American Airlines Group Inc.: Form 10-Q for the period ended Sep 30, 2026

Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Form 10-K). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of AAG and American, but rather updates disclosures made in the 2025 Form 10-K.

Financial Overview

Business and Macroeconomic Conditions

Worldwide macroeconomic, political and military events, including war, terrorist activity, and conflict in the Middle East (particularly if it intensifies or is prolonged) and in Ukraine, have contributed, and are likely to continue to contribute, to oil and natural gas price volatility. These factors, along with changes in U.S. or international trade policies and continued uncertainty surrounding such policies, could lead to weakened business conditions for the transportation industry, which may adversely impact our operations through increased supply chain challenges, commodity price volatility and a decline in discretionary spending and consumer confidence, among others.

Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of aircraft fuel can have a material effect on our operating results and liquidity. Market prices for aircraft fuel have fluctuated substantially during the first nine months of 2026 and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $1.86 per gallon to a high of approximately $4.78 per gallon during this period.

AAG’s Third Quarter 2026 Results

The selected financial data presented below is derived from AAG’s unaudited condensed consolidated financial statements included in Part I, Item 1A of this report and should be read in conjunction with those financial statements and the related notes thereto.

(In millions, except percentage changes)

(1) See “Reconciliation of GAAP to Non-GAAP Financial Measures” below and Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of net special items.

(2) Not meaningful or greater than 100% change.

Pre-Tax Loss and Net Loss

Pre-tax loss and net loss were $334 million and $269 million, respectively, in the third quarter of 2026. This compares to third quarter of 2025 pre-tax loss and net loss of $142 million and $114 million, respectively. Excluding the effects of pre-tax net special items, pre-tax loss was $222 million and $139 million in the third quarters of 2026 and 2025, respectively.

The period-over-period increase in pre-tax loss on both a GAAP basis and excluding pre-tax net special items was principally driven by increases in aircraft fuel and related taxes, salaries, wages and benefits and certain other operating expenses, offset in part by an increase in passenger revenue.

Revenue

In the third quarter of 2026, we reported total operating revenues of $16.3 billion, an increase of $2.6 billion, or 19.3%, from the third quarter of 2025. Passenger revenue was $14.9 billion in the third quarter of 2026, an increase of $2.4 billion, or 19.5%, from the third quarter of 2025. Passenger revenue performance improved in the third quarter of 2026, with a 14.6% increase in PRASM compared to the third quarter of 2025, primarily driven by higher passenger yield, which increased 18.3% year over year. We had strong revenue performance across all regions with domestic and international PRASM increasing by 13.6% and 16.4%, respectively, primarily driven by an increase in passenger yield of 18.0% and 18.5%, respectively.

Cargo revenue increased $62 million, or 29.1%, in the third quarter of 2026 from the third quarter of 2025, primarily due to a 14.7% increase in cargo ton miles and a 12.6% increase in cargo yield.

Other operating revenue increased $153 million, or 15.2%, in the third quarter of 2026 from the third quarter of 2025, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2026 and 2025, cash payments from co-branded credit card and other partners were $1.7 billion and $1.5 billion, respectively.

Our total revenue per available seat mile (TRASM) was 20.25 cents in the third quarter of 2026, a 14.5% increase as compared to 17.69 cents in the third quarter of 2025.

Fuel

Aircraft fuel and related taxes was $4.6 billion in the third quarter of 2026, which was $1.9 billion, or 67.5%, higher as compared to the third quarter of 2025. This was primarily due to a 62.7% increase in the average price per gallon of aircraft fuel including related taxes to $3.85 in the third quarter of 2026 compared to $2.37 in the third quarter of 2025 and a 3.0% increase in gallons of fuel consumed due to increased capacity.

As of September 30, 2026, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. See Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity” in our 2025 Form 10-K.

Other Costs

We remain committed to actively managing our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. Additionally, we continue to focus on initiatives to reengineer our business through the use of digital solutions, process enhancements and procurement transformation and we intend to continue to invest in reengineering our business through the remainder of 2026 and beyond to build an even more efficient airline and continue to manage costs while delivering a better experience for our customers and team members.

Our 2026 third quarter total operating cost per available seat mile (CASM) was 20.10 cents, an increase of 14.9% compared to 17.49 cents in the third quarter of 2025. The increase in CASM was primarily driven by higher costs for aircraft fuel, salaries, wages and benefits and other operating expenses.

Our 2026 third quarter CASM excluding net special items, fuel and profit sharing was 14.34 cents, an increase of 3.0% compared to 13.92 cents in the third quarter of 2025, which was primarily driven by higher costs for salaries, wages and benefits and other operating expenses.

For a reconciliation of CASM to CASM excluding net special items, fuel and profit sharing see “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Liquidity

As of September 30, 2026, we had $11.8 billion in total available liquidity, consisting of $8.3 billion in unrestricted cash and short-term investments, and $3.5 billion in total undrawn capacity under revolving credit and other facilities.

During the first nine months of 2026, we completed the following financing transactions (see Note 5 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on 2026 financing activities):

• repaid in full $629 million of the outstanding principal amount of the senior short-term term loan facility;
• prepaid in full $1.0 billion of the outstanding principal amount of the 8.50% senior secured notes;
• amended the terms of the 2025 AAdvantage Term Loan Facility to reduce the applicable interest rate margin;
• increased the aggregate revolving commitments under the 2013 Revolving Facility, the 2014 Revolving Facility and the 2023 Revolving Facility from $3.0 billion to $3.1 billion and extended the maturity of each facility from June 2029 to March 2031;
• extended the maturity date of a revolving credit facility that provides for borrowing capacity of up to $350 million by an additional year to March 2028;
• extended the maturity date of the term loans under the 2014 Credit Agreement from January 2027 to May 2033, refinanced in full the existing term loans of approximately $1.1 billion and incurred incremental term loans of $703 million;
• prepaid $310 million of the outstanding principal amounts of certain equipment notes issued under enhanced equipment trust certificates (EETCs); and
• received approximately $4.1 billion in proceeds from EETCs, equipment loans and other notes payable in connection with the financing of certain aircraft and spare engines.

Reconciliation of GAAP to Non-GAAP Financial Measures

We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

The following table presents the reconciliation of pre-tax income (loss) (GAAP measure) to pre-tax income (loss) excluding net special items (non-GAAP measure). Management uses this non-GAAP financial measure to evaluate our current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items provides management with an additional tool to understand our core operating performance.

(In millions)

(1) See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.

Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net special items, fuel and profit sharing (non-GAAP measure) and CASM to CASM excluding net special items, fuel and profit sharing. Management uses total operating costs excluding net special items, fuel and profit sharing and CASM excluding net special items, fuel and profit sharing to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. Additionally, we exclude profit sharing to allow investors to better understand and analyze our operating cost performance and to provide a more meaningful comparison of our core operating costs to the airline industry. The adjustment to exclude net special items, fuel and profit sharing provides management with an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.

(In millions)

(1) See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.

AAG’s Results of Operations

Operating Statistics

The table below sets forth selected operating data for the three and nine months ended September 30, 2026 and 2025. Amounts may not recalculate due to rounding.

(a) Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile.

(b) Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile.

(c) Passenger load factor – The percentage of available seats that are filled with revenue passengers.

(d) Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs.

(e) Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs.

(f) Total revenue per available seat mile (TRASM) – Total revenues divided by ASMs.

(g) Total operating cost per available seat mile (CASM) – Total operating expenses divided by ASMs.

(h) Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excluded from the aircraft count above are two Bombardier CRJ900 regional aircraft that are held in temporary storage as of September 30, 2026.

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Operating Revenues

(In millions, except percentage changes)

This table presents our passenger revenue and the period-over-period change in certain operating statistics:

(In millions)

Passenger revenue increased $2.4 billion, or 19.5%, in the third quarter of 2026 from the third quarter of 2025 with a 14.6% increase in PRASM compared to the third quarter of 2025, primarily driven by higher passenger yield, which increased 18.3% year over year. We had strong revenue performance across all regions, with domestic and international PRASM increasing by 13.6% and 16.4%, respectively, primarily driven by an increase in passenger yield of 18.0% and 18.5%, respectively.

Cargo revenue increased $62 million, or 29.1%, in the third quarter of 2026 from the third quarter of 2025, primarily due to a 14.7% increase in cargo ton miles and a 12.6% increase in cargo yield.

Other operating revenue increased $153 million, or 15.2%, in the third quarter of 2026 from the third quarter of 2025, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2026 and 2025, cash payments from co-branded credit card and other partners were $1.7 billion and $1.5 billion, respectively.

Operating Expenses

(In millions, except percentage changes)

48

Aircraft fuel and related taxes increased $1.9 billion, or 67.5%, in the third quarter of 2026 from the third quarter of 2025, primarily due to a 62.7% increase in the average price per gallon of aircraft fuel including related taxes to $3.85 in the third quarter of 2026 compared to $2.37 in the third quarter of 2025 and a 3.0% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $252 million, or 5.7%, in the third quarter of 2026 from the third quarter of 2025, primarily due to annual contractual wage rate increases and a 2.7% increase in mainline full-time equivalent employees subsequent to the third quarter of 2025.

Regional expenses increased $79 million, or 5.8%, in the third quarter of 2026 from the third quarter of 2025, primarily due to an increase in regional flight operations as regional capacity, as measured by ASMs, increased 7.5% in the third quarter of 2026 from the third quarter of 2025.

Maintenance, materials and repairs increased $64 million, or 6.2%, in the third quarter of 2026 from the third quarter of 2025, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume and flight hours.

Other rent and landing fees increased $90 million, or 9.9%, in the third quarter of 2026 from the third quarter of 2025, primarily due to rate increases at certain airports.

Selling expenses increased $70 million, or 14.7%, in the third quarter of 2026 from the third quarter of 2025, primarily due to higher commissions from renegotiated agency contracts and higher credit card fees, both driven by increased passenger revenue.

Other operating expenses increased $237 million, or 13.7%, in the third quarter of 2026 from the third quarter of 2025, primarily driven by higher costs for onboard food and catering, crew travel, ground and cargo handling, international navigation fees, airport lounge operations, Wi-Fi and certain general and administrative expenses.

Operating Special Items, Net

(In millions)

Nonoperating Results

(In millions, except percentage changes)

Interest income decreased $3 million, or 3.8%, in the third quarter of 2026 from the third quarter of 2025, primarily due to lower interest rates resulting in reduced returns, offset in part by a higher average balance of our short-term investments. Interest expense, net increased $3 million, or 0.7%, in the third quarter of 2026 from the third quarter of 2025, primarily due to the issuance of debt subsequent to the third quarter of 2025 and higher interest rates on our variable-rate debt instruments, offset in part by repayments of higher interest debt.

In the third quarter of 2026, other nonoperating expense, net, included $95 million of net special charges, primarily related to an impairment charge associated with our equity investment in Republic Airways Holdings Inc. (Republic Holdings) and mark-to-market net unrealized losses associated with certain equity investments.

In the third quarter of 2025, other nonoperating income, net, primarily included $31 million of net earnings related to our equity investments accounted for under the equity method and $17 million of non-service-related pension and other postretirement benefit plan income.

Income Taxes

In the third quarter of 2026, we recorded an income tax benefit of $65 million. Substantially all of our loss before income taxes is attributable to the United States.

See Note 6 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Operating Revenues

(In millions, except percentage changes)

This table presents our passenger revenue and the period-over-period change in certain operating statistics:

(In millions)

Passenger revenue increased $5.6 billion, or 15.2%, in the first nine months of 2026 from the first nine months of 2025 with a 10.5% increase in PRASM compared to the first nine months of 2025, primarily driven by higher passenger yield, which increased 12.1% year over year. We had strong revenue performance across all regions, with domestic and international PRASM both increasing by 10.4%, primarily driven by an increase in passenger yield of 12.7% and 10.6%, respectively.

Cargo revenue increased $149 million, or 24.3%, in the first nine months of 2026 from the first nine months of 2025, primarily due to a 15.5% increase in cargo ton miles and a 7.6% increase in cargo yield.

Other operating revenue increased $575 million, or 18.9%, in the first nine months of 2026 from the first nine months of 2025, driven primarily by higher revenue associated with our loyalty program. During the nine months ended September 30, 2026 and 2025, cash payments from co-branded credit card and other partners were $6.3 billion and $4.7 billion, respectively. Cash payments for the first nine months of 2026 included a one-time payment associated with the extension of a partner agreement announced in 2025.

Operating Expenses

(In millions, except percentage changes)

Aircraft fuel and related taxes increased $4.4 billion, or 55.2%, in the first nine months of 2026 from the first nine months of 2025, primarily due to a 50.8% increase in the average price per gallon of aircraft fuel including related taxes to $3.58 in the first nine months of 2026 compared to $2.38 in the first nine months of 2025 and a 2.9% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $962 million, or 7.4%, in the first nine months of 2026 from the first nine months of 2025, primarily due to annual contractual wage rate increases and a 2.7% increase in mainline full-time equivalent employees subsequent to the first nine months of 2025.

