Q125 Financial Results Roundup: Major U.S. Airlines

‍DALLAS — The first quarter of 2025 has shown varied performance across major U.S. airlines, with some carriers posting profits while others reported losses amid economic uncertainty. 

We’ll go through the recently released Q1 2025 financial results from Southwest Airlines (WN), American Airlines (AA), Delta Air Lines (DL), United Airlines (UA), and Alaska Air Group (AS), highlighting key metrics, challenges, and strategic responses.

Financial Performance Overview

Revenue, Profitability

Delta and UA managed to achieve profitability in Q1 2025, while WN, AA, and AS reported losses. UA demonstrated robust performance with pre-tax earnings of US$478 million and a pre-tax margin of 3.6%, marking its strongest first quarter since the pandemic began. DL posted pre-tax income of US$320 million with a pre-tax margin of 2.3%, resulting in earnings per share of US$0.37.

In contrast, WN reported a net loss of US$149 million, or US$0.26 per diluted share, and a net loss of US$77 million, or US$0.13 per diluted share, excluding special items. AA faced similar challenges, reporting a GAAP net loss of US$473 million (US$0.72 per diluted share) and an adjusted net loss of US$386 million (US$0.59 per diluted share), excluding special items.

Alaska Airlines reported a GAAP net loss of US$166 million, or US$1.35 per share, and an adjusted net loss of US$95 million, or US$0.77 per share, which includes Hawaiian Airlines (HA) results.

Revenue Growth

Despite economic headwinds, airlines generally reported strong revenue figures:

• United led with a 5.4% increase in revenue, reaching a record US$13.2 billion for the quarter
• Southwest achieved record first-quarter operating revenues of US$6.4 billion, with passenger revenues at US$5.8 billion (a 1.7% year-over-year increase)
• Delta reported operating revenue of US$14.0 billion
• American posted revenue of US$12.6 billion, which was essentially flat year-over-year
• Alaska's total revenue grew 9.0% year-over-year, with unit revenue up 5.0% year-over-year

Market Trends, Segment Performance

Premium vs. Economy Performance

A notable trend across carriers was the divergence between the performance of premium and economy cabins. UA reported that while domestic main cabin RASM declined by 5%, their premium cabin revenues grew in the mid-single digits, with International Polaris RASM rising by an impressive 8%.

Similarly, AA noted strength in international unit revenue, which increased 2.9% year-over-year, and continued growth in premium and loyalty revenue. AS reported that premium revenue remains resilient, up 10% year-over-year.

Loyalty Program Performance

Loyalty programs remain a bright spot for airlines. UA's loyalty revenue surged by 9%, totaling US$1.5 billion for the quarter. WN reported a first-quarter record for co-brand card spend, demonstrating the resilience of these high-margin revenue streams even as core passenger revenue faces pressure. AS's loyalty program cash remuneration grew 11.6% year-over-year.

Operational Challenges, Market Conditions

Demand Environment

Multiple airlines cited weakening demand trends throughout the quarter. WN specifically noted "softness in bookings, particularly in domestic leisure travel. " DL's CEO, Ed Bastian, remarked on "broad economic uncertainty around global trade" and stated that "growth has largely stalled."

This challenging demand environment brought about by the recent tectonic trade shifts is affecting the entire industry. However, international routes are performing better than domestic ones. AS also noted that macroeconomic factors and a softening demand environment began to negatively impact their results in February.

Specific Impacts

American reported that the AA Eagle Flight 5342 accident reduced its revenue by approximately US$200 million in the quarter, demonstrating how operational incidents can significantly impact financial results.

Despite this setback, AA generated substantial cash flow, with US$2.6 billion in operating cash flow and US$1.8 billion in free cash flow during the first quarter.

Strategic Responses, Outlook

Capacity Adjustments

In response to softening demand, airlines are adjusting their capacity plans. DL announced it would be "reducing planned capacity growth in the second half of the year to flat over last year."

Southwest expects second quarter 2025 capacity to increase only in the range of 1% to 2% year-over-year, showing restraint in growth plans. AS capacity grew 3.9% during the quarter.

New Revenue Initiatives

Southwest plans to introduce basic economy and bag fees for most fare products in May 2025 and will begin selling assigned and extra legroom seats in Q3 2025. These changes mark significant shifts in WN's traditional business model and revenue strategy.

Cost Management, Balance Sheet Focus

American highlighted its continued focus on debt reduction. WN beat its previously adjusted cost guidance and reported progress on its cost reduction plan. DL emphasized its focus on "protecting margins and cash flow by focusing on what we can control.”

Alaska Airlines generated US$459 million in operating cash flow for the first quarter and held US$2.5 billion in unrestricted cash and marketable securities as of March 31, 2025.

Alaska Air Group's Integration of Hawaiian Airlines

Alaska Airlines is in the process of integrating HA, with synergies already being realized. HA unit revenue increased 8.8% year-over-year, and HA’s adjusted pretax margin improved 14 points. The integration includes enhanced loyalty program benefits, co-location of stations, and unified cargo booking systems.

Bottom Line

All carriers are seeing relative strength in international and premium segments while facing challenges in domestic leisure travel. In response, airlines are moderating capacity growth, implementing new revenue initiatives, and focusing on cost control measures.

Cash flow generation remains strong across the industry, even for airlines reporting net losses, which provides some financial flexibility as they adjust to current market conditions.

The varied performance among carriers suggests that, tariff impacts aside, airline-specific strategies and network exposure continue to drive differentiated results even as broader economic pressures affect the entire sector.

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