10-K – 2026-02-18 – aal-20251231.htm

Mark-to-market adjustments on equity investments, net (5)
(40) 8 
Debt refinancing and extinguishment 22  16 
Other nonoperating special items, net 18  — 
Nonoperating special items, net —  24 
Pre-tax special items, net $ 162  $ 667 

Reconciliation of Pre-Tax Income Excluding Net Special Items:
Pre-tax income – GAAP $ 190  $ 1,154 
Adjusted for: Pre-tax special items, net 162  667 
Pre-tax income excluding net special items $ 352  $ 1,821 
Reconciliation of Net Income Excluding Net Special Items:
Net income – GAAP $ 111  $ 846 
Adjusted for: Pre-tax special items, net 162  667 
Adjusted for: Net tax effect of net special items (36) (151)
Net income excluding net special items $ 237  $ 1,362 

(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
(2) Labor contract expenses for 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.
Labor contract expenses for 2024 included one-time charges resulting from the ratifications of new CBAs with our mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases.
(3) In 2024, we entered into a sales agreement for certain Airbus A330 aircraft, resulting in a $42 million gain. These aircraft were previously retired in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(4) Regional operating special items, net for 2024 included a $33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer ERJ145 aircraft.
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(5) Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity investments.
Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel 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. The adjustment to exclude net special items and fuel 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.

  Year Ended December 31,
  2025 2024
Reconciliation of CASM Excluding Net Special Items and Fuel:
(In millions)
Total operating expenses – GAAP $ 53,166  $ 51,597 
Operating net special items (1) :

Mainline operating special items, net
(159) (610)
Regional operating special items, net
(3) (33)
Aircraft fuel and related taxes (10,718) (11,418)
Total operating expenses, excluding net special items and fuel $ 42,286  $ 39,536 
(In millions)
Total Available Seat Miles (ASM) 299,411  292,948 
(In cents)
CASM 17.76  17.61 
Operating net special items per ASM (1) :

Mainline operating special items, net (0.05) (0.21)
Regional operating special items, net —  (0.01)
Aircraft fuel and related taxes per ASM (3.58) (3.90)
CASM, excluding net special items and fuel 14.12  13.50 

(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
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Selected Consolidated Financial Data of American
The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2025, 2024 and 2023, are derived from American’s audited consolidated financial statements.

  Year Ended December 31,
  2025 2024 2023
  (In millions)
Consolidated Statements of Operations data:
Total operating revenues $ 54,626  $ 54,204  $ 52,784 
Total operating expenses 53,115  51,550  49,715 
Operating income 1,511  2,654  3,069 
Net income 564  1,262  1,188 

Consolidated Balance Sheet data (at end of period):
Total assets $ 70,247  $ 68,755  $ 69,074 
Debt and finance leases
25,259  25,736  27,675 
Pension and postretirement obligations (1)
1,678  2,262  3,148 
Operating lease liabilities 6,908  7,008  7,708 
Stockholder’s equity 9,028  8,234  6,577 

(1) Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial Statements in Part II, Item 8B for further information on pension and postretirement benefits.
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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2025 Financial Overview
Business and Macroeconomic Conditions
Starting in the first quarter of 2025, the U.S. Government has promoted and implemented plans to place additional tariffs on goods imported into the U.S. from numerous countries and has pursued other trade policies intended to restrict imports and, in response, multiple nations have countered with reciprocal tariffs and other actions.
These or additional changes in U.S. or international trade policies, along with continued uncertainty surrounding such policies, could lead to further 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. We continue to monitor the situation.
Many aspects of our airline operations depend on the U.S. Government, and in the fourth quarter of 2025, the prolonged government shutdown led to mandated schedule reductions, strained air traffic control and security screening resources, reduced air traffic capacity at key U.S. airports, and increased delays and cancellations. Additionally, the government shutdown-related uncertainty temporarily impacted customer bookings in the fourth quarter of 2025 and negatively impacted our revenue by approximately $325 million.
AAG’s 2025 Financial Results
The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of this report and should be read in conjunction with those financial statements and the related notes thereto.

  Year Ended December 31, Increase
(Decrease) Percent
Increase
(Decrease)
  2025 2024
  (In millions, except percentage changes)
Passenger revenue $ 49,643  $ 49,586  $ 57  0.1
Cargo revenue 839  804  35  4.3
Other operating revenue 4,151  3,821  330  8.7
Total operating revenues 54,633  54,211  422  0.8
Aircraft fuel and related taxes 10,718  11,418  (700) (6.1)
Salaries, wages and benefits 17,566  16,021  1,545  9.6
Total operating expenses 53,166  51,597  1,569  3.0
Operating income 1,467  2,614  (1,147) (43.9)
Pre-tax income 190  1,154  (964) (83.6)
Income tax provision 79  308  (229) (74.7)
Net income 111  846  (735) (86.8)

Pre-tax income – GAAP $ 190  $ 1,154  $ (964) (83.6)
Adjusted for: pre-tax net special items (1)
162  667  (505) (75.7)
Pre-tax income excluding net special items $ 352  $ 1,821  $ (1,469) (80.7)

(1) See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of pre-tax net special items.
Pre-Tax Income and Net Income
Pre-tax income and net income were $190 million and $111 million, respectively, in 2025. This compares to 2024 pre-tax income and net income of $1.2 billion and $846 million, respectively.
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Pre-tax income on a GAAP basis decreased in 2025 as compared to 2024. This decrease was driven primarily by increases in certain operating expenses including salaries, wages and benefits, regional expenses and other operating expenses, offset in part by lower costs for aircraft fuel and related taxes, a decrease in pre-tax net special items and higher revenues.
Excluding the effects of pre-tax net special items, pre-tax income was $352 million and $1.8 billion in 2025 and 2024, respectively. The year-over-year decrease in our pre-tax income excluding pre-tax net special items was principally driven by certain operating expenses as mentioned above, offset in part by lower costs for aircraft fuel and related taxes and higher revenues.
Revenue
In 2025, we reported total operating revenues of $54.6 billion, an increase of $422 million, or 0.8%, as compared to 2024. Passenger revenue was $49.6 billion and remained relatively flat as compared to 2024. Our passenger revenue in 2025 was impacted by the American Eagle flight 5342 accident and softness in domestic demand for air travel in the first half of the year, offset by strength in international travel, particularly in the Atlantic and Pacific regions, and recovery in domestic travel in the second half of the year despite the negative revenue impact from the temporary shutdown of the U.S. Government in the fourth quarter of 2025.
Other operating revenue increased $330 million, or 8.7%, in 2025 as compared to 2024, driven primarily by higher revenue associated with our loyalty program. During 2025 and 2024, cash payments from co-branded credit card and other partners were $6.2 billion and $6.1 billion, respectively. Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024. This one-time cash payment will be amortized over the life of the new agreement beginning in 2026.
Our total revenue per available seat mile (TRASM) was 18.25 cents in 2025, a 1.4% decrease as compared to 18.51 cents in 2024.
Fuel
In 2025, aircraft fuel expense totaled $10.7 billion, a decrease of $700 million, or 6.1%, as compared to 2024. This decrease was primarily driven by an 8.2% decrease in the average price per gallon of aircraft fuel including related taxes to $2.39 in 2025 from $2.60 in 2024, offset in part by a 2.2% increase in gallons of fuel consumed due to increased capacity.
As of December 31, 2025, 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.”
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 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.
Our 2025 CASM was 17.76 cents, an increase of 0.8%, from 17.61 cents in 2024. This increase in CASM was primarily driven by higher costs for salaries, wages and benefits, regional expenses and other operating expenses, offset in part by lower aircraft fuel costs as well as a decrease in mainline operating special items, net.
Our 2025 CASM excluding net special items and fuel was 14.12 cents, an increase of 4.6%, from 13.50 cents in 2024, which was primarily driven by higher costs for salaries, wages and benefits, regional expenses and other operating expenses.
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For a reconciliation of total operating CASM to total operating CASM excluding net special items and fuel, see Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.”
Liquidity
As of December 31, 2025, we had $9.2 billion in total available liquidity, consisting of $5.8 billion in unrestricted cash and short-term investments and $3.4 billion in total undrawn capacity under revolving credit and other facilities.
During 2025, we completed the following financing transactions (see Notes 1, 4 and 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information):
• amended the AAdvantage term loan credit and guaranty agreement to reduce the applicable interest rate margin and to reduce the scheduled quarterly principal amortization amount;
• issued $1.0 billion of incremental term loans pursuant to the AAdvantage term loan credit guaranty agreement (2025 AAdvantage Term Loan Facility), as amended;
• prepaid $487 million of the outstanding principal amounts of certain equipment notes issued under enhanced equipment trust certificates (EETCs);
• increased the aggregate revolving commitments under the 2013, 2014 and 2023 Revolving Facilities from approximately $2.9 billion to $3.0 billion;
• received $432 million of gross proceeds pursuant to special facility revenue bonds issued by the Tulsa Municipal Airport Trust (TMAT), of which a portion was used to fund the redemption of other bonds related to TMAT and the remaining amount will be used to finance the cost of improvements at American’s overhaul and maintenance base at Tulsa International Airport;
• prepaid in full $937 million of the outstanding principal amounts of the 10.75% senior secured IP notes (the IP Notes) and the 10.75% senior secured LGA/DCA notes (LGA/DCA Notes and together with the IP Notes, the 10.75% Senior Secured Notes);
• borrowed $629 million under a senior unsecured short-term term loan facility due in January 2026;
• received approximately $978 million in proceeds from EETCs;
• received $840 million in net proceeds from fuel financing transactions; and
• issued $1.2 billion of equipment loans and other notes payable in connection with the financing of certain aircraft.
American Eagle Flight 5342
On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ700 aircraft operated by PSA was en route to Washington, D.C. from Wichita, Kansas when it was involved in a midair collision near Ronald Reagan Washington National Airport. We estimate that the accident reduced first quarter 2025 total operating revenues by approximately $200 million, of which the impacted revenue is not covered by insurance. Beginning on September 24, 2025, multiple wrongful death and survival actions have been filed against the U.S. Government, PSA and American seeking unspecified damages, and we expect that additional lawsuits will be filed. While we cannot predict the outcome of these lawsuits, American has industry standard insurance coverage for this incident and we believe these lawsuits are without merit and are defending against them vigorously.
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AAG’s Results of Operations
For a comparison of the 2024 to 2023 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ AAG’s Results of Operations” of our 2024 Form 10-K.
Operating Statistics
The table below sets forth selected operating data for the years ended December 31, 2025 and 2024.