Regional expenses increased $235 million, or 5.8%, in the first nine months of 2026 from the first nine months of 2025, primarily due to an increase in regional flight operations as regional capacity, as measured by ASMs, increased 7.0% in the first nine months of 2026 from the first nine months of 2025.

Maintenance, materials and repairs increased $224 million, or 7.8%, in the first nine months of 2026 from the first nine months of 2025, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume and flight hours.

Other rent and landing fees increased $235 million, or 9.0%, in the first nine months of 2026 from the first nine months of 2025, primarily due to rate increases at certain airports.

Selling expenses increased $197 million, or 13.4%, in the first nine months of 2026 from the first nine months of 2025, primarily due to higher commissions from renegotiated agency contracts and higher credit card fees, both driven by increased passenger revenue, as well as higher advertising expenses.

Other operating expenses increased $614 million, or 12.1%, in the first nine months of 2026 from the first nine months of 2025, primarily driven by higher costs for onboard food and catering, crew travel, ground and cargo handling, Wi-Fi, international navigation fees, airport lounge operations and certain general and administrative expenses.

Operating Special Items, Net

(In millions)

(1) Labor contract expenses for the nine months ended September 30, 2025 included a one-time charge resulting from adjustments to vacation accruals due to pay rate increases effective January 1, 2025, following the ratification of the contract extension in the fourth quarter of 2024 with our mainline maintenance and fleet service team members.

Nonoperating Results

(In millions, except percentage changes)

Interest income decreased $68 million, or 24.0%, in the first nine months of 2026 from the first nine months of 2025, primarily due to lower interest rates and a lower average balance of our short-term investments, resulting in reduced returns. Interest expense, net decreased $52 million, or 4.0%, in the first nine months of 2026 from the first nine months of 2025, primarily due to repayments of higher interest debt, offset in part by the issuance of debt subsequent to the third quarter of 2025 and higher interest rates on our variable-rate debt instruments.

In the first nine months of 2026, other nonoperating expense, net, included $259 million of net special charges, primarily related to mark-to-market net unrealized losses associated with certain equity investments, an impairment charge related to our equity investment in Republic Holdings and costs associated with debt refinancings and extinguishments, offset in part by $57 million of non-service-related pension and other postretirement benefit plan income.

In the first nine months of 2025, other nonoperating income, net, included $46 million of net earnings related to our equity investments accounted for under the equity method and $39 million of non-service-related pension and other postretirement benefit plan income, offset in part by $28 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and debt refinancings and extinguishments.

Income Taxes

In the first nine months of 2026, we recorded an income tax benefit of $122 million. Substantially all of our loss before income taxes is attributable to the United States.

See Note 6 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

American’s Results of Operations

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Operating Revenues

(In millions, except percentage changes)

Passenger revenue increased $2.4 billion, or 19.5%, in the third quarter of 2026 from the third quarter of 2025 due to strong revenue performance across all regions, with domestic and international PRASM increasing compared to the third quarter of 2025, primarily driven by higher passenger yield.

Cargo revenue increased $62 million, or 29.1%, in the third quarter of 2026 from the third quarter of 2025, primarily due to an increase in cargo ton miles and cargo yield.

Other operating revenue increased $155 million, or 15.4%, in the third quarter of 2026 from the third quarter of 2025, driven primarily by higher revenue associated with American’s loyalty program. During the three months ended September 30, 2026 and 2025, cash payments from co-branded credit card and other partners were $1.7 billion and $1.5 billion, respectively.

Operating Expenses

(In millions, except percentage changes)

Aircraft fuel and related taxes increased $1.9 billion, or 67.5%, in the third quarter of 2026 from the third quarter of 2025, primarily due to a 62.7% increase in the average price per gallon of aircraft fuel including related taxes to $3.85 in the third quarter of 2026 compared to $2.37 in the third quarter of 2025 and a 3.0% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $252 million, or 5.7%, in the third quarter of 2026 from the third quarter of 2025, primarily due to annual contractual wage rate increases and a 2.7% increase in mainline full-time equivalent employees subsequent to the third quarter of 2025.

Regional expenses increased $99 million, or 7.3%, in the third quarter of 2026 from the third quarter of 2025, primarily due to an increase in regional flight operations.

Maintenance, materials and repairs increased $64 million, or 6.2%, in the third quarter of 2026 from the third quarter of 2025, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume and flight hours.

Other rent and landing fees increased $90 million, or 9.9%, in the third quarter of 2026 from the third quarter of 2025, primarily due to rate increases at certain airports.

Selling expenses increased $70 million, or 14.7%, in the third quarter of 2026 from the third quarter of 2025, primarily due to higher commissions from renegotiated agency contracts and higher credit card fees, both driven by increased passenger revenue.

Other operating expenses increased $237 million, or 13.7%, in the third quarter of 2026 from the third quarter of 2025, primarily driven by higher costs for onboard food and catering, crew travel, ground and cargo handling, international navigation fees, airport lounge operations, Wi-Fi and certain general and administrative expenses.

Operating Special Items, Net

(In millions)

Nonoperating Results

(In millions, except percentage changes)

Interest income decreased $18 million, or 7.3%, in the third quarter of 2026 from the third quarter of 2025, primarily due to lower interest rates resulting in reduced returns, offset in part by a higher average balance of American’s short-term investments. Interest expense, net decreased $23 million, or 5.1%, in the third quarter of 2026 from the third quarter of 2025, primarily due to repayments of higher interest debt, offset in part by the issuance of debt subsequent to the third quarter of 2025.

In the third quarter of 2026, other nonoperating expense, net, included $95 million of net special charges, primarily related to an impairment charge associated with American’s equity investment in Republic Holdings and mark-to-market net unrealized losses associated with certain equity investments.

In the third quarter of 2025, other nonoperating income, net, primarily included $31 million of net earnings related to American’s equity investments accounted for under the equity method and $17 million of non-service-related pension and other postretirement benefit plan income.

Income Taxes

American is a member of AAG’s consolidated federal and certain state income tax returns.

In the third quarter of 2026, American recorded an income tax benefit of $32 million. Substantially all of American’s loss before income taxes is attributable to the United States.

See Note 5 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Operating Revenues

(In millions, except percentage changes)

Passenger revenue increased $5.6 billion, or 15.2%, in the first nine months of 2026 from the first nine months of 2025 due to strong revenue performance across all regions, with domestic and international PRASM increasing compared to the first nine months of 2025, primarily driven by higher passenger yield.

Cargo revenue increased $149 million, or 24.3%, in the first nine months of 2026 from the first nine months of 2025, primarily due to an increase in cargo ton miles and cargo yield.

