American Express's Airline Billing Slowdown: A Temporary Hiccup or a Sign of Shifting T&E Trends?

The first quarter of 2025 brought a notable development for American Express (AXP) investors: CEO Stephen Squeri revealed a sequential slowdown in airline billings growth during the company’s earnings call. While this news may raise eyebrows, a closer look at the broader context—coupled with AmEx’s resilient performance in other travel and entertainment (T&E) segments—suggests the slowdown may be more of a speed bump than a red flag.

Key Takeaways from Squeri’s Remarks

1. Airline Billings Growth Slowed Sequentially: The dip was isolated to the airline category, with Squeri noting stronger performance in restaurants, lodging, and goods/services.
2. Overall T&E Remains Stable: The CEO emphasized that T&E spending growth remained consistent with “steady levels” seen throughout 2024, despite macroeconomic uncertainties like U.S. tariff policies.
3. Resilient Financials: AmEx reported a 7% year-over-year revenue increase to $15.4 billion, with net income of $2.6 billion, underscoring its diversified revenue streams.

Decoding the Airline Billings Slowdown

The sequential slowdown in airline billings—meaning a deceleration from the prior quarter’s growth rate—is not entirely unexpected. The T&E sector has faced headwinds, including lingering impacts from post-pandemic demand normalization and rising fuel costs. However, Squeri’s emphasis on early April spending staying consistent with Q1 metrics suggests the dip might not mark a long-term trend.

To put this into perspective, airline billings typically account for a smaller slice of AmEx’s T&E portfolio compared to broader categories like hotels and restaurants. For example, in 2024, AmEx’s T&E revenue grew by a mid-single-digit percentage, with airline spending contributing a smaller fraction of that growth. This structural diversity likely shields AmEx from overexposure to any single subsector’s volatility.

The Broader T&E Landscape

While airlines slowed, restaurants and lodging continued to thrive, with Squeri highlighting double-digit growth in these areas. This resilience aligns with broader industry trends: the global travel market is projected to reach $9.3 trillion by 2027, driven by pent-up demand and the rise of flexible remote work models boosting leisure travel.

Moreover, AmEx’s commercial card business—a major contributor to its T&E revenue—has shown consistent strength. The company’s commercial volume grew 12% year-over-year in Q1, driven by corporate clients’ spending on services and goods. This underscores AmEx’s ability to navigate sector-specific headwinds through its diversified portfolio.

Macro Risks and AmEx’s Resilience

Squeri and CFO Christophe Le Caillec also addressed broader macroeconomic factors, such as U.S. tariff policies, which could pressure consumer and corporate spending. Yet AmEx’s Q1 results suggest its affluent client base and corporate clients remain insulated from these pressures. The company’s consumer loan delinquency rates remain near historic lows, and its premium card offerings—like the Platinum and Centurion cards—continue to drive high-margin revenue.

Investor Implications

The airline billing slowdown is a valid concern, but it’s essential to weigh it against AmEx’s broader strengths:
- Diversification: T&E is just one pillar of AmEx’s business, which also includes strong credit card fees, merchant services, and cross-selling opportunities.
- Valuation: At current levels, AmEx trades at a price-to-earnings (P/E) ratio of 18x, below its five-year average of 22x, offering potential upside.
- Dividend Safety: With a payout ratio of ~35%, the dividend (currently yielding 1.8%) appears secure.

Conclusion

American Express’s airline billing slowdown is a blip in an otherwise stable trajectory. While investors should monitor T&E trends closely, the company’s robust financials, diversified revenue streams, and resilient performance in non-airline categories suggest this is a temporary dip rather than a structural issue.

The data reinforces this narrative: AmEx’s 7% revenue growth and 12% commercial volume expansion in Q1, alongside consistent spending in lodging and restaurants, indicate underlying strength. Even if airline growth remains muted, AmEx’s premium brand, corporate client relationships, and diversified product mix position it to weather sector-specific volatility.

For investors, the key takeaway is this: AmEx’s long-term story remains intact. The airline hiccup is a minor detour on a road paved with strong fundamentals—and one that may present a buying opportunity as the market digests the news.