  Year Ended December 31, Increase
(Decrease)
  2025 2024
Revenue passenger miles (millions) (a)
250,294  248,795  0.6%
Available seat miles (millions) (b)
299,411  292,948  2.2%
Passenger load factor (percent) (c)
83.6  84.9  (1.3)pts
Yield (cents) (d)
19.83  19.93  (0.5)%
Passenger revenue per available seat mile (cents)  (e)
16.58  16.93  (2.0)%
Total revenue per available seat mile (cents) (f)
18.25  18.51  (1.4)%
Fuel consumption (gallons in millions) 4,488  4,391  2.2%
Average aircraft fuel price including related taxes (dollars per gallon) 2.39  2.60  (8.2)%
Total operating cost per available seat mile (cents) (g)
17.76  17.61  0.8%
Aircraft at end of period (h)
1,580  1,562  1.2%
Full-time equivalent employees at end of period 139,100  133,300 4.4%

(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 as of December 31, 2025 are three Airbus A321XLR mainline aircraft and four Bombardier CRJ900 regional aircraft held in temporary storage.
Operating Revenues

  Year Ended December 31, Increase Percent
Increase
  2025 2024
  (In millions, except percentage changes)
Passenger $ 49,643  $ 49,586  $ 57  0.1
Cargo 839  804  35  4.3
Other 4,151  3,821  330  8.7
Total operating revenues $ 54,633  $ 54,211  $ 422  0.8

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

    Increase (Decrease)
vs. Year Ended December 31, 2024

  Year Ended
December 31, 2025 Passenger
Revenue RPMs ASMs Load
Factor Passenger
Yield PRASM
  (In millions)
Passenger revenue $ 49,643  0.1% 0.6% 2.2% (1.3)pts (0.5)% (2.0)%

Passenger revenue remained relatively flat in 2025 as compared to 2024. Our passenger revenue in 2025 was impacted by the American Eagle flight 5342 accident and softness in domestic demand for air travel in the first half of the year, offset by strength in international travel, particularly in the Atlantic and Pacific regions, and recovery in domestic travel in the second half of the year despite the negative revenue impact from the temporary shutdown of the U.S. Government in the fourth quarter of 2025.
Other operating revenue increased $330 million, or 8.7%, in 2025 from 2024 driven primarily by higher revenue associated with our loyalty program. During 2025 and 2024, cash payments from co-branded credit card and other partners were $6.2 billion and $6.1 billion, respectively. Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024. This one-time cash payment will be amortized over the life of the new agreement beginning in 2026.
Operating Expenses

  Year Ended December 31, Increase
(Decrease) Percent
Increase
(Decrease)
  2025 2024
  (In millions, except percentage changes)
Aircraft fuel and related taxes $ 10,718  $ 11,418  $ (700) (6.1)
Salaries, wages and benefits 17,566  16,021  1,545  9.6
Regional expenses 5,448  5,042  406  8.1
Maintenance, materials and repairs 3,844  3,794  50  1.3
Other rent and landing fees 3,476  3,303  173  5.2
Aircraft rent 1,220  1,242  (22) (1.8)
Selling expenses 1,997  1,812  185  10.2
Depreciation and amortization 1,890  1,926  (36) (1.9)
Mainline operating special items, net 159  610  (451) (73.9)
Other 6,848  6,429  419  6.5
Total operating expenses $ 53,166  $ 51,597  $ 1,569  3.0

Aircraft fuel and related taxes decreased $700 million, or 6.1%, in 2025 from 2024 primarily due to an 8.2% decrease in the average price per gallon of aircraft fuel including related taxes to $2.39 in 2025 from $2.60 in 2024, offset in part by a 2.2% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.5 billion, or 9.6%, in 2025 from 2024 primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in our other labor agreements.
Regional expenses increased $406 million, or 8.1%, in 2025 from 2024 primarily due to an increase in regional flight operations as regional capacity, as measured by ASMs, increased 10.3% year over year. Higher maintenance, materials and repair costs driven by an increase in the volume of airframe heavy checks and cost of materials also contributed to the increase in regional expenses.
Maintenance, materials and repairs increased $50 million, or 1.3%, in 2025 from 2024 primarily due to increased costs for airframe heavy checks and component part repairs driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $173 million, or 5.2%, in 2025 from 2024 primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
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Selling expenses increased $185 million, or 10.2%, in 2025 from 2024 primarily due to an increase in commissions expense, driven by higher costs resulting from renegotiated agency contracts, as well as an increase in advertising expenses. Higher credit card fees driven by higher rates also contributed to the increase in selling expenses.
Other operating expenses increased $419 million, or 6.5%, in 2025 from 2024 primarily driven by increased costs for crew travel, onboard food and catering, ground and cargo handling, and airport lounge operations, as well as certain general and administrative expenses.
Operating Special Items, Net

  Year Ended December 31,
  2025 2024
  (In millions)
Litigation reserve adjustments $ 77  $ — 
Labor contract expenses (1)
31  605 
Severance expenses 44  13 
A330 fleet-related adjustments (2)
—  (42)
Other operating special items, net 7  34 
Mainline operating special items, net 159  610 
Regional operating special items, net (3)
3  33 
Operating special items, net $ 162  $ 643 

(1) Labor contract expenses for 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.
Labor contract expenses for 2024 included one-time charges resulting from the ratifications of new CBAs with our mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases.
(2) In 2024, we entered into a sales agreement for certain Airbus A330 aircraft, resulting in a $42 million gain. These aircraft were previously retired in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(3) Regional operating special items, net for 2024 included a $33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer ERJ145 aircraft.
Nonoperating Results

   Year Ended December 31, Increase
(Decrease) Percent
Increase
(Decrease)
   2025 2024
  (In millions, except percentage changes)
Interest income $ 357  $ 468  $ (111) (23.7)
Interest expense, net (1,716) (1,934) 218  (11.2)
Other income, net 82  6  76   nm (1)

Total nonoperating expense, net $ (1,277) $ (1,460) $ 183  (12.5)

(1) Not meaningful or greater than 100% change.
Interest income decreased $111 million, or 23.7%, in 2025 compared to 2024 primarily due to lower interest rates and a decrease in the average balance of our short-term investments, resulting in reduced returns. Interest expense, net decreased $218 million, or 11.2%, in 2025 compared to 2024 primarily due to lower interest rates on our variable-rate debt instruments and lower outstanding debt in 2025, as we continue our efforts to strengthen the balance sheet.
In 2025, other nonoperating income, net included $57 million of non-service related pension and other postretirement benefit plan income, $51 million of net earnings related to our equity investments accounted for under the equity method
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and $40 million of mark-to-market net unrealized gains associated with certain equity investments recognized as net special items. These amounts were offset in part by $40 million of net special charges related to debt refinancings and extinguishments and other costs, as well as $15 million of foreign currency losses.
In 2024, other nonoperating income, net included $113 million of non-service related pension and other postretirement benefit plan income, offset in part by $48 million of foreign currency losses, $24 million of net special charges primarily for debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments and $24 million of net losses related to our equity investments accounted for under the equity method.
Income Taxes
In 2025, we recorded an income tax provision of $79 million with an effective rate of approximately 41.2%, which was substantially non-cash. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2025, we had approximately $11.9 billion of gross federal 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.
In 2024, we recorded an income tax provision of $308 million at an effective rate of approximately 26.7%, which was substantially non-cash.
See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes.

