very successful airline. And we are the same as we go forward. We’ll make sure that anything that we do complies with our scope clauses. And we’re going to make sure that we really take care of our customers and do what’s right for both companies and our customers. And I’ll leave it at that.

Operator

Thank you. Our next question comes from the line of Connor Cunningham of Mealyus Research. Please go ahead, Connor.

Conor Cunningham — Analyst, Mealyus Research

Hi everyone. Thank you. Just maybe a point of clarity before I get into another question. Just on the yield progression throughout the year, I just want to make sure that I understand. Is it that you assume that yields will essentially be flat from here to get to your recapture target by the end of the end of the year. That is, you don’t need additional fare increases to get to that 90 plus percent come fourth quarter. Thank you.

Nat Pieper — Chief Commercial Officer

Yeah, I think that roughly in line. That’s right. We don’t need enormous increases to hit our targets as it works through because it balances with the recapture assumptions.

Conor Cunningham — Analyst, Mealyus Research

Right. So check fuel forward curve comes down, you’re currently exposed to higher fares. Okay, makes sense. All right then, Devin, maybe on the cost side, just clearly some challenges of 1Q given weather. I think everyone had those problems as well. But your 2Q guide is actually pretty good. And then it seems like the setup for the second half is also in a pretty good standing. So if you could just give, give some puts and takes that you see moving throughout the year just on cost, I think that would be helpful.

Again, I think it sticks out relative to a lot of what we’re hearing so far. Thank you.

Devon May — Chief Financial Officer

Sure. Well, it’s been a long term effort on driving efficiencies in the business. It’s something we’ve been at for three years. You don’t see it every single year because some of these initiatives are long term in nature. We’ve had a handful of new CBAs that have driven some cost pressure, but we’re seeing it this year. If it weren’t for the storms in the first quarter, our cost performance would have been really nice. Up 2 to 4 in the second quarter feels pretty good. Obviously it had been a little bit lower.

Had we flown the entirety of our schedule. The back half of the year we’re set up well. We’re going to see pressure in some areas that end up being good pressure, things like selling expense. But our unit cost is going to be dependent on how much capacity we produce. If we produce a similar amount of capacity to what we’re doing here in the Second quarter I would expect unit cost to be in the low single digits. If we pull back on capacity, given the higher fuel, we’re going to see some cost pressure there.

But we do a nice job getting out of any sort of volume related costs. We’ll continue to do that and we’ll continue to focus on driving an efficient business.

Conor Cunningham — Analyst, Mealyus Research

Appreciate it. Thank you.

Operator

Thank you. Our next question comes from the line of Tom Fitzgerald of TD Cohen. Your line is open, Tom.

Tom Fitzgerald — Analyst, TD Cohen

Hi everyone, thanks very much for the time. Curious within the loyalty program what geographies you’re seeing the most, the strongest performance in terms of signups and then if that kind of within that question, if that 1.2 billion of other revenue, if that’s kind of a good run rate for that line item moving forward.

Nat Pieper — Chief Commercial Officer

Hi, it’s Nat. I’ll take the first one and then Devin, the second piece of it first. Just from a resonating perspective from a volume as you would expect it would be in our hubs. But what’s exciting about loyalty enrollments is the penetration. Our top three markets are New York, Los Angeles and Chicago. So places that incredibly competitive hubs for us but also for, for our competitors. So again, further evidence that the loyalty program, you know, the biggest, the best and it continues to resonate with guests.

Devon May — Chief Financial Officer

Sure. And yeah, just on the, on the other revenue or the marketing component of it, we did see an increase. It’s pretty meaningful. Year over year, quarter over quarter just versus the fourth quarter was up, you know, something less than 10%. But like we’ve been saying as remuneration grows, we expect that line item to grow as well. I would expect less volatility in that line item than what we’ve had from quarter to quarter in the past. And it’s probably going to be somewhere around a billion dollars a quarter for 2026.

Robert Isom — Chief Executive Officer

Hey Tom, I just want to underscore one stat. While Chicago, New York and LA lead overall loyalty enrollments are up 25% percent year over year.