Other operating revenue increased $578 million, or 19.1%, in the first nine months of 2026 from the first nine months of 2025, driven primarily by higher revenue associated with American’s loyalty program. During the nine months ended September 30, 2026 and 2025, cash payments from co-branded credit card and other partners were $6.3 billion and $4.7 billion, respectively. Cash payments for the first nine months of 2026 included a one-time payment associated with the extension of a partner agreement announced in 2025.

Operating Expenses

(In millions, except percentage changes)

Aircraft fuel and related taxes increased $4.4 billion, or 55.2%, in the first nine months of 2026 from the first nine months of 2025, primarily due to a 50.8% increase in the average price per gallon of aircraft fuel including related taxes to $3.58 in the first nine months of 2026 compared to $2.38 in the first nine months of 2025 and a 2.9% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $961 million, or 7.4%, in the first nine months of 2026 from the first nine months of 2025, primarily due to annual contractual wage rate increases and a 2.7% increase in mainline full-time equivalent employees subsequent to the first nine months of 2025.

Regional expenses increased $251 million, or 6.2%, in the first nine months of 2026 from the first nine months of 2025, primarily due to an increase in regional flight operations.

Maintenance, materials and repairs increased $224 million, or 7.8%, in the first nine months of 2026 from the first nine months of 2025, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume and flight hours.

Other rent and landing fees increased $235 million, or 9.0%, in the first nine months of 2026 from the first nine months of 2025, primarily due to rate increases at certain airports.

Selling expenses increased $197 million, or 13.4%, in the first nine months of 2026 from the first nine months of 2025, primarily due to higher commissions from renegotiated agency contracts and higher credit card fees, both driven by increased passenger revenue, as well as higher advertising expenses.

Other operating expenses increased $615 million, or 12.2%, in the first nine months of 2026 from the first nine months of 2025, primarily driven by higher costs for onboard food and catering, crew travel, ground and cargo handling, Wi-Fi, international navigation fees, airport lounge operations and certain general and administrative expenses.

Operating Special Items, Net

(In millions)

(1) Labor contract expenses for the nine months ended September 30, 2025 included a one-time charge resulting from adjustments to vacation accruals due to pay rate increases effective January 1, 2025, following the ratification of the contract extension in the fourth quarter of 2024 with American’s mainline maintenance and fleet service team members.

Nonoperating Results

(In millions, except percentage changes)

Interest income decreased $93 million, or 12.8%, in the first nine months of 2026 from the first nine months of 2025, primarily due to lower interest rates and a lower average balance of American’s short-term investments, resulting in reduced returns. Interest expense, net decreased $112 million, or 8.4%, in the first nine months of 2026 from the first nine months of 2025, primarily due to repayments of higher interest debt, offset in part by the issuance of debt subsequent to the third quarter of 2025.

In the first nine months of 2026, other nonoperating expense, net, included $259 million of net special charges, primarily related to mark-to-market net unrealized losses associated with certain equity investments, an impairment charge related to American’s equity investment in Republic Holdings and costs associated with debt refinancings and extinguishments, offset in part by $56 million of non-service-related pension and other postretirement benefit plan income.

In the first nine months of 2025, other nonoperating income, net, included $46 million of net earnings related to American’s equity investments accounted for under the equity method and $39 million of non-service-related pension and other postretirement benefit plan income, offset in part by $28 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments and debt refinancings and extinguishments.

Income Taxes

American is a member of AAG’s consolidated federal and certain state income tax returns.

In the first nine months of 2026, American recorded an income tax benefit of $26 million. Substantially all of American’s loss before income taxes is attributable to the United States.

See Note 5 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Liquidity and Capital Resources

Liquidity

At September 30, 2026, AAG had $11.8 billion in total available liquidity and $555 million in restricted cash and short-term investments. Additional detail regarding our available liquidity is provided in the table below (in millions):

In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other factors. The amounts involved may be material.

Certain Covenants

Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict our ability and that of our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt financing agreements (including our secured notes, term loans and revolving credit facilities) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semi-annually. Pursuant to such agreements, if the applicable LTV or collateral coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities. The AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. As of the most recent applicable measurement dates, we were in compliance with each of the foregoing covenants.

Sources and Uses of Cash

AAG

Operating Activities

Our net cash provided by operating activities was $4.5 billion and $3.4 billion for the first nine months of 2026 and 2025, respectively, a $1.2 billion period-over-period increase driven primarily by working capital increases principally in our air traffic liability and loyalty program liability, offset in part by lower profitability in the first nine months of 2026 as compared to the same period in 2025.

Investing Activities

Our net cash used in investing activities was $4.8 billion and $1.5 billion for the first nine months of 2026 and 2025, respectively.

Our principal investing activities in the first nine months of 2026 included $2.7 billion of capital expenditures, which primarily related to the purchase of 14 Boeing 737 MAX aircraft, 14 Embraer E175 aircraft, five Airbus A321XLR aircraft, four Bombardier CRJ900 aircraft, two Airbus A321neo aircraft, one Airbus A319 aircraft lease repurchase, 21 aircraft engines and aircraft purchase deposits. Additionally, we had $2.3 billion in net purchases of short-term investments.

Our principal investing activities in the first nine months of 2025 included $2.1 billion of capital expenditures, which primarily related to the purchase of 13 Boeing 737 MAX aircraft, six Embraer E175 aircraft, five Bombardier CRJ900 aircraft, three Boeing 787-9 aircraft, two Airbus A321XLR aircraft, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and seven aircraft engines. These cash outflows were offset in part by $328 million in net proceeds from the issuance of the Tulsa Municipal Airport Trust (TMAT) special facility revenue bonds and $243 million in proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at Los Angeles International Airport (LAX). Additionally, we had $143 million in net sales of short-term investments.

Financing Activities

Our net cash provided by financing activities was $456 million for the first nine months of 2026 as compared to net cash used in financing activities of $1.8 billion for the first nine months of 2025.

Our principal financing activities in the first nine months of 2026 included $5.9 billion of proceeds from the issuance of long-term debt, primarily consisting of $4.1 billion from the issuance of EETCs, equipment loans and other notes payable in connection with the financing of certain aircraft and spare engines and proceeds from the 2014 Term Loan Facility, which refinanced $1.1 billion of existing term loans and provided $703 million of incremental term loan borrowings. These cash inflows were offset in part by $5.3 billion in long-term debt and finance lease repayments, primarily consisting of $2.8 billion in scheduled repayments, $1.3 billion of early repayments, including $1.0 billion of the outstanding principal amount of the 8.50% senior secured notes and $310 million of equipment notes issued under EETCs, and $1.1 billion from the refinancing in connection with the 2014 Term Loan Facility.