American’s Results of Operations
For a comparison of the 2024 to 2023 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ American’s Results of Operations” of American’s 2024 Form 10-K.
Operating Revenues

   Year Ended December 31, Increase Percent
Increase
   2025 2024
  (In millions, except percentage changes)
Passenger $ 49,643  $ 49,586  $ 57  0.1
Cargo 839  804  35  4.3
Other 4,144  3,814  330  8.7
Total operating revenues $ 54,626  $ 54,204  $ 422  0.8

Passenger revenue remained relatively flat in 2025 as compared to 2024. American’s passenger revenue in 2025 was impacted by the American Eagle flight 5342 accident and softness in domestic demand for air travel in the first half of the year, offset by strength in international travel, particularly in the Atlantic and Pacific regions, and recovery in domestic travel in the second half of the year despite the negative revenue impact from the temporary shutdown of the U.S. Government in the fourth quarter of 2025.
Other operating revenue increased $330 million, or 8.7%, in 2025 from 2024 driven primarily by higher revenue associated with American’s loyalty program. During 2025 and 2024, cash payments from co-branded credit card and other partners were $6.2 billion and $6.1 billion, respectively. Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024. This one-time cash payment will be amortized over the life of the new agreement beginning in 2026.
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Operating Expenses

   Year Ended December 31, Increase
(Decrease) Percent
Increase
(Decrease)
   2025 2024
  (In millions, except percentage changes)
Aircraft fuel and related taxes $ 10,718  $ 11,418  $ (700) (6.1)
Salaries, wages and benefits 17,556  16,012  1,544  9.6
Regional expenses 5,406  5,009  397  7.9
Maintenance, materials and repairs 3,844  3,794  50  1.3
Other rent and landing fees 3,476  3,303  173  5.2
Aircraft rent 1,220  1,242  (22) (1.8)
Selling expenses 1,997  1,812  185  10.2
Depreciation and amortization 1,884  1,919  (35) (1.8)
Mainline operating special items, net 159  610  (451) (73.9)
Other 6,855  6,431  424  6.6
Total operating expenses $ 53,115  $ 51,550  $ 1,565  3.0

Aircraft fuel and related taxes decreased $700 million, or 6.1%, in 2025 from 2024 primarily due to an 8.2% decrease in the average price per gallon of aircraft fuel including related taxes to $2.39 in 2025 from $2.60 in 2024, offset in part by a 2.2% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.5 billion, or 9.6%, in 2025 from 2024 primarily due to contractual wage rate increases and higher costs for benefit-related items associated with newly ratified and extended labor agreements reached in 2024, as well as annual contractual wage rate increases in American’s other labor agreements.
Regional expenses increased $397 million, or 7.9%, in 2025 from 2024 primarily due to an increase in regional flight operations and costs at American’s regional carriers.
Maintenance, materials and repairs increased $50 million, or 1.3%, in 2025 from 2024 primarily due to increased costs for airframe heavy checks and component part repairs driven by higher volume, offset in part by a decrease in the volume of engine overhauls.
Other rent and landing fees increased $173 million, or 5.2%, in 2025 from 2024 primarily due to rate increases at certain airports, offset in part by a decrease in leased engines.
Selling expenses increased $185 million, or 10.2%, in 2025 from 2024 primarily due to an increase in commissions expense, driven by higher costs resulting from renegotiated agency contracts, as well as an increase in advertising expenses. Higher credit card fees driven by higher rates also contributed to the increase in selling expenses.
Other operating expenses increased $424 million, or 6.6%, in 2025 from 2024 primarily driven by increased costs for crew travel, onboard food and catering, ground and cargo handling, and airport lounge operations, as well as certain general and administrative expenses.
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Operating Special Items, Net

  Year Ended December 31,
2025 2024
  (In millions)
Litigation reserve adjustments $ 77  $ — 
Labor contract expenses (1)
31  605 
Severance expenses 44  13 
A330 fleet-related adjustments (2)
—  (42)
Other operating special items, net 7  34 
Mainline operating special items, net 159  610 
Regional operating special items, net (3)
3  33 
Operating special items, net $ 162  $ 643 

(1) Labor contract expenses for 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.
Labor contract expenses for 2024 included one-time charges resulting from the ratifications of new CBAs with American’s mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases.
(2) In 2024, American entered into a sales agreement for certain Airbus A330 aircraft, resulting in a $42 million gain. These aircraft were previously retired in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(3) Regional operating special items, net for 2024 included a $33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer ERJ145 aircraft.
Nonoperating Results

   Year Ended December 31, Increase
(Decrease) Percent
Increase
(Decrease)
   2025 2024
  (In millions, except percentage changes)
Interest income $ 949  $ 1,058  $ (109) (10.3)
Interest expense, net (1,780) (2,029) 249  (12.3)
Other income, net 81  5  76  nm
Total nonoperating expense, net $ (750) $ (966) $ 216  (22.3)

Interest income decreased $109 million, or 10.3%, in 2025 compared to 2024 primarily due to lower interest rates and a decrease in the average balance of American’s short-term investments, resulting in reduced returns. Interest expense, net decreased $249 million, or 12.3%, in 2025 compared to 2024 primarily due to lower interest rates on American’s variable-rate debt instruments and lower outstanding debt in 2025, as American continues its efforts to strengthen the balance sheet.
In 2025, other nonoperating income, net included $56 million of non-service related pension and other postretirement benefit plan income, $51 million of net earnings related to American’s equity investments accounted for under the equity method and $40 million of mark-to-market net unrealized gains associated with certain equity investments recognized as net special items. These amounts were offset in part by $40 million of net special charges related to debt refinancings and extinguishments and other costs, as well as $15 million of foreign currency losses.
In 2024, other nonoperating income, net included $113 million of non-service related pension and other postretirement benefit plan income, offset in part by $47 million of foreign currency losses, $24 million of net special charges primarily for debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments and $24 million of net losses related to American’s equity investments accounted for under the equity method.
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Income Taxes
American is a member of AAG’s consolidated federal and certain state income tax returns.
In 2025, American recorded an income tax provision of $197 million with an effective rate of approximately 25.9%, which was substantially non-cash. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2025, American had approximately $11.7 billion of gross federal NOLs and $3.8 billion of other carryforwards available to reduce future federal taxable income, of which $1.8 billion will expire beginning in 2033 if unused and $13.7 billion can be carried forward indefinitely. American also had approximately $4.7 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.
In 2024, American recorded an income tax provision of $426 million at an effective rate of approximately 25.2%, which was substantially non-cash.
See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes.

Liquidity and Capital Resources
Liquidity
At December 31, 2025, AAG had $9.2 billion in total available liquidity and $735 million in restricted cash and short-term investments. Additional detail regarding our available liquidity is provided in the table below (in millions):

  AAG American
  December 31, December 31,
  2025 2024 2025 2024
Cash $ 954  $ 804  $ 936  $ 795 
Short-term investments 4,882  6,180  4,880  6,177 
Undrawn facilities 3,397  3,289  3,397  3,289 
Total available liquidity $ 9,233  $ 10,273  $ 9,213  $ 10,261 