Tom Fitzgerald — Analyst, TD Cohen

That’s all great color, I really appreciate that. And then kind of similar bucket just on the corporate recapture. Curious what verticals you’re seeing the most momentum and maybe other places where there’s still room to recover versus the last couple years. Thanks again for the time.

Nat Pieper — Chief Commercial Officer

Well, the three verticals we’ve seen the most uptake in are banking, health care and pharma and industrials and that’s both domestically and internationally. So encouraged by that performance and really across all verticals I think there’s still opportunity there. But those are the Big three we’re seeing right now.

Operator

Thank you. Our next question comes from the line of Michael Goldie of BMO Capital Markets. Please go ahead. Michael,

Unidentified Participant

Good morning, and thank you for the question. You’ve rebanked DFW and now Philadelphia. Can you talk about the operational benefits you expect to get from this and what other initiatives you’re undertaking on the operations front?

Robert Isom — Chief Executive Officer

Hey, Michael. Thank you. So one of the biggest parts of our Elevating the customer experience initiative is to improve our reliability, the biggest investments we’re making. So the rebanking of dfw, it really smooths out the operation throughout the entire day. There’s never a period during the day where we come close to exceeding the operational capacity of the hub, and from what we’ve seen so far is just really strengthening our operational reliability. But then it’s when it’s stressed, say, throw a thunderstorm in which we’ve had our ability to recover is so much quicker.

Over our centennial celebration, I was out in DFW talking to our team, went to the control center and asked folks, okay, well, do you sense something’s different? And for the most part, people said, you just don’t see as many people running from gate to gate. And so it’s an improvement in operation. It takes the stress level down considerably for our customers, but also for our team members as well. And then, I know Nat could comment on this, but the good thing that we’re seeing as well is that revenue is holding and increasing.

Two points to that. One is that we just don’t have as many missed connects. Second is that we haven’t really extended connect times by that much. And so we really haven’t seen people book away. So we’re retaining more revenue. It’s a better customer experience. NPS scores are higher, so we’re taking that, of course, and those results are very, very promising. And we’ve expanded it and will be expanding it to Philadelphia and taking a look at the potential in other parts of our network as well. And we’d expect similar results ultimately.

Higher NPS scores, lower missed connections, greater retention of revenue. But that’s not all. We’ve certainly taken a look at our schedule to make sure that we’ve buffered appropriately in terms of travel times outside of connect times in the hubs. And that, I believe, is paying off. And as well, we’re making good use of contractual changes that have happened, especially with our flight attendants, where we’ve increased boarding times. And so all of that has come to fruition. The airline as a whole Regionals, mainline, We’re in good shape and ready for the summer.

So thanks for the question.

Unidentified Participant

And then as my follow up, when you think of industry consolidation, which everyone seems to be in agreement on, if MA is difficult to pass, do you think airlines will increasingly look domestically for partnerships as another avenue? Thank you.

Robert Isom — Chief Executive Officer

Well, I appreciate the question. The biggest issue out there today is can the largest airlines in the world get together and do something? And the answer to that is it’s anti competitive. So whatever happens next, we look to make sure that anything that we do strengthens our network. And in many cases, partnerships are the best way to do that. In other cases, it’s just organic growth. And so what you’ll see from us this year included in our growth plan is to really strengthen our hub in Phoenix, make sure that Miami is fully built out.

We’ve got a lot of work going on in Chicago, as noted in Philadelphia as well. It really is the most comprehensive network in North America. And we’ve been pioneers in terms of building partnerships and relationships. And we’ve got a tremendous amount of experience here with MA should that ever come about. And so I feel really good about where we stand. And as dynamics change and the fortunes of other carriers change, we’ll be ready.

Operator

Thank you. Our next question comes from the line. John Godin of Citigroup. Your line is open, John.

Unidentified Participant

Hey guys, thanks for taking my question. This is Max starting for John. I just wanted to follow up on the field pass through commentary and getting to a recapture rate in the 90s by the end of the year. If we could maybe get a little bit of geographic color, kind of how pass throughs are evolving internationally versus in the domestic market. Maybe a little bit of color would be helpful.