Our principal financing activities in the first nine months of 2025 primarily included $4.1 billion in long-term debt and finance lease repayments, consisting of $3.3 billion in scheduled repayments, including the $1.0 billion cash settlement of AAG’s 6.50% convertible senior notes. Long-term debt and finance lease repayments also included early repayments of $487 million for the outstanding principal amount of equipment notes issued under EETCs and $308 million toward portions of the outstanding principal amounts of the 10.75% senior secured IP notes (IP Notes) and 10.75% senior secured LGA/DCA notes (LGA/DCA Notes). These cash outflows were offset in part by $2.2 billion of proceeds from the issuance of long-term debt, consisting of $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $1.2 billion from the issuance of equipment loans and other notes payable in connection with the financing of certain aircraft.

American

Operating Activities

American’s net cash provided by operating activities was $4.4 billion and $2.2 billion for the first nine months of 2026 and 2025, respectively, a $2.2 billion period-over-period increase driven primarily by working capital increases principally in American’s air traffic liability and loyalty program liability, as well as changes in net receivables from related parties primarily due to the scheduled repayment of AAG’s $1.0 billion 6.50% convertible senior notes in the first nine months of 2025. These increases were offset in part by lower profitability in the first nine months of 2026 as compared to the same period in 2025.

Investing Activities

American’s net cash used in investing activities was $4.8 billion and $1.5 billion for the first nine months of 2026 and 2025, respectively.

American’s principal investing activities in the first nine months of 2026 included $2.7 billion of capital expenditures, which primarily related to the purchase of 14 Boeing 737 MAX aircraft, 14 Embraer E175 aircraft, five Airbus A321XLR aircraft, four Bombardier CRJ900 aircraft, two Airbus A321neo aircraft, one Airbus A319 aircraft lease repurchase, 21 aircraft engines and aircraft purchase deposits. Additionally, American had $2.3 billion in net purchases of short-term investments.

American’s principal investing activities in the first nine months of 2025 included $2.1 billion of capital expenditures, which primarily related to the purchase of 13 Boeing 737 MAX aircraft, six Embraer E175 aircraft, five Bombardier CRJ900 aircraft, three Boeing 787-9 aircraft, two Airbus A321XLR aircraft, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and seven aircraft engines. These cash outflows were offset in part by $328 million in net proceeds from the issuance of the TMAT special facility revenue bonds and $243 million in proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX. Additionally, American had $143 million in net sales of short-term investments.

Financing Activities

American’s net cash provided by financing activities was $477 million for the first nine months of 2026 as compared to net cash used in financing activities of $737 million for the first nine months of 2025.

American’s principal financing activities in the first nine months of 2026 included $5.9 billion of proceeds from the issuance of long-term debt, primarily consisting of $4.1 billion from the issuance of EETCs, equipment loans and other notes payable in connection with the financing of certain aircraft and spare engines and proceeds from the 2014 Term Loan Facility, which refinanced $1.1 billion of existing term loans and provided $703 million of incremental term loan borrowings. These cash inflows were offset in part by $5.3 billion in long-term debt and finance lease repayments, primarily consisting of $2.8 billion in scheduled repayments, $1.3 billion of early repayments, including $1.0 billion of the outstanding principal amount of the 8.50% senior secured notes and $310 million of equipment notes issued under EETCs, and $1.1 billion from the refinancing in connection with the 2014 Term Loan Facility.

American’s principal financing activities in the first nine months of 2025 primarily included $3.1 billion in long-term debt and finance lease repayments, consisting of $2.3 billion in scheduled repayments and early repayments of $487 million for the outstanding principal amount of equipment notes issued under EETCs and $308 million toward portions of the outstanding principal amounts of the IP Notes and LGA/DCA Notes. These cash outflows were offset in part by $2.2 billion of proceeds from the issuance of long-term debt, consisting of $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $1.2 billion from the issuance of equipment loans and other notes payable in connection with the financing of certain aircraft.

Commitments

Significant Indebtedness

As of September 30, 2026, AAG had $29.3 billion in long-term debt, including current maturities of $3.6 billion. As of September 30, 2026, American had $25.6 billion in long-term debt, including current maturities of $3.6 billion. All material changes in our significant indebtedness since our 2025 Form 10-K are discussed in Note 5 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A and Note 4 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B.

Aircraft and Engine Purchase Commitments

As of September 30, 2026, we had definitive purchase agreements for the acquisition of the following new aircraft (1):

(1) Delivery schedule represents our best estimate as of the date of this report as described in footnote (d) to the “Contractual Obligations” table below. Actual delivery dates are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and regulatory concerns. See Part I, Item 1A. Risk Factors – “We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, adversely impacts our business, results of operations and financial condition” in our 2025 Form 10-K.

(2) The table above and the “Contractual Obligations” table below reflect our exercise of purchase options for five Airbus A320 Family aircraft in October 2026.

In addition, we have committed to purchase two Boeing 777-200ER aircraft off-lease in the fourth quarter of 2026. We also have agreements for 58 spare engines to be delivered in the fourth quarter of 2026 and beyond. The “Contractual Obligations” table below reflects these commitments.

We intend to finance future aircraft deliveries and option exercises using cash on hand and long-term financing.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.

There have been no material changes in our off-balance sheet arrangements as discussed in our 2025 Form 10-K.

Contractual Obligations

The following table provides details of our estimated material cash requirements from contractual obligations as of September 30, 2026 (in millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time and is subject to other conventions as set forth in the applicable accompanying footnotes.

(a) Amounts represent contractual amounts due. Excludes $344 million and $2 million of unamortized debt discount, premium and issuance costs as of September 30, 2026 for American and AAG Parent, respectively. For additional information, see Note 5 and Note 4 to AAG’s and American’s Condensed Consolidated Financial Statements in Part I, Items 1A and 1B, respectively.

(b) For variable-rate debt, future interest obligations are estimated using the current forward rates at September 30, 2026.

(c) Includes $9.3 billion of future principal payments and $1.9 billion of future interest payments as of September 30, 2026, related to EETCs associated with mortgage financings of certain aircraft and spare engines.

(d) See “Aircraft and Engine Purchase Commitments” above for additional information about the firm commitments for the acquisition of aircraft and engines, including the anticipated aircraft delivery schedule. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable equipment manufacturer and certain management assumptions. However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the equipment manufacturers and regulatory concerns.

(e) These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially.

(f) Represents minimum pension contributions and expected contributions to our retiree medical and other postretirement plans based on actuarially determined estimates as of December 31, 2025 and is based on estimated payments through 2035. During the first nine months of 2026, we made required contributions of $237 million and supplemental contributions of $50 million to our defined benefit pension plans.