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, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually. 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. Our 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. For further information regarding our debt covenants, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B.
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Sources and Uses of Cash
For a comparison of the 2024 and 2023 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ Sources and Uses of Cash” of our 2024 Form 10-K.
AAG
Operating Activities
Our net cash provided by operating activities was $3.1 billion and $4.0 billion in 2025 and 2024, respectively, an $884 million year-over-year decrease driven by lower profitability and net changes in working capital.
Investing Activities
Our net cash used in investing activities was $1.9 billion and $968 million in 2025 and 2024, respectively.
Our principal investing activities in 2025 included $3.8 billion of capital expenditures, which primarily related to the purchase of 23 Boeing 737 MAX aircraft, 12 Embraer E175 aircraft, eight Bombardier CRJ900 aircraft, six Boeing 787-9 aircraft, five Airbus A321XLR aircraft, two Boeing 737-800 aircraft lease repurchases, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and eight aircraft engines. These cash outflows were offset in part by $1.3 billion in net sales of short-term investments and $344 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 and sale of certain of our A330 aircraft. Additionally, we had $328 million in net proceeds from the issuance of the TMAT special facility revenue bonds.
Our principal investing activities in 2024 included $2.7 billion of capital expenditures, which primarily related to the purchase of 16 Embraer E175 aircraft, six Boeing 737 MAX aircraft, four Airbus A321neo aircraft , four Boeing 737-800 aircraft lease repurchases, two Bombardier CRJ900 aircraft, one Airbus A320 aircraft lease repurchase, 48 aircraft engines and aircraft purchase deposits. These cash outflows were offset in part by $819 million in net sales of short-term investments and $654 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX.
Financing Activities
Our net cash used in financing activities was $1.1 billion and $2.8 billion in 2025 and 2024, respectively.
Our principal financing activities in 2025 included $5.5 billion in long-term debt and finance lease repayments, consisting of $4.1 billion in scheduled repayments, including the $1.0 billion cash settlement of AAG’s 6.50% convertible senior notes. Debt and finance lease repayments also included the early repayments of $937 million for the outstanding principal amounts of the 10.75% Senior Secured Notes and $487 million for the outstanding principal amount of equipment notes issued under EETCs. These cash outflows were offset in part by $3.8 billion of proceeds from issuance of long-term debt, consisting of $1.2 billion from the issuance of equipment loans and other notes payable, $978 million from the issuance of EETCs in connection with the financing of certain aircraft, $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $629 million under a senior unsecured short-term term loan facility due January 2026. Additionally, we had $840 million in net proceeds from fuel financing transactions.
Our principal financing activities in 2024 included $4.5 billion in long-term debt and finance lease repayments, consisting of $3.7 billion in scheduled repayments and the early repayments of $487 million of the outstanding principal amount of the 3.75% Senior Notes and $263 million toward portions of the outstanding principal amounts of the 10.75% Senior Secured Notes. These cash outflows were offset in part by $1.7 billion of proceeds from issuance of long-term debt, consisting of $990 million from the issuance of equipment loans and other notes payable and $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had previously been delivered.
American
Operating Activities
American’s net cash provided by operating activities was $1.9 billion and $3.4 billion in 2025 and 2024, respectively, a $1.5 billion year-over-year decrease driven by a net increase in receivables from related parties, including the scheduled repayment of AAG’s $1.0 billion 6.50% convertible senior notes. Excluding this net increase in receivables from related parties, American’s operating cash flows decreased $877 million compared to 2024 due to lower profitability and net changes in working capital.
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Investing Activities
American’s net cash used in investing activities was $1.8 billion and $909 million in 2025 and 2024, respectively.
American’s principal investing activities in 2025 included $3.7 billion of capital expenditures, which primarily related to the purchase of 23 Boeing 737 MAX aircraft, 12 Embraer E175 aircraft, eight Bombardier CRJ900 aircraft, six Boeing 787-9 aircraft, five Airbus A321XLR aircraft, two Boeing 737-800 aircraft lease repurchases, one Airbus A321neo aircraft, one Airbus A320 aircraft lease repurchase and eight aircraft engines. These cash outflows were offset in part by $1.3 billion in net sales of short-term investments and $343 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 and sale of certain of American’s A330 aircraft. Additionally, American had $328 million in net proceeds from the issuance of the TMAT special facility revenue bonds.
American’s principal investing activities in 2024 included $2.6 billion of capital expenditures, which primarily related to the purchase of 16 Embraer E175 aircraft, six Boeing 737 MAX aircraft, four Airbus A321neo aircraft , four Boeing 737-800 aircraft lease repurchases, two Bombardier CRJ900 aircraft, one Airbus A320 aircraft lease repurchase, 48 aircraft engines and aircraft purchase deposits. These cash outflows were offset in part by $819 million in net sales of short-term investments and $654 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX.
Financing Activities
American’s net cash used in financing activities was $47 million and $2.3 billion in 2025 and 2024, respectively.
American’s principal financing activities in 2025 included $4.5 billion in long-term debt and finance lease repayments, consisting of $3.1 billion in scheduled repayments and the early repayments of $937 million for the outstanding principal amounts of the 10.75% Senior Secured Notes and $487 million for the outstanding principal amount of equipment notes issued under EETCs. These cash outflows were offset in part by $3.8 billion of proceeds from issuance of long-term debt, consisting of $1.2 billion from the issuance of equipment loans and other notes payable, $978 million from the issuance of EETCs in connection with the financing of certain aircraft, $1.0 billion from the issuance of the 2025 AAdvantage Term Loan Facility and $629 million under a senior unsecured short-term term loan facility due January 2026. Additionally, American had $840 million in net proceeds from fuel financing transactions.
American’s principal financing activities in 2024 included $4.0 billion in long-term debt and finance lease repayments, consisting of $3.7 billion in scheduled repayments and the early repayment of $263 million toward portions of the outstanding principal amounts of the 10.75% Senior Secured Notes. These cash outflows were offset in part by $1.7 billion of proceeds from issuance of long-term debt, consisting of $990 million from the issuance of equipment loans and other notes payable and $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had previously been delivered.

Commitments
For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below.

  AAG    American
Debt Note 4
   Note 3

Leases Note 5
Note 4

Employee Benefit Plans Note 9
   Note 8

Commitments, Contingencies and Guarantees Note 11
   Note 10

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.
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We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material current or future effect on financial condition, liquidity or results of operations.
Pass-Through Trusts
American currently has 280 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the case of spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American.
Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2025, $6.9 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
Letters of Credit and Other
We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation obligations and airport commitments. As of December 31, 2025, we had $412 million of letters of credit and surety bonds securing various obligations, of which $97 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2037.
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Contractual Obligations
The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2025 (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.

  Payments Due by Period
  2026 2027 2028 2029 2030 2031 and Thereafter Total
American (a)

Long-term debt:
Principal amount (b), (d) (See Note 3)
$ 3,641  $ 4,455  $ 7,324  $ 4,045  $ 730  $ 4,653  $ 24,848 
Interest obligations (c), (d)
1,267  1,039  739  420  276  770  4,511 
Finance lease obligations (See Note 4)
161  152  110  102  100  310  935 
Aircraft and engine purchase commitments (e) (See Note 10(a))
2,931  2,468  4,021  4,921  3,151  6,696  24,188 
Operating lease commitments (See Note 4)
1,487  1,358  1,238  1,131  948  2,987  9,149 
Regional capacity purchase agreements (f) (See Note 10(b))
1,159  1,156  1,082  900  457  399  5,153 
Minimum pension obligations (g) (See Note 8)
236  89  21  —  —  —  346 
Retiree medical and other postretirement benefits (g) (See Note 8)
111  113  116  115  112  588  1,155 
Other purchase obligations (h) (See Note 10(a))
4,112  1,803  1,557  493  615  3,724  12,304 
Total American Contractual Obligations 15,105  12,633  16,208  12,127  6,389  20,127  82,589 

AAG Parent and Other AAG Subsidiaries (a)

Long-term debt:
Principal amount (b) (See Note 4)
—  —  —  —  1,757  1,989  3,746 
Interest obligations (c)
172  197  201  208  171  49  998 
Finance lease obligations (See Note 5)
3  —  —  —  —  —  3 
Operating lease commitments (See Note 5)
14  9  8  7  6  35  79 
Minimum pension obligations (g) (See Note 9)
2  1  1  1  1  1  7 
Other purchase obligations (See Note 11(a))
14  12  5  2  —  —  33 
Total AAG Contractual Obligations $ 15,310  $ 12,852  $ 16,423  $ 12,345  $ 8,324  $ 22,201  $ 87,455 

(a) For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, referenced in the table above.
(b) Amounts represent contractual amounts due. Excludes $313 million and $1 million of unamortized debt discount, premium and issuance costs as of December 31, 2025 for American and AAG Parent, respectively.
(c) For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2025.
(d) Includes $6.9 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2025, related to EETCs associated with mortgage financings of certain aircraft and spare engines.
(e) See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” 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.
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(f) 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.
(g) Represents minimum pension contributions and expected contributions to our retiree medical and other post-retirement plans based on actuarially determined estimates as of December 31, 2025 and is based on estimated payments through 2035. In January 2026, we made required contributions of $236 million and a supplemental contribution of $50 million to our defined benefit pension plans.
(h) 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” 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. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements.
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.
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OTHER INFORMATION