Nat Pieper — Chief Commercial Officer

Okay, I’ll start just give you the quick entity run through around the world and then come back to the other question. I think just first, domestically, 65% of Americans capacities. Robert just said we’ve got the best network in North America and it’s resonating. Unit revenue up 7% in the quarter. And we saw it increase sequentially up into March for double digits. And then as mentioned earlier, the second quarter, 65% booked. And we’re seeing further acceleration as it goes through in Q1, stellar performance in Philadelphia and LaGuardia as we strategically are shifting to deepen our schedule, improving our service to big markets and really generating higher yields that way.

Pleased with the improvement in DC as well. And then in the second quarter DFW, full implementation of the 13 bank structure and Los Angeles as that operation Straightens out a little bit that we’re starting to see traction there as well. In the Atlantic, 15% roughly of our capacity depending on season. It’s our best performing international entity. Our quarterly RASM, 17%. March was north of 20%. And in the second quarter, as we grow a bit, we’ll still see high single digits in unit revenue performance.

Heathrow, the stalwart ras them 25% in the first quarter. Not rocket science, our strategy there. We’re putting our best, most premium airplane into the world’s most premium market and we’ll continue that through the summer. British Airways is a terrific partner for us in Heathrow and obviously the IAG group across the Transatlantic as well. Rest of Europe remains strong. We’ve got four new routes coming online here in May. Two out of Philadelphia to Prague and Budapest, two out of Dallas to Athens and Zurich.

And bookings there look terrific. Latin America, roughly 15% mixed bag with break even rasm on the quarter. Short haul, international challenge due to the events in Mexico, but that’s starting to turn positive as we get to May and to June bookings. And in the Deep south that’s been strong. Brazil was the stalwart there. And then in 2Q as we grow, Argentina will see better revenue performance in that. And then the other highlight for Latin America, for American, we’re excited to restart a Venezuela service next week.

We’ll be the first US carrier to do that and it just further enhances our industry leading Latin American operation out of Miami. Lastly, in the Pacific, roughly 5% of our capacity, 8% unit revenue growth in the first quarter, little bit higher expectation in the second quarter. And again the shift of our two big markets in the first quarter, Oceana performance was great, it’ll stay decent in the second quarter. But Japan really becomes a stalwart as we fold into May into June. And no coincidence, we’ve got two terrific joint business partners in each of those arenas.

Qantas in Australia and Japan Airlines across the Pacific. So a good story around the entities. It’s a terrific demand environment both for the domestic and the international.

Unidentified Participant

Great. Thank you. That was great color. And you know, kind of as my follow up. Every airline has a bit of a different philosophy guiding its capacity decisions. Can you help us understand what yours is? If the macro situation continues and you revisit second half capacity growth plans, are you managing to margin neutrality, an ROIC target or any other targets kind of guided in this decision. Thanks.

Devon May — Chief Financial Officer

Yep. We touched on capacity earlier. I’d just say we’re always going to Be sharp on capacity. When we had a supply issue in 2024, we pulled capacity pretty quickly. In 25, we had different demand shocks. We pulled capacity to get supply more in line with demand as well. This year we have this fuel increase and we are going to do what’s needed on capacity to make sure that we are passing on as much of that fuel increase to customers as possible. So we’ll be watching for the next four to six weeks before we have to make some capacity decisions for August and September and we’ll adjust accordingly.

Operator

Thank you. Ladies and gentlemen, at this time, the Q and A queue is open to media questions. If you have a question, please press Star one one on your telephone. Again, the line is open. For media questions, please press star 11 at this time. Our first question comes from the line of Allison Slider of Wall Street Journal. Your line is open. Allison,

Alison Sider — Reporter

Hi. Curious what you guys are seeing for World cup bookings, if those are coming in as you’d hoped, or if there’s any kind of concerns about people not wanting to travel to the U.S.

