American Airlines (AAL)
US network carrier guiding on total debt: FY2025 RASM of 18.25¢ against CASM ex fuel of 14.12¢, net debt of $30.7B and company-defined FCF of −$83M.
Educational analysis for professional use. This profile is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Snapshot
Leverage Without a Ratio Target
American flies about as many seats as Delta, yet debt makes up most of what the business is worth. It flew 299,411 million available seat miles (ASMs, one seat flown one mile) in FY2025, up 2.2% and roughly level with Delta's 298,045 million. Net debt, which includes operating lease liabilities and pension obligations, was $30,673 million at 31 December 2025, the highest of the four US carriers. Against a market capitalisation of about $8.9 billion on 10 June 2026, that is about three and a half times the equity and about three-quarters of enterprise value.
Cash flow is not yet shrinking that debt. Company-defined free cash flow was −$83 million in FY2025, against non-GAAP FCF of $4.64 billion at Delta and $2.71 billion at United. American guides on total debt instead of a leverage ratio: $36.5 billion at the end of 2025, which it expects to bring below $35 billion in 2026, a year ahead of its earlier plan (January 2026 earnings presentation). It files nothing like Delta's guidance of about 2× gross leverage for 2026 or United's <2.0× net leverage target, and the EBITDAR guide flags the gap: there is no stated ratio to measure American against.
Unit Economics
American's ex-fuel unit spread is roughly 4.1¢ a seat mile, against about 5.2¢ at United and 5.7¢ at Delta. Revenue per ASM (RASM, American's name for what Delta and United call TRASM) was 18.25¢, including 16.58¢ of passenger revenue per ASM (PRASM). Cost per ASM excluding fuel and net special items was 14.12¢ per the earnings presentation; like its peers' ex-fuel measures, it still includes depreciation and aircraft rent. Load factor, the share of seats sold, was 83.6%. The RASM and CASM guide keeps each carrier's revenue definition separate when building the peer comparison.
The margin is positive. The hard part is turning it into cash that pays down debt.
FCF Definition Matters
The −$83 million is American's own definition, taken from its earnings presentation. The FCF guide maps the definitions across the comp set: Delta and United reconcile a non-GAAP figure, while Southwest's −$831 million is computed as operating cash flow less capex. Setting American's figure beside Delta's without reading each reconciliation misstates the gap in their capacity to repay debt.
What to Watch in the Financials
With FCF near zero, the balance sheet barely moved in FY2025. Because the guidance is in dollars, progress shows up in absolute debt and in net debt including leases: each quarter, set debt repaid against capex and pension needs, and total debt against the 2026 guide.
Costs are the other line. If labour and fleet inflation push CASM ex fuel towards Delta's 13.86¢ without a matching rise in RASM, the 4.1¢ spread narrows. The sector convention treats a spread below 3¢ as thin.
Capacity grew 2.2%, the slowest of the three network carriers. If load factor holds while peers grow faster, American may be protecting fares at the cost of relative scale.
Valuation Framework
With net debt at about three and a half times equity, a given change in normalised EBITDAR (EBITDA before aircraft rent) moves the equity value proportionally far more than enterprise value. EV/EBITDAR on normalised earnings remains the screening lens, with a band of roughly 4–7×. Because American files no EBITDAR leverage ratio, any ratio has to be built from its own EBITDAR reconciliation before it is compared with Delta's or United's.
Key Risks
The main risk is a bad year. Near-zero FCF funds little deleveraging, and a fuel spike or recession that pushed FCF well below zero would put the debt guidance at risk. Fuel has already risen sharply in 2026: American's second-quarter fuel expense was up 83% year on year (Q2 2026 10-Q, the quarterly filing).
On the filed figures, American's ex-fuel unit cost sits above United's CASM-ex of 12.64¢, before reconciling their different exclusions. And debt this size needs continuous access to capital markets, so credit metrics matter more here than at Delta ($14.3 billion adjusted net debt) or Southwest (~$2.75 billion).
Peer Context
Delta runs 2.4× gross leverage with a published path down. United runs a larger network at 2.2× net leverage. In the Airlines Sector Primer comp set, American is the example of a network carrier that manages its debt to a dollar figure.
EBITDAR builds from a thin unit margin on seat miles, the leases are capitalised into net debt, and the value moves on what a small load-factor drop costs.
The Excel model is the primer's airline build live across 11 sheets: EBITDAR from seat miles and unit margin, leases capitalised into adjusted net debt, a through-cycle EV/EBITDAR valuation for a network carrier and a low-cost carrier, a load-factor downturn, a lease-adjusted leverage screen and a sensitivity grid. Change the unit revenue, fuel or leases and the value moves.