Basis of Presentation
See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information regarding the basis of presentation.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with 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. We believe our estimates and assumptions are reasonable; however, actual results could differ from those estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that impact the preparation of our consolidated financial statements. See the “ Basis of Presentation and Summary of Significant Accounting Policies ” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for additional discussion of the application of these estimates and other accounting policies.
Passenger Revenue
We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American, American Eagle and partner airlines.
The contract duration of passenger tickets is generally one year. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.
Loyalty Revenue
We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, American Eagle, any one world airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American, American Eagle and other participating partner airlines, as well as for other non-air travel awards such as car rentals, hotel stays, cruises and retail goods from program partners. For mileage credits earned by AAdvantage program members, we apply the deferred revenue method.
Mileage credits earned through travel
For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. For the year ended December 31, 2025, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased revenues by approximately $155 million primarily as a result of additional amounts deferred from passenger ticket sales to be recognized in future periods.
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Mileage credits sold to co-branded credit card and other partners
We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partner, under contracts with remaining terms generally from one to 10 years as of December 31, 2025. Consideration received from the sale of mileage credits is predominantly variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits to co-branded credit card and non-airline business partners are comprised of two revenue elements: a transportation component and a marketing component. We allocate the consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered.
Our most significant mileage credit partner agreement is our co-branded credit card agreement with Citi. In December 2024, we announced a 10-year agreement with Citi and Citi became the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S. starting in 2026.
The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided.
The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method.
For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. For the year ended December 31, 2025, a hypothetical 10% increase in our estimate of mileage credits not expected to be redeemed would have increased revenues by approximately $140 million.
Pensions and Retiree Medical and Other Postretirement Benefits
We recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension and retiree medical and other postretirement benefits plans on the consolidated balance sheets with a corresponding adjustment to accumulated other comprehensive income (loss).
Our pension and retiree medical and other postretirement benefits costs and liabilities are calculated using various actuarial assumptions and methodologies. We use certain assumptions including, but not limited to, the selection of the discount rate and expected return on plan assets.
As of December 31, 2025, our weighted average discount rate assumptions were 5.5% and 5.3% for our pension and retiree medical and other postretirement benefits obligations, respectively. When establishing the discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace whose cash flows approximate our projected benefit disbursements. Lowering the discount rate by 50 basis points as of December 31, 2025 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $635 million and $40 million, respectively, and decrease estimated 2026 pension and retiree medical and other postretirement benefits expense by approximately $10 million and $1 million, respectively.
As of January 1, 2026, our expected rate of return on plan assets is 7.3%. The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account current and expected market conditions and our target asset allocation of 45% U.S. fixed income securities, 18% U.S. stocks, 25% private investments, 9% international developed market stocks and 3% emerging market stocks. The expected rate of return on plan assets component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. Lowering the expected long-term rate of return on plan assets by 50 basis points would increase estimated 2026 pension expense by approximately $60 million.
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Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other postretirement benefits discount rates, health care costs and certain other retirement assumptions. The net effect of changing these assumptions for the pension plans resulted in an increase of $238 million in the projected benefit obligation at December 31, 2025. The net effect of changing these assumptions for retiree medical and other postretirement benefits plans resulted in a decrease of $10 million in the accumulated postretirement benefit obligation at December 31, 2025.
See Note 9 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 8 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information regarding our employee benefit plans.
Income Taxes
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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. 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. There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material.
Recent Accounting Pronouncements
Accounting Standards Update (ASU) 2024-03: Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses
This standard enhances transparency in reporting by requiring disaggregation of certain costs and expenses in the notes to financial statements. This update is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, and early adoption is permitted. We are currently evaluating how the adoption of this standard may impact our disclosures.
ASU 2025-06: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software
This standard modernizes the accounting for costs related to internal-use software by removing references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. The amendments in this update are effective for interim and annual periods beginning after December 15, 2027, and early adoption is permitted. We are currently evaluating how the adoption of this standard may impact our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of aircraft fuel, foreign currency exchange rates and interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions we may take to mitigate our exposure to such changes. Therefore, actual results may differ.
Aircraft Fuel
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 over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $1.83 per gallon to a high of approximately $3.82 per gallon during the period from January 1, 2023 to December 31, 2025.
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As of December 31, 2025, 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 $50 million.
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. We estimate a uniform 10% strengthening in the value of the U.S. dollar from 2025 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease in pre-tax income of approximately $140 million for the year ended December 31, 2025.
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” 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.
Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt financings, principally the Secured Overnight Financing Rate (SOFR). Variable-rate debt instruments represented 47% of our total long-term debt as of December 31, 2025. We currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations. If annual interest rates increase 100 basis points, based on our December 31, 2025 variable-rate debt and short-term investments balances, annual interest expense on variable-rate debt would increase by approximately $130 million and annual interest income on short-term investments would increase by approximately $60 million. Additionally, the fair value of fixed-rate debt would have decreased by approximately $410 million for AAG and $320 million for American.
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ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC.

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
American Airlines Group Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of American Airlines Group Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ deficit for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 18, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards
As discussed in Notes 1(i) and 6 to the consolidated financial statements, the Company had $4.1 billion of tax net operating loss and other carryforwards, which are recorded as deferred tax assets at December 31, 2025. Deferred tax assets are recognized related to tax net operating loss and other carryforwards that will reduce future taxable income. The Company provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating the need for a valuation allowance, management considers the weighting of all available positive and negative evidence.
We identified the evaluation of the sufficiency of audit evidence over the realizability of federal tax net operating loss and other carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s deferred tax asset valuation allowance process, including controls related to the realizability of federal tax net operating loss and other carryforwards. We evaluated positive and negative evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of the Company, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net operating loss and other carryforwards by evaluating the cumulative results of the audit procedures.
/s/    KPMG LLP

We have served as the Company’s auditor since 2014.
Dallas, Texas
February 18, 2026
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AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)

  Year Ended December 31,
  2025 2024 2023
Operating revenues:
Passenger $ 49,643   $ 49,586   $ 48,512  
Cargo 839   804   812  
Other 4,151   3,821   3,464  
Total operating revenues 54,633   54,211   52,788  
Operating expenses:
Aircraft fuel and related taxes 10,718   11,418   12,257  
Salaries, wages and benefits 17,566   16,021   14,580  
Regional expenses 5,448   5,042   4,643  
Maintenance, materials and repairs 3,844   3,794   3,265  
Other rent and landing fees 3,476   3,303   2,928  
Aircraft rent 1,220   1,242   1,369  
Selling expenses 1,997   1,812   1,799  
Depreciation and amortization 1,890   1,926   1,936  
Special items, net 159   610   971  
Other 6,848   6,429   6,006  
Total operating expenses 53,166   51,597   49,754  
Operating income 1,467   2,614   3,034  
Nonoperating income (expense):
Interest income 357   468   591  
Interest expense, net ( 1,716 ) ( 1,934 ) ( 2,145 )
Other income (expense), net 82   6   ( 359 )
Total nonoperating expense, net ( 1,277 ) ( 1,460 ) ( 1,913 )
Income before income taxes 190   1,154   1,121  
Income tax provision 79   308   299  
Net income $ 111   $ 846   $ 822  

Earnings per common share:
Basic $ 0.17   $ 1.29   $ 1.26  
Diluted $ 0.17   $ 1.24   $ 1.21  
Weighted average shares outstanding (in thousands):
Basic 659,964   656,996   653,612  
Diluted 661,052   721,300   719,669  

See accompanying notes to consolidated financial statements.
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AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)

  Year Ended December 31,
  2025 2024 2023
Net income $ 111   $ 846   $ 822  
Other comprehensive income (loss), net of tax:
Pension, retiree medical and other postretirement benefits 176   327   ( 312 )

Investments —   2   3  
Total other comprehensive income (loss), net of tax 176   329   ( 309 )
Total comprehensive income $ 287   $ 1,175   $ 513  

See accompanying notes to consolidated financial statements.
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AMERICAN AIRLINES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and par value amounts)

  December 31,
  2025 2024
ASSETS
Current assets
Cash $ 954   $ 804  
Short-term investments 4,882   6,180  
Restricted cash and short-term investments 735   732  
Accounts receivable, net 2,075   2,006  
Aircraft fuel, spare parts and supplies, net 2,792   2,638  
Prepaid expenses and other 767   794  
Total current assets 12,205   13,154  
Operating property and equipment
Flight equipment 46,597   43,521  
Ground property and equipment 10,479   10,202  
Equipment purchase deposits 656   1,012  
Total property and equipment, at cost 57,732   54,735  
Less accumulated depreciation and amortization ( 25,192 ) ( 23,608 )
Total property and equipment, net 32,540   31,127  
Operating lease right-of-use assets 7,091   7,333  
Other assets
Goodwill 4,091   4,091  
Intangibles, net of accumulated amortization of $ 848 and $ 841 , respectively
2,066   2,044  
Deferred tax asset 2,368   2,485  
Other assets 1,413   1,549  
Total other assets 9,938   10,169  
Total assets $ 61,774   $ 61,783  
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt and finance leases $ 3,753   $ 5,322  
Accounts payable 2,840   2,455  
Accrued salaries and wages 2,128   2,150  
Air traffic liability 7,158   6,759  
Loyalty program liability 3,725   3,556  
Operating lease liabilities 1,058   1,092  
Fuel financing 914   74  
Other accrued liabilities 2,916   2,887  
Total current liabilities 24,492   24,295  
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities 25,254   25,154  
Pension and postretirement benefits 1,568   2,128  
Loyalty program liability 6,839   6,498  
Operating lease liabilities 5,905   5,976  
Other liabilities 1,443   1,709  
Total noncurrent liabilities 41,009   41,465  
Commitments and contingencies (Note 11)

Stockholders’ equity (deficit)
Common stock, $ 0.01  par value; 1,750,000,000  shares authorized, 660,301,080 shares issued and outstanding at December 31, 2025; 657,566,166 shares issued and outstanding at December 31, 2024
7   7  
Additional paid-in capital 7,387   7,424  
Accumulated other comprehensive loss ( 4,389 ) ( 4,565 )
Retained deficit ( 6,732 ) ( 6,843 )
Total stockholders’ deficit ( 3,727 ) ( 3,977 )
Total liabilities and stockholders’ equity (deficit) $ 61,774   $ 61,783  

See accompanying notes to consolidated financial statements.
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AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

   Year Ended December 31,
  2025 2024 2023
Cash flows from operating activities:
Net income $ 111   $ 846   $ 822  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,219   2,245   2,254  
Debt extinguishment costs 20   9   267  
Special items, net non-cash ( 17 ) ( 1 ) 41  
Pension and postretirement ( 31 ) ( 82 ) ( 13 )
Deferred income tax provision 79   308   299  
Share-based compensation, non-cash 57   92   102  