(g) Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility.

Capital Raising Activity and Other Possible Actions

In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. For instance, an economic downturn or general global instability caused by governmental actions, military actions, terrorism, disease outbreaks, natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash generated by operations. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions could adversely affect our business” in our 2025 Form 10-K for additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general increase in interest rates, due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, or due to an increase in tariffs, could decrease the amount of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements.

In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts involved may be material.

Critical Accounting Policies and Estimates

For information regarding our critical accounting policies and estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting Policies and Estimates” in our 2025 Form 10-K.

AAG’s and American’s Market Risk Sensitive Instruments and Positions

Our primary market risk exposures include the price of aircraft fuel, foreign currency exchange rates and interest rate risk. Our exposure to these market risks has not changed materially from our exposure discussed in our 2025 Form 10-K, except as updated below.

Aircraft Fuel

As of September 30, 2026, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. Based on our 2026 forecasted fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2026 annual fuel expense by approximately $45 million. See Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity” in our 2025 Form 10-K.

Foreign Currency

We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions. Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the Brazilian real). We do not currently have a foreign currency hedge program.

Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our assets located outside the United States. These conditions, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” in our 2025 Form 10-K for additional discussion of this and other currency risks.

Interest

Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from variable-rate debt instruments and our interest income from short-term, interest-bearing investments. If annual interest rates increase 100 basis points, based on our September 30, 2026 variable-rate debt and short-term investments balances, annual interest expense on variable-rate debt would increase by approximately $150 million and annual interest income on short-term investments would increase by approximately $80 million.

Management’s Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and is accumulated and communicated to the company’s management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. An evaluation of the effectiveness of AAG’s and American’s disclosure controls and procedures as of September 30, 2026 was performed under the supervision and with the participation of AAG’s and American’s management, including AAG’s and American’s principal executive officer, the Chief Executive Officer (CEO), and principal financial officer, the Chief Financial Officer (CFO). Based on that evaluation, AAG’s and American’s management, including AAG’s and American’s CEO and CFO, concluded that AAG’s and American’s disclosure controls and procedures were effective as of September 30, 2026 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2026, there have been no changes in AAG’s or American’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, AAG’s and American’s internal control over financial reporting.

Limitation on the Effectiveness of Controls

We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and, as noted above, the CEO and CFO of AAG and American believe that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share amounts)(Unaudited)

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)(Unaudited)

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and par value amounts)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)(Unaudited)

(1) The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions, except share amounts)(Unaudited)

10

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions, except share amounts)(Unaudited)

See accompanying notes to condensed consolidated financial statements.

1. Basis of Presentation

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of American Airlines Group Inc. (we, us, our and similar terms, or AAG) should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025. The accompanying unaudited condensed consolidated financial statements include the accounts of AAG and its wholly-owned subsidiaries. AAG’s principal subsidiary is American Airlines, Inc. (American). All significant intercompany transactions have been eliminated.

Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits.

(b) Recent Accounting Pronouncements

Accounting Standards Update 2026-02: Environmental Credits and Environmental Credit Obligations (Topic 818)

This standard provides guidance for the recognition, measurement, presentation and disclosure of environmental credits and environmental credit obligations. The amendments in this update are effective for annual periods beginning after December 15, 2027 and interim periods within those annual periods, and early adoption is permitted. We are currently evaluating the impact that adoption of this standard may have on our consolidated financial statements and disclosures.

2. Special Items, Net

Special items, net in the condensed consolidated statements of operations consisted of the following (in millions):

(1) Labor contract expenses for the nine months ended September 30, 2025 included a one-time charge resulting from adjustments to vacation accruals due to pay rate increases effective January 1, 2025, following the ratification of the contract extension in the fourth quarter of 2024 with our mainline maintenance and fleet service team members.

(2) Mark-to-market adjustments on equity investments, net, included unrealized gains and losses associated with certain equity investments.

(3) In the third quarter of 2026, we recorded an impairment charge related to our equity investment in Republic Airways Holdings Inc. (Republic Holdings). See Note 8 for further information on our equity investments.

3. Earnings (Loss) Per Common Share

The following table provides the computation of basic and diluted earnings (loss) per common share (EPS) (in millions, except share and per share amounts):

The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands):

(1) On March 27, 2025, we provided notice to the holders of our 6.50% convertible senior notes due 2025 (Convertible Notes) that we would settle our Convertible Notes at their maturity in cash on July 1, 2025. As a result, we have excluded the Convertible Notes from the calculation of diluted EPS for the quarterly periods ended after March 31, 2025.

For the nine months ended September 30, 2026, excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are certain shares underlying the warrants issued pursuant to the payroll support program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP2 Warrants) and the payroll support program established under the American Rescue Plan Act of 2021 (PSP3 Warrants).

During the first nine months of 2026, 2.8 million shares of PSP2 Warrants were exercised at an exercise price of $15.66 per share and net settled in cash for a nominal amount, reflected within other financing activities in the condensed consolidated statement of cash flows. Additionally, the remaining 3.8 million shares of PSP2 Warrants and 4.4 million shares of PSP3 Warrants expired.

4. Revenue Recognition

Revenue

The following are the significant categories comprising our operating revenues (in millions):

(1) Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.

The following is our total passenger revenue by geographic region (in millions):

We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment.

Contract Balances

Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future air travel, non-air travel and other awards, reported as loyalty program liability on the condensed consolidated balance sheets; and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on the condensed consolidated balance sheets.

(In millions)

14

The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions):

(1) Principally relates to revenue recognized from the redemption of mileage credits for air travel, non-air travel and other awards. Mileage credits are combined in one homogeneous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that were part of the loyalty program liability balance at the beginning of the period, as well as mileage credits that were issued during the period.

(2) Mileage credits can be redeemed at any time and generally do not expire as long as the AAdvantage member has any type of qualifying activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of September 30, 2026, our current loyalty program liability was $4.4 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.

Additionally, as of September 30, 2026, our loyalty program liability includes a one-time cash payment associated with the extension of a partner agreement announced in 2025.

The air traffic liability principally represents tickets sold for future travel on American, our regional carriers and partner airlines. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For the nine months ended September 30, 2026, $5.3 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2025.

5. Debt

Debt included in the condensed consolidated balance sheets consisted of (in millions):

(1) Collectively referred to as the AAdvantage Financing.

As of September 30, 2026, the maximum availability under our revolving credit and other facilities is as follows (in millions):

16

(Unaudited)

(1) Includes a revolving credit facility that provides for borrowing capacity of up to $350 million. In March 2026, American elected to exercise its option to extend the maturity date of the revolving credit facility by an additional year to March 2028. American also currently has $50 million of available borrowing capacity under a cargo receivables facility that is scheduled to expire in December 2026. There are no amounts drawn under these facilities.

Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, simulators, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property and certain loyalty program assets.

2026 Financing Activities

2013 Credit Facilities

In March 2026, American and AAG entered into the Eleventh Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, pursuant to which American terminated all then-existing revolving commitments and letter of credit commitments and established new revolving commitments in an aggregate amount of $363 million and new letter of credit commitments (which are part of, and not in addition to, the revolving credit commitments) in an aggregate amount of $155 million (the newly established revolving commitments, the 2013 Revolving Facility), which mature in March 2031. All other terms of the 2013 Revolving Facility are substantially similar to the prior revolving commitments.

2014 Credit Facilities

In March 2026, American and AAG entered into the Eleventh Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015 (as amended, the Prior 2014 Credit Agreement), pursuant to which American terminated all then-existing revolving commitments and letter of credit commitments and established new revolving commitments in an aggregate amount of approximately $1.3 billion and new letter of credit commitments (which are part of, and not in addition to, the revolving credit commitments) in an aggregate amount of $195 million (the newly established revolving commitments, the 2014 Revolving Facility), which mature in March 2031. All other terms of the 2014 Revolving Facility are substantially similar to the prior revolving commitments.

In May 2026, American and AAG entered into the Twelfth Amendment to the Amended and Restated Credit and Guaranty Agreement (the Twelfth Amendment), amending the Prior 2014 Credit Agreement (as amended, the 2014 Credit Agreement), pursuant to which American refinanced in full the existing term loans under the then-existing credit agreement, which were scheduled to mature in January 2027, by incurring term loans in an aggregate principal amount of approximately $1.1 billion (the 2026 Refinancing Term Loans) and incurred incremental term loans in an aggregate principal amount of $703 million (the 2026 Incremental Term Loans and, together with the 2026 Refinancing Term Loans, the 2026 Term Loans, and such facility, the 2014 Term Loan Facility). Additionally, as a result of the Twelfth Amendment, the 2026 Term Loans bear interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 2.00% per annum or, at American’s option, the Secured Overnight Financing Rate (SOFR) for a tenor of three months (subject to a floor of 0.00%), plus an applicable margin of 3.00% per annum. The 2026 Term Loans mature in May 2033, and shall be repaid in annual installments of 1.00% of the aggregate amount of 2026 Term Loans outstanding, which is scheduled to begin in May 2027.

2023 Credit Facilities

In March 2026, American and AAG entered into the Fourth Amendment to the Credit and Guaranty Agreement, amending the Credit and Guaranty Agreement, dated as of December 4, 2023, pursuant to which American terminated all then-existing revolving commitments and established new revolving commitments in an aggregate amount of approximately $1.5 billion (the newly established revolving commitments, the 2023 Revolving Facility), which mature in March 2031. All other terms of the 2023 Revolving Facility are substantially similar to the prior revolving commitments.

2025 AAdvantage Term Loan Facility

In February 2026, American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted company incorporated with limited liability and an indirect wholly-owned subsidiary of American (together with American, the AAdvantage Issuers) entered into a fourth amendment to the term loan credit and guaranty agreement dated March 24, 2021 (the AAdvantage Fourth Amendment). As a result of the AAdvantage Fourth Amendment, the term loans outstanding under the 2025 AAdvantage Term Loan Facility were replaced with new term loans in the same principal amount. Pursuant to the AAdvantage Fourth Amendment, the 2025 AAdvantage Term Loan Facility bears interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 1.75% per annum or, at the AAdvantage Issuers’ option, the SOFR rate for a tenor of three months (subject to a floor of 0.00%), plus an applicable margin of 2.75% per annum. All other terms of the 2025 AAdvantage Term Loan Facility remain substantially similar.

2026-1 Class (B)R Aircraft EETCs

In March 2026, American entered into agreements under which it borrowed $870 million in connection with the financing of certain aircraft that had been previously delivered. Debt incurred under these agreements is junior to existing equipment notes secured by such previously delivered aircraft, matures in 2028 through 2029 and bears interest at a fixed rate of 5.61%.

2025-1 Aircraft EETCs

In November 2025, American created two pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2025-1 Class A and Class B EETCs (the 2025-1 Aircraft EETCs) in connection with the financing of 25 aircraft delivered to American from October 2025 through March 2026 (the 2025-1 Aircraft). In 2025, $978 million of the proceeds were used to purchase equipment notes issued by American in connection with the financing of 21 of the 2025-1 Aircraft. During the first nine months of 2026, approximately $127 million of proceeds were used to purchase equipment notes issued by American in connection with the financing of the four remaining 2025-1 Aircraft. As of September 30, 2026, there were no remaining proceeds held in escrow, and all proceeds had been used to purchase equipment notes issued by American. Interest and principal payments on equipment notes issued in connection with the 2025-1 Aircraft EETCs are payable semi-annually in May and November each year, with interest payments that began in May 2026 and principal payments scheduled to begin in November 2026.

Certain information regarding the 2025-1 Aircraft EETC equipment notes, as of September 30, 2026, is set forth in the table below:

2026-1 Aircraft EETCs

In May 2026, American created two pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2026-1 Class A and Class B EETCs (the 2026-1 Aircraft EETCs) in connection with the financing of 32 aircraft delivered to American from April 2013 through September 2026 (the 2026-1 Aircraft). As of September 30, 2026, all of the proceeds received from the sale of the 2026-1 Aircraft EETCs were used to purchase equipment notes issued by American in connection with the financing of the 2026-1 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2026-1 Aircraft EETCs are payable semi-annually in May and November each year, with interest and principal payments scheduled to begin in November 2026.

Certain information regarding the 2026-1 Aircraft EETC equipment notes, as of September 30, 2026, is set forth in the table below:

2026 Engine EETCs

In June 2026, American created two pass-through trusts which issued $567 million aggregate face amount of Series 2026 Engine EETCs (the 2026 Engine EETCs), to refinance in full the $228 million outstanding principal amount of the 2019-1 Engine EETCs upon maturity and incur incremental borrowings in the aggregate principal amount of $339 million. The 2026 Engine EETCs have maturity dates from June 2031 to June 2033 and bear interest at fixed rates ranging from 5.46% to 6.04%.

