American Airlines' $700M Volume Ranks 113th as Rising Costs and Tariffs Press Margins

On August 27, 2025, American Airlines (AAL) traded with a volume of $0.7 billion, ranking 113th in market activity, as the stock closed down 0.15%. The carrier faces ongoing operational challenges, with adjusted operating margins projected to remain weak in Q3 2025. Despite a rebound to 8.2% in Q2 2025 from a negative figure in Q1, management anticipates a range of -1% to +2% for the current quarter, driven by subdued revenue growth and rising costs. Total revenues are forecast to decline or grow modestly compared to the prior year, while cost per available seat mile is expected to rise 2.5-4.5% from Q3 2024 levels.

Operating expenses, particularly labor costs, remain a significant headwind. Adjusted operating costs are projected to exceed 2024 levels by over 3% in 2025, with pilot union agreements contributing to a 9.9% increase in 2024 salaries and an expected 8% rise in 2025. Strong unionization in the industry limits flexibility in managing wage pressures, compounding margin pressures. Tariff-related uncertainties also weigh on passenger demand, further constraining revenue potential.

Valuation metrics suggest AAL is undervalued relative to its peers, trading at a forward price/sales ratio of 0.15, below the industry average of 0.69. However, the stock has underperformed the broader airline sector, declining 8.4% over the past six months. Analysts maintain a neutral stance, with the Zacks Consensus Estimate for 2025 earnings revised upward in recent months.

AAL’s stock performance reflects structural challenges, including a 8.4% six-month price decline amid rising costs and revenue volatility. The carrier’s adjusted operating margin of 6% in 2024 and 8.2% in Q2 2025 highlights a fragile recovery path. Despite valuation discounts, persistent cost inflation and economic uncertainties suggest near-term risks to profitability remain elevated.