Other, net ( 85 ) ( 249 ) ( 205 )
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable ( 74 ) 35   95  
Increase in other assets ( 218 ) ( 314 ) ( 11 )
Increase in accounts payable 335   257   209  
Increase (decrease) in air traffic liability 399   559   ( 545 )
Increase in loyalty program liability 510   727   182  
Contributions to pension plans ( 228 ) ( 300 ) ( 73 )
Increase (decrease) in other liabilities 22   ( 149 ) 379  
Net cash provided by operating activities 3,099   3,983   3,803  
Cash flows from investing activities:
Capital expenditures and aircraft purchase deposits ( 3,779 ) ( 2,683 ) ( 2,596 )

Proceeds from sale-leaseback transactions and sale of property and equipment 344   654   230  

Sales of short-term investments 6,189   8,013   8,861  
Purchases of short-term investments ( 4,905 ) ( 7,194 ) ( 7,323 )
Decrease in restricted short-term investments 3   177   51  

Other investing activities 254   65   275  
Net cash used in investing activities ( 1,894 ) ( 968 ) ( 502 )
Cash flows from financing activities:
Payments on long-term debt and finance leases ( 5,504 ) ( 4,467 ) ( 7,718 )
Proceeds from issuance of long-term debt 3,773   1,670   4,822  

Net proceeds from fuel financing 840   74   —  
Other financing activities ( 160 ) ( 71 ) ( 310 )
Net cash used in financing activities ( 1,051 ) ( 2,794 ) ( 3,206 )
Net increase in cash and restricted cash 154   221   95  
Cash and restricted cash at beginning of year 902   681   586  
Cash and restricted cash at end of year (a)
$ 1,056   $ 902   $ 681  

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

Cash $ 954   $ 804   $ 578  
Restricted cash included in restricted cash and short-term investments 102   98   103  
Total cash and restricted cash $ 1,056   $ 902   $ 681  

See accompanying notes to consolidated financial statements.
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AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In millions, except share amounts)

Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Retained
Deficit Total
Balance at December 31, 2022 $ 6   $ 7,291   $ ( 4,585 ) $ ( 8,511 ) $ ( 5,799 )
Net income —  —  —  822   822  
Other comprehensive loss, net —  —  ( 309 ) —  ( 309 )
Issuance of 3,630,731 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
1   ( 23 ) —  —  ( 22 )
Share-based compensation expense —  102   —  —  102  
Settlement of single-dip unsecured claims held in Disputed Claims Reserve —  4   —  —  4  
Balance at December 31, 2023 7   7,374   ( 4,894 ) ( 7,689 ) ( 5,202 )
Net income —  —  —  846   846  
Other comprehensive income, net —  —  329   —  329  
Issuance of 3,292,974 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  ( 22 ) —  —  ( 22 )
Share-based compensation expense —  92   —  —  92  
Modification of share-based awards —  ( 20 ) —  —  ( 20 )
Balance at December 31, 2024 7   7,424   ( 4,565 ) ( 6,843 ) ( 3,977 )
Net income —  —  —  111   111  
Other comprehensive income, net —  —  176   —  176  
Settlement of PSP1 and Treasury Loan Warrants (see Note 3) —  ( 79 ) —  —  ( 79 )
Issuance of 2,734,914 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  ( 18 ) —  —  ( 18 )
Share-based compensation expense —  60   —  —  60  

Balance at December 31, 2025 $ 7   $ 7,387   $ ( 4,389 ) $ ( 6,732 ) $ ( 3,727 )

See accompanying notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

1.  Basis of Presentation and Summary of Significant Accounting Policies
(a) Basis of Presentation
American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont), that operate under the brand American Eagle. All significant intercompany transactions have been eliminated.
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 (ASU) 2024-03: Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses
This standard enhances transparency in reporting by requiring disaggregation of certain costs and expenses in the notes to financial statements. This update is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, and early adoption is permitted. We are currently evaluating how the adoption of this standard may impact our disclosures.
ASU 2025-06: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software
This standard modernizes the accounting for costs related to internal-use software by removing references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. The amendments in this update are effective for interim and annual periods beginning after December 15, 2027, and early adoption is permitted. We are currently evaluating how the adoption of this standard may impact our consolidated financial statements.
(c) Investments
Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded as part of interest income within total nonoperating expense, net on our consolidated statements of operations. Unrealized gains and losses are recorded as a component of accumulated other comprehensive loss on our consolidated balance sheets. For investments in an unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses.
Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee. Equity investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative). Our equity investments are reflected in other assets on our 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 consolidated statements of operations. See Note 8 for additional information related to our equity investments.
(d) Restricted Cash and Short-term Investments
We have restricted cash and short-term investments related primarily to 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 (Tulsa Maintenance Base). See Note 4 and Note 11 for further information on the AAdvantage Financing and Tulsa Maintenance Base, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC .

(e) Accounts Receivable, Net
Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, amounts due from airline and non-airline business partners, including our co-branded credit card partner and cargo customers. Receivables from ticket sales are short-term, mostly settled within seven days after sale. Receivables from our business partners are typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2025 and 2024. We consider past and future financial and qualitative factors, including aging, payment history and other credit monitoring indicators, when establishing the allowance for credit losses.
(f) Aircraft Fuel, Spare Parts and Supplies, Net
Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. We also provide an allowance for spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, spare parts and supplies are expensed when used.
(g) Operating Property and Equipment
Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. Effective January 1, 2025, we adjusted the estimated useful lives of our mainline and regional aircraft, engines and related rotable parts by three years to align with the extended lives of aircraft included in our long-term fleet plan. In conjunction with this change, we also reduced the salvage values for most of these assets from 10 % to 5 % of original cost to more closely reflect the estimated value at the end of the useful life. Accordingly, the estimated useful lives for the principal property and equipment classification are as follows:

Principal Property and Equipment Classification Estimated Useful Life
Aircraft, engines and related rotable parts 20  –  33 years

Buildings and improvements 5  –  30 years

Furniture, fixtures and other equipment 3  –  15 years

Capitalized software 5  –  10 years

The effect of these changes did not have a material impact to depreciation and amortization expense in the consolidated statement of operations for the year ended December 31, 2025. Total mainline and regional depreciation and amortization expense was $ 2.2 billion for each of the years ended December 31, 2025 and 2024 and $ 2.3 billion for the year ended December 31, 2023.
We assess impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. If such assets are impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales agreements when applicable.
(h) Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current maturities, on our consolidated balance sheets. See Note 5 for further information on our operating and finance leases.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC .

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.
Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on our consolidated balance sheets.
Under certain of our capacity purchase agreements with third-party regional carriers, we do not own the underlying aircraft. However, since we control the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew and maintenance. Where applicable, we allocate the consideration in the capacity purchase agreements to the lease and non-lease components using their estimated relative standalone prices. See Note 11(b) for additional information on our capacity purchase agreements.
For real estate, we account for the lease and non-lease components as a single lease component.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent on our consolidated balance sheets.
We provide a valuation allowance for our deferred tax assets, which include our net operating losses (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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. 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.
(j) Goodwill
Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the 2013 merger with US Airways Group, Inc. (US Airways Group). We have one reporting unit. We assess goodwill for impairment annually or more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. Our annual assessment date is October 1.
Goodwill is assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our goodwill may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon our annual assessment, there was no goodwill impairment in 2025. The carrying value of our goodwill on our consolidated balance sheets was $ 4.1 billion as of December 31, 2025 and 2024.
(k) Other Intangibles, Net
Intangible assets consist of certain domestic airport slots and gate leasehold rights, international slots and route authorities, commercial agreements, marketing agreements, customer relationships and tradenames.
Definite-Lived Intangible Assets
Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC .

basis over 25 years. Certain marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 years.
We had $ 124 million and $ 101 million of definite-lived intangible assets, net of accumulated amortization on our consolidated balance sheets as of December 31, 2025 and 2024, respectively. We expect to record amortization expense related to these assets of approximately $ 7 million for each of the years in 2026 through 2030, and $ 88 million of amortization expense in 2031 and thereafter until fully amortized.
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and our commercial agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). We assess indefinite-lived intangible assets for impairment annually or more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. Our annual assessment date is October 1.
Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our indefinite-lived intangible assets may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon our annual assessment, there were no indefinite-lived intangible asset impairments in 2025. We had $ 1.9 billion of indefinite-lived intangible assets on our consolidated balance sheets as of December 31, 2025 and 2024.
(l) Fuel Financing
In December 2024, we entered into a fuel financing facility with a bank pursuant to which the bank pays certain fuel invoices on our behalf. The agreement contains a maximum allowable outstanding principal balance at any time of $ 1.0 billion and is required to be repaid at least quarterly. The fuel financing facility bears interest at a base rate equal to one-month Secured Overnight Financing Rate (SOFR), plus a margin of 3.75 %. Our obligations to the counterparty are secured on a second-priority basis by certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions, as provided in, and subject to the covenants and conditions of, the Second Lien Brand Collateral Security Agreement. Either American or the bank may terminate this agreement at any time and with immediate effect upon sixty days’ prior written notice to the other party. As of December 31, 2025 and 2024, we had $ 914 million and $ 74 million, respectively, in fuel financing obligations included on our consolidated balance sheets.
The following is a rollforward of our outstanding fuel financing obligation during the years ended December 31, 2025 and 2024 (in millions):