Nat Pieper — Chief Commercial Officer

Hi, Ali. World cup event, Actually, we’re really excited about that. I personally am super excited. Just any event with a ball and a scoreboard is worth it, but the globalization and what that event really means. Thrilled to be the official North American airline of the FIFA World cup and something we can work on with Qatar Airways as well. We’ve got the best network in North America to get global fans where they want to go. So huge loyalty benefits for us here as well. And we’re really excited to see it.

It’s a great event because it’s not focused geographically on one city like the Olympics, but you get the entire North America region with matches in Canada and Mexico in addition to double digit cities in the US So really excited about the event and not seeing Bookaway at this time.

Operator

Thank you. Our next question comes from the line of Leslie Josephs of cnbc. Leslie, your line is open.

Leslie Josephs — Reporter

Hi, good morning. My question is about demand with fares going up. Is it that you’re seeing this like the same or growing number of bookings at a higher rate or are fewer people booking but they appear to be willing to pay more to fly? And then my second question is about VFR travel, whether you’re seeing any change in that this year. Thanks.

Robert Isom — Chief Executive Officer

Hey, Leslie. International VFR Leslie, Thanks. Just in terms of demand, we’ve always been really sharp in terms of managing our load factors and we see our loads keeping pace with the capacity adds. And so that would suggest that we’re seeing the real benefit in yields right now and then from a VFR perspective, I don’t have a lot of detail on that, but I tell you that we’ve held pretty true to where we have been historically and I just tell you that VFR traffic. I’m really excited about what Nat mentioned with our return to Venezuela.

My guess is that that’s going to be a real factor in the development of that marketplace.

Leslie Josephs — Reporter

Thank you.

Operator

Thank you. Our next question comes from the line of Rajesh Singh of Reuters. Your line is open. Rajesh,

Unidentified Participant

Thanks. Hi Robert. Can you comment on reports of talks with Allah to join your Transatlantic and Trans Pacific joint ventures and how far those discussions have progressed and what scope you are considering?

Robert Isom — Chief Executive Officer

Thanks for the question. We’ve got a great relationship with Alaska. Really look forward to building on a history that’s dated back a long time, not just to one world, when we brought sponsored Alaska into one world, but then developed the wcia. And as their business has changed and ours has too, we look for opportunities going forward. I know that they’ve been fiercely independent, but at the same time we have been able to cooperate for the good of consumers on a number of fronts and we look forward to doing more with Alaska going forward.

Unidentified Participant

Robert, if I can, just one more question. You said that if there are any consolidation opportunities, you will be interested in looking at that. Is there anything out there that interests you and you think that might be the best fit for Americans?

Robert Isom — Chief Executive Officer

So a question regarding consolidation. Again, I appreciate that we’re always on the lookout for opportunities, but right now, nothing to report. And American is long experienced in terms of making sure that we take care of our customers, our network, our company. And we’ve been really creative over the years in being able to do that, whether it was back the creation of today’s American airlines back in 2013 in the combination of US Airways and American, all the way to things that have worked really well, like our relationship with Alaska and the WCIA or our joint businesses with IAG and jal.

And we’ll continue to be creative and do what’s right for our company and our customers. Thanks.

Operator

Thank you. This concludes the Q and A portion of the call. I would now like to turn the conference back to Robert Isom for closing remarks. Sir,

Robert Isom — Chief Executive Officer

Thanks, Lateef, and thanks everybody for listening in today. We’re really encouraged by our revenue growth in the first quarter, anticipated growth in the second quarter. It’s all due to what we’re focused on, elevating our customer experience, growing our global network, driving premium revenue and leading in loyalty. We have a fantastic team. I’d just like to thank them for everything that they do. And I’m very encouraged by what we’re projecting for the year with. With fuel prices up by over $4 billion, we’re still anticipating to be able to produce a profit here.

It gives testament to what we will be able to do when those fuel prices moderate in the future. So thank you for listening in, and we’re going to get back to work.

Operator

This concludes today’s conference call. Thank you for participating. You may now disconnect it.