AIRLINES & ALLIANCES

US Airlines 2Q 2025 results: Loyalty Trends.

GLO analysed 2Q 2025 results to uncover key industry underlying trends in revenue, fees & loyalty across US airlines. America’s largest airlines reported mixed Q2 2025 results, with record revenues at several carriers despite softer domestic travel. Strong demand for premium cabins, booming loyalty program income, and higher ancillary fees helped offset cost pressures and weaker economy-class bookings.

GLO

Industry Overview: Revenue Holds, Premium & Loyalty Shine

• Revenue broadly stable: American Airlines achieved record Q2 revenue of $14.4 billion, up ~0.4% year‑over‑year, even as domestic passenger revenue declined ~2% amid soft demand in the economy cabin.

• Premium seats and international help offset domestic weakness: Atlantic passenger revenue rose ~3–5%, with strong performance in long‑haul and premium cabins—aligning with trends at Delta, United and Alaska where premium yields rose 5–6%.

• Loyalty and incidental fees increasingly critical: American’s AAdvantage program delivered ~77% of premium revenue, with co‑brand card spend up ~6‑7% YoY. Alaska saw loyalty revenue grow 5% and cargo up 34%.

• Costs rising: While fuel costs declined (~13% YoY for American), unit cost ex‑fuel rose across carriers—American’s CASM ex‑fuel up ~3%, Alaska +6.5%, JetBlue +6%.

Airline-by-Airline 2Q 2025 financial results summary:

American Airlines

• Revenue & Volume: Delivered its highest-ever quarterly revenue at $14.4 billion (+0.4%). However, operating income declined to $1.135 billion and net income to $599 million, partly due to a 2% drop in domestic passenger revenue and softer economy yields.

• Fees & Loyalty: AAdvantage remains a key profit driver—contributing ~77% of premium revenue—with active accounts up ~7% and credit‑card spend up ~6% YoY. The airline also extended its Mastercard partnership to strengthen ancillary income.

• Outlook: Q3 adjusted EPS guidance is bleak (loss of $0.10–$0.60), with full‑year range between –$0.20 and +$0.80 depending on domestic recovery.

Delta Air Lines

• Revenue & Volume: Posted record Q2 revenue of $15.5–15.6 billion with a strong 13% operating margin and ~$1.8 billion pre-tax profit—led by premium cabin growth (+5%) and strong international demand.

• Fees & Loyalty: Loyalty revenues grew ~8% and co‑brand card income ~10%. Cargo revenue rose 7%, supporting diversified earnings.

• Strengths & Strategy: Delta’s pivot toward luxury travel is paying off; it reinstated full-year EPS guidance at $5.25–$6.25, positioning itself as an industry benchmark.

United Airlines

• Revenue & Volume: Delivered Q2 operating revenue of $15.24 billion, with an 8.7% operating margin and ~$1.7 billion pre-tax profit, broadly in line with expectations. Domestic RASM fell ~7%, though premium revenue rose ~5.6% and cargo +4%.

• Fees & Loyalty: MileagePlus loyalty income grew ~9% year-over-year. United also repaid $1.5 billion in bonds and repurchased $235 million in shares, enhancing shareholder returns.

• Outlook: Full‑year EPS guidance stands at $9–$11, with strong free cash flow anticipated — over $2 billion.

JetBlue Airways

• Revenue & Volume: Reported $2.4 billion operating revenue (-3% YoY) and modest shrinkage in capacity (-1.5%). Non‑GAAP net loss narrowed to $58 million as cost controls kicked in.

• Fees & Loyalty: Premium unit revenues grew mid-single digits, while loyalty remunerations rose ~9%. New partners, lounge expansions, and self-service tools aim to deepen loyalty engagement.

• Outlook: JetBlue expects Q3 unit revenue to fall 2–6%, unit costs up ~5–7%, but remains hopeful about demand turning positive into late 2025.

Southwest Airlines

• Revenue & Volume: Operating revenue declined ~1.5% YoY to $7.2 billion, with passenger revenue down ~1.3%. Unit revenue per seat mile fell ~3.1%, despite capacity up 1.6%.

• Fees & Loyalty: New fees—including checked bag charges—are delivering over $350 million EBIT run-rate. Rapid Rewards performance has been mixed, with recent changes dampening points accrual and redemption attractiveness.

• Strategy: Fare structure revamp continues with assigned seating starting 2026 and basic economy testing; gains expected more in late 2025 and beyond.

Alaska Air Group

• Revenue & Volume: Achieved Q2 record revenue of $3.7 billion, though RASM declined ~0.6%. Operating margin came in at ~6.4% GAAP and ~8.0% adjusted; adjusted EPS reached $1.78, ahead of guidance.

• Fees & Loyalty: Nearly half of revenue came from non‑main‑cabin sources. Premium revenue grew ~5%, cargo soared 34%, and loyalty remuneration rose 5% YoY.

• Strategy & Outlook: Integration with Hawaiian Airlines is progressing well under the Alaska Accelerate plan, with new long-haul routes launching in 2026 and full-year EPS expected above $3.25.

Key Industry & Loyalty Takeaways:

1. Premium upgrades and loyalty continue to drive profitability for network carriers—buffers against weak economy class and domestic demand.

2. Cargo and ancillary fee growth are increasingly material, particularly for airlines like Alaska and Southwest.

3. Cost pressure remains a theme: while lower fuel costs help, labor agreements and inflation are pushing unit costs higher across carriers.

4. Outlooks remain cautious, with American particularly conservative, while Delta, United, and Alaska retain optimistic full‑year guidance anchored in premium and international strength.

Source: GLO