2025 2024
Balance at beginning of year $ 74   $ —  
Proceeds 1,217   74  
Payments ( 377 ) —  
Balance at end of year $ 914   $ 74  

We include payments to designated fuel suppliers as an operating activity in the consolidated statement of cash flows. Proceeds and payments related to fuel financing transactions are presented net as a financing activity in the consolidated statement of cash flows.
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(m) Revenue Recognition
Revenue
The following are the significant categories comprising our operating revenues (in millions):

Year Ended December 31,
  2025 2024 2023
Passenger revenue:
Passenger travel $ 45,607   $ 45,743   $ 44,914  
Loyalty revenue - travel (1)
4,036   3,843   3,598  
Total passenger revenue 49,643   49,586   48,512  
Cargo 839   804   812  
Other:
Loyalty revenue - marketing services 3,511   3,257   2,929  
Other revenue 640   564   535  
Total other revenue 4,151   3,821   3,464  
Total operating revenues $ 54,633   $ 54,211   $ 52,788  

(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. See “ Loyalty Revenue ” below for further discussion on these mileage credits.
The following is our total passenger revenue by geographic region (in millions):

Year Ended December 31,
  2025 2024 2023
Domestic $ 35,201   $ 35,336   $ 34,592  
Latin America 6,444   6,560   6,719  
Atlantic
6,583   6,445   6,205  
Pacific 1,415   1,245   996  
Total passenger revenue $ 49,643   $ 49,586   $ 48,512  

We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment.
Passenger Revenue
We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American, American Eagle and partner airlines.
The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.
Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.
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Loyalty Revenue
We currently operate the loyalty program, AAdvantage ® . This program awards mileage credits to passengers who fly on American, American Eagle, any one world airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American, American Eagle and other participating partner airlines, as well as for other non-air travel awards such as car rentals, hotel stays, cruises and retail goods from program partners. For mileage credits earned by AAdvantage program members, we apply the deferred revenue method.
Mileage credits earned through travel
For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption.
Mileage credits sold to co-branded credit card and other partners
We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partner, under contracts with remaining terms generally from one to 10 years as of December 31, 2025. Consideration received from the sale of mileage credits is predominantly variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits to co-branded credit card and non-airline business partners are comprised of two revenue elements: a transportation component and a marketing component. We allocate the consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered.
Our most significant mileage credit partner agreement is our co-branded credit card agreement with Citibank N.A. (Citi). In December 2024, we announced a 10 -year agreement with Citi and Citi became the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S. starting in 2026.
The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided.
The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method.
For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption.
Cargo Revenue
Cargo revenue is recognized when we provide the transportation.
Other Revenue
Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for the loyalty program marketing services are discussed above in “ Loyalty Revenue .” The remaining amounts included within other revenue relate to airport clubs, other commission revenue, advertising and vacation-related services.
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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 our consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on our consolidated balance sheets.

December 31,
2025 2024
(In millions)
Loyalty program liability $ 10,564   $ 10,054  
Air traffic liability 7,158   6,759  
Total $ 17,722   $ 16,813  

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):

Balance at December 31, 2024 $ 10,054  
Deferral of revenue 4,445  
Recognition of revenue (1)
( 3,935 )
Balance at December 31, 2025 (2)
$ 10,564  

(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 homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that were part of the loyalty program deferred revenue 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 December 31, 2025, our current loyalty program liability was $ 3.7 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 December 31, 2025 and 2024, our loyalty program liability includes a one-time cash payment related to the new co-branded credit card agreement announced in December 2024, which will be amortized over the life of the new agreement beginning in 2026.
The air traffic liability principally represents tickets sold for future travel on American, American Eagle 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 2025, $ 5.1 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2024.
(n) Maintenance, Materials and Repairs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under certain power-by-the-hour maintenance agreements, which are charged to operating expense based on contractual terms when an obligation exists.
(o) Selling Expenses
Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. Advertising expense was $ 200 million, $ 143 million and $ 114 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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(p) Share-based Compensation
We account for our share-based compensation expense based on the fair value of the equity award at the time of grant, which is recognized ratably over the vesting period of the award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The majority of our equity awards are time vested restricted stock units. For equity-classified awards, the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the date of grant and is not subsequently remeasured unless modified. For liability-classified awards, the fair value of such awards is remeasured at the end of each reporting period until settled. See Note 14 for further discussion of share-based compensation.
(q) Foreign Currency Gains and Losses
Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on our consolidated statements of operations. For the years ended December 31, 2025, 2024 and 2023, foreign currency losses were $ 15 million, $ 48 million and $ 30 million, respectively.
(r) Other Operating Expenses
Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses.
(s) 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 with our third-party regional partners and similar arrangements with our wholly-owned regional affiliates. Expenses, excluding fuel expense, associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations.
Regional expenses for the years ended December 31, 2025, 2024 and 2023 include $ 329 million, $ 319 million and $ 318 million of depreciation and amortization, respectively. Regional expenses also include $ 9 million of aircraft rent for each of the years ended December 31, 2025 and 2024 and $ 7 million for the year ended December 31, 2023.
In 2025, 2024 and 2023, we recognized $ 658 million, $ 612  million and $ 636 million, respectively, of expense under our capacity purchase agreement with Republic Airways Inc. (Republic). We hold a 20.8 % equity interest in Republic Airways Holdings Inc. (Republic Holdings), the parent company of Republic.

2.  Special Items, Net
Special items, net on our consolidated statements of operations consisted of the following (in millions):

  Year Ended December 31,
  2025 2024 2023
Litigation reserve adjustments $ 77   $ —   $ —  
Labor contract expenses (1)
31   605   989  
Severance expenses 44   13   23  
A330 fleet-related adjustments (2)
—   ( 42 ) —  
Other operating special items, net 7   34   ( 41 )
Mainline operating special items, net 159   610   971  

Regional operating special items, net (3)
3   33   8  
Operating special items, net 162   643   979  

Mark-to-market adjustments on equity investments, net (4)
( 40 ) 8   82  
Debt refinancing and extinguishment (5)
22   16   280  
Other nonoperating special items, net 18   —   —  
Nonoperating special items, net —   24   362  

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(1) Labor contract expenses for 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.
Labor contract expenses for 2024 included one-time charges resulting from the ratifications of new collective bargaining agreements (CBAs) with our mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases.
Labor contract expenses for 2023 included one-time charges resulting from the ratification of a new CBA with our mainline pilots, including a one-time payment of $ 754  million as well as adjustments to other benefit-related items of $ 235  million.
(2) In 2024, we entered into a sales agreement for certain Airbus A330 aircraft, resulting in a $ 42  million gain. These aircraft were previously retired in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(3) Regional operating special items, net for 2024 included a $ 33  million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer ERJ145 aircraft.
(4) Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity investments. See Note 8 for further information related to our equity investments.
(5) Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early repayment of debt.

3.  Earnings Per Common Share
The following table provides the computation of basic and diluted earnings per common share (EPS) (in millions, except share and per share amounts):

  Year Ended December 31,
  2025 2024 2023
Basic EPS:
Net income $ 111   $ 846   $ 822  
Weighted average common shares outstanding (in thousands) 659,964   656,996   653,612  
Basic EPS $ 0.17   $ 1.29   $ 1.26  

Diluted EPS:
Net income $ 111   $ 846   $ 822  
Interest expense on 6.50 % convertible senior notes
—   51   46  
Net income for purposes of computing diluted EPS $ 111   $ 897   $ 868  
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding 659,964   656,996   653,612  
Dilutive effect of restricted stock unit awards 763   1,121   1,830  
Dilutive effect of certain PSP Warrants and Treasury Loan Warrants 325   1,455   2,499  
Assumed conversion of 6.50 % convertible senior notes
—   61,728   61,728  
Diluted weighted average common shares outstanding 661,052   721,300   719,669  
Diluted EPS $ 0.17   $ 1.24   $ 1.21  

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

Year Ended December 31,
2025 2024 2023
6.50 % convertible senior notes (1)
15,432   —   —  
Restricted stock unit awards 1,188   2,350   4,371  

(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 ending after March 31, 2025.
In addition, excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are certain shares underlying the warrants issued pursuant to (i) the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (PSP1), (ii) the payroll support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP2), (iii) the payroll support program established under the American Rescue Plan Act of 2021 (PSP3, and together with PSP1 and PSP2, the PSP Warrants) and (iv) the Loan and Guarantee Agreement with the U.S. Department of Treasury (Treasury Loan Warrants).
During the first quarter of 2025, all of the PSP1 Warrants and Treasury Loan Warrants, 14.0  million shares and 4.4  million shares, respectively, were exercised at an exercise price of $ 12.51 per share and net settled in cash for $ 79  million, reflected within other financing activities in the consolidated statement of cash flows.
The table below provides a summary of the warrants outstanding as of December 31, 2025:

Warrants Warrants Issued
(shares, in thousands) (1)
Exercise Price ($) Expiration