2026-2 Aircraft EETCs

In August 2026, American created two pass-through trusts which issued approximately $1.3 billion aggregate face amount of Series 2026-2 Class A and Class B EETCs (the 2026-2 Aircraft EETCs) in connection with the financing of 37 aircraft previously delivered or scheduled to be delivered to American from July 2013 through February 2027 (the 2026-2 Aircraft). As of September 30, 2026, approximately $692 million of the proceeds were used to purchase equipment notes issued by American in connection with the financing of 23 of the 2026-2 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2026-2 Aircraft EETCs are payable semi-annually in February and August each year, with interest and principal payments scheduled to begin in February 2027. As of September 30, 2026, the remaining proceeds of approximately $633 million were being held in escrow with a depositary for the benefit of the holders of the 2026-2 Aircraft EETCs until such time as American issues additional equipment notes with respect to the remaining 2026-2 Aircraft to the pass-through trusts, which will purchase such additional equipment notes with the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on its condensed consolidated balance sheet because the proceeds held by the depositary for the benefit of the holders of the 2026-2 Aircraft EETCs are not American’s assets.

Certain information regarding the 2026-2 Aircraft EETC equipment notes, as of September 30, 2026, is set forth in the table below:

Equipment Loans and Other Notes Payable Issued in 2026

During the first nine months of 2026, American entered into agreements under which it borrowed $705 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2036 through 2038 and bears interest at variable rates (comprised of SOFR plus an applicable margin) averaging 5.87% as of September 30, 2026.

Other Financing Activities

During the first nine months of 2026, American paid in full $629 million of the outstanding principal amount of the senior short-term term loan facility due January 2026 and prepaid in full $1.0 billion of the outstanding principal amount of the 8.50% senior secured notes. Additionally, American prepaid $310 million of the outstanding principal amounts of equipment notes issued under EETCs, and these amounts were applied to repay the related trust certificates.

6. Income Taxes

At December 31, 2025, we had approximately $11.9 billion of gross federal net operating losses (NOLs) and $6.0 billion of other carryforwards available to reduce future federal taxable income, of which $1.6 billion will expire beginning in 2033 if unused and $16.3 billion can be carried forward indefinitely. We also had approximately $5.0 billion of NOL carryforwards to reduce future state taxable income at December 31, 2025, which will expire in taxable years 2025 through 2045 if unused.

Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a valuation allowance for our deferred tax assets, which include our NOLs and other carryforwards, when it is more likely than not that some portion, or all, of our deferred tax assets will not be realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets.

We have used the discrete method to calculate income taxes for the three and nine months ended September 30, 2026. At this time, we believe that the use of the discrete method is more appropriate than the estimated annual effective tax rate method due to the fact that small changes in projected full year income could cause material fluctuations in our annual effective tax rate applied during each quarter.

During the three and nine months ended September 30, 2026, we recorded an income tax benefit of $65 million and $122 million, respectively, which was substantially non-cash. Substantially all of our loss before income taxes is attributable to the United States.

7. Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis

We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the nine months ended September 30, 2026.

Assets measured at fair value on a recurring basis are summarized below (in millions):

(1) All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.

(2) Our short-term investments mature in one year or less.

(3) Restricted cash and short-term investments primarily include collateral held to support workers’ compensation obligations, collateral associated with the payment of interest for the AAdvantage Financing and money market funds to be used to finance the cost of improvements at the overhaul and maintenance base at Tulsa International Airport. Restricted short-term investments principally mature in one year or less.

(4) Long-term investments primarily include our equity investment in China Southern Airlines Company Limited (China Southern Airlines). See Note 8 for further information on our equity investments.

Fair Value of Debt

The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current estimated incremental borrowing rates for similar types of borrowing arrangements.

The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):

8. Investments

To help expand our network and as part of our ongoing commitment to sustainability, we enter into various commercial relationships or other strategic partnerships, including equity investments, with other airlines and companies. Our equity investments are reflected in other assets on our condensed consolidated balance sheets. Our share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the condensed consolidated statements of operations.

Our equity investment ownership interests and carrying values are as follows:

(1) In the third quarter of 2026, we determined that the decline in the fair value of our equity method investment in Republic Holdings was other-than-temporary. Accordingly, we recorded a $78 million nonoperating special charge for the impairment of our equity investment in Republic Holdings and reduced the carrying value to the estimated fair value using quoted market prices.

(2) Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method.

9. Employee Benefit Plans

The following table provides the components of net periodic benefit cost (income) (in millions):

Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen.

The service cost component of net periodic benefit cost (income) is included in operating expenses and the other components of net periodic benefit cost (income) are included in nonoperating other income (expense), net in the condensed consolidated statements of operations.

During the first nine months of 2026, we made required contributions of $237 million and supplemental contributions of $50 million to our defined benefit pension plans.

10. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive income (loss) (AOCI) are as follows (in millions):

(1) Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net loss until the obligations are fully extinguished. Amounts reclassified from AOCI are recognized within the income tax benefit on the condensed consolidated statements of operations.

Reclassifications out of AOCI are as follows (in millions):

11. Regional Expenses

Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are principally in the form of capacity purchase agreements. Expenses, excluding fuel expense, associated with American Eagle operations are classified as regional expenses on the condensed consolidated statements of operations.

Regional expenses for the three months ended September 30, 2026 and 2025 include $93 million and $84 million of depreciation and amortization, respectively, and $2 million of aircraft rent in each period. Regional expenses for the nine months ended September 30, 2026 and 2025 include $276 million and $244 million of depreciation and amortization, respectively, and $6 million and $7 million of aircraft rent, respectively.

During the three months ended September 30, 2026 and 2025, we recognized $184 million and $177 million, respectively, of expense under our capacity purchase agreement with Republic Airways Inc. (Republic). During the nine months ended September 30, 2026 and 2025, we recognized $548 million and $519 million, respectively, of expense under our capacity purchase agreement with Republic. We hold a 20.8% equity interest in Republic Holdings, the parent company of Republic.

12. Legal Proceedings

Private Party Antitrust Actions Related to the Northeast Alliance (NEA). On December 5, 2022 and December 7, 2022, two private party plaintiffs filed putative class action antitrust complaints against AAG and JetBlue Airways Corporation (JetBlue) in the U.S. District Court for the Eastern District of New York alleging that AAG and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, 2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against AAG and JetBlue in the U.S. District Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, AAG filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In September 2023, AAG, together with JetBlue, filed a motion to dismiss the third amended complaint. In September 2024, the court denied that motion. AAG and JetBlue filed answers to the private party plaintiffs’ third amended complaint in October 2024. In July 2026, the remaining private party plaintiff filed a motion for class certification limited to purchasers of American and JetBlue flights to or from Boston from April 1, 2021 through July 28, 2023. In October 2026, AAG, together with JetBlue, filed an opposition to that motion. We believe these lawsuits are without merit and are defending against them vigorously.

General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain but could be material.