PSP2 Warrants 6,576 15.66   January 2026 (2) to April 2026

PSP3 Warrants 4,407 21.75   April 2026 to June 2026

(1) The PSP2 Warrants and PSP3 Warrants are subject to certain anti-dilution provisions, do not have any voting rights and are freely transferable, with registration rights. Each warrant will be exercisable either through net share settlement or cash, at our option. The warrants were issued solely as compensation to the U.S. Government related to entry into the payroll support program agreements. No separate proceeds (apart from the financial assistance previously received in 2021) were received upon issuance of the warrants or will be received upon exercise thereof.
(2) In January 2026, 2.8  million shares of the PSP2 Warrants were exercised at an exercise price of $ 15.66 per share and net settled in cash for a nominal amount.
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4.  Debt
Debt included on our consolidated balance sheets consisted of (in millions):

  December 31,
  2025 2024
Secured
2013 Term Loan Facility, variable interest rate of 6.00 %, installments until due in February 2028 (a)
$ 970   $ 980  
2014 Term Loan Facility, variable interest rate of 5.69 %, installments until due in January 2027 (a)
1,159   1,171  
2023 Term Loan Facility, variable interest rate of 6.26 %, installments until due in June 2029 (a)
1,078   1,089  
10.75 % senior secured IP notes (b)
—   781  
10.75 % senior secured LGA/DCA notes (b)
—   156  
7.25 % senior secured notes, interest only payments until due in February 2028 (b)
750   750  
8.50 % senior secured notes, interest only payments until due in May 2029 (b)
1,000   1,000  
5.50 % senior secured notes, installments until due in April 2026 (c)
583   1,750  
5.75 % senior secured notes, installments beginning in July 2026 until due in April 2029 (c)
3,000   3,000  
2021 AAdvantage Term Loan Facility, variable interest rate of 6.13 %, installments until due in April 2028 (c)
2,264   2,450  
2025 AAdvantage Term Loan Facility, variable interest rate of 7.13 %, installments until due in May 2032 (c)
995   —  
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88 % to 7.15 %, averaging 3.95 %, maturing from 2026 to 2038 (d)
6,912   7,271  
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55 % to 6.56 %, averaging 5.57 %, maturing from 2026 to 2037 (e)
4,719   4,094  
Special facility revenue bonds, fixed interest rates ranging from 2.25 % to 5.38 %, maturing from 2026 to 2036
789   880  
24,219   25,372  
Unsecured
PSP1 Promissory Note, variable interest rate of 5.92 %, interest only payments until due in April 2030 (f)
1,757   1,757  
PSP2 Promissory Note, interest only payments until due in January 2031 (f)
1,030   1,030  
PSP3 Promissory Note, interest only payments until due in April 2031 (f)
959   959  
6.50 % convertible senior notes (g)
—   1,000  
Senior short-term term loan facility, variable interest rate of 6.11 %, interest only payments until due in January 2026 (h)
629   —  
4,375   4,746  
Total 28,594   30,118  
Less: Total unamortized debt discount, premium and issuance costs 314   305  
Less: Current maturities 3,641   5,196  
Long-term debt, net of current maturities $ 24,639   $ 24,617  

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As of December 31, 2025, the maximum availability under our revolving credit and other facilities is as follows (in millions):

2013 Revolving Facility (1)
$ 519  
2014 Revolving Facility (1)
1,557  
2023 Revolving Facility (1)
924  
Other facilities (2)
397  
Total $ 3,397  

(1) On April 21, 2025, the aggregate revolving commitments under the 2013, 2014 and 2023 Revolving Facilities were increased from approximately $ 2.9  billion to $ 3.0  billion upon the upsize of commitments by certain existing lenders. No other terms were changed and there are no borrowings outstanding under the facilities.
(2) Includes a revolving credit facility that provides for borrowing capacity of up to $ 350  million, maturing in March 2027 with an option to extend for an additional year. Additionally, American currently has $ 47  million of available borrowing base 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.
At December 31, 2025, the maturities of long-term debt are as follows (in millions):

2026 $ 3,641  
2027 4,455  
2028 7,324  
2029 4,045  
2030 2,487  
2031 and thereafter 6,642  
Total $ 28,594  

(a) 2013, 2014 and 2023 Credit Facilities
2013 Credit Facilities
The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), includes a revolving credit facility (the 2013 Revolving Facility) and term loan facility (the 2013 Term Loan Facility), collectively referred to as the 2013 Credit Facilities. The 2013 Term Loan Facility matures in February 2028 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 2.25 % per annum. SOFR borrowings under the 2013 Term Loan Facility are not subject to a credit spread adjustment. As of December 31, 2025, the margin elected was 2.25 % per annum.
The 2013 Revolving Facility matures in June 2029 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. SOFR borrowings under the 2013 Revolving Facility are not subject to a credit spread adjustment. The 2013 Revolving Facility has aggregate commitments of $ 519 million, with the ability to issue letters of credit up to an aggregate amount of $ 100  million. As of December 31, 2025, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility.
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2014 Credit Facilities
The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), includes a revolving credit facility (the 2014 Revolving Facility) and term loan facility (the 2014 Term Loan Facility), collectively referred to as the 2014 Credit Facilities. The 2014 Term Loan Facility matures in January 2027 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 0.75 % or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00 %) plus an applicable margin of 1.75 %. As of December 31, 2025, the margin elected was 1.75 % per annum.
The 2014 Revolving Facility matures in June 2029 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. SOFR borrowings under the 2014 Revolving Facility are not subject to a credit spread adjustment. The 2014 Revolving Facility has aggregate commitments of $ 1.6 billion, with the ability to issue letters of credit up to an aggregate amount of $ 200  million. As of December 31, 2025, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility.
2023 Credit Facilities
The Credit and Guaranty Agreement, dated as of December 4, 2023, as amended (the 2023 Credit Agreement), includes a revolving credit facility (the 2023 Revolving Facility) and term loan facility (the 2023 Term Loan Facility), collectively referred to as the 2023 Credit Facilities. The 2023 Term Loan Facility matures in June 2029 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 2.25 % per annum. SOFR borrowings under the 2023 Term Loan Facility are not subject to a credit spread adjustment. As of December 31, 2025, the margin elected was 2.25 % per annum.
The 2023 Revolving Facility matures in June 2029 and bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. SOFR borrowings under the 2023 Revolving Facility are not subject to a credit spread adjustment. The 2023 Revolving Facility has aggregate commitments of $ 924 million. As of December 31, 2025, there were no borrowings outstanding under the 2023 Revolving Facility.
Other Terms of the 2013, 2014 and 2023 Credit Facilities
The term loans under the 2013, 2014 and 2023 Credit Facilities (collectively referred to as the Credit Facilities) are repayable in annual installments, in an amount equal to 1.00 % of the aggregate principal amount issued, with any unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time.
The 2013, 2014 and 2023 Revolving Facilities provide that American may from time to time borrow, repay and reborrow loans thereunder. The 2013, 2014 and 2023 Revolving Facilities are each subject to an undrawn annual fee of 0.75 %.
Subject to certain limitations and exceptions, the Credit Facilities are secured by collateral, including certain slots, route authorities, simulators and leasehold rights. American has the ability to make modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit Facilities contain events of default customary for similar financings, including cross default and cross-acceleration to other material indebtedness.
(b) Senior Secured Notes
10.75 % Senior Secured Notes
On September 25, 2020 (the 10.75 % Senior Secured Notes Closing Date), American issued $ 1.0 billion in initial principal amount of senior secured IP notes (the IP Notes) and $ 200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and together with the IP Notes, the 10.75 % Senior Secured Notes). In February 2025, American prepaid $ 308  million toward portions of the outstanding principal amounts of the 10.75 % Senior Secured
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Notes. In October 2025, American redeemed in full the $ 629  million in aggregate principal amount of 10.75 % Senior Secured Notes in advance of maturity at par, plus accrued and unpaid interest thereon, using amounts borrowed under a senior unsecured short-term term loan facility, described further below.
7.25 % Senior Secured Notes
On February 15, 2023, American issued $ 750  million aggregate principal amount of 7.25 % senior secured notes due 2028 (the 7.25 % Senior Secured Notes) in a private offering. The 7.25 % Senior Secured Notes were issued at par and bear interest at a rate of 7.25 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 7.25 % Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August 15, 2023. The 7.25 % Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG.
The 7.25 % Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) airports in certain countries in South America and New Zealand (collectively, the 7.25 % Senior Secured Notes Collateral). The 7.25 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25 % Senior Secured Notes, the 2013 Credit Facilities.
American may redeem the 7.25 % Senior Secured Notes, in whole or in part, at the redemption prices described in the 7.25 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption.
Twice per year, American is required to deliver an appraisal of the 7.25 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 7.25 % Senior Secured Notes Collateral (the 7.25 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.00 % per annum of the principal amount of the 7.25 % Senior Secured Notes until the 7.25 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0.
8.50 % Senior Secured Notes
On December 4, 2023, American issued $ 1.0  billion aggregate principal amount of 8.50 % senior secured notes due 2029 (the 8.50 % Senior Secured Notes) in a private offering. The 8.50 % Senior Secured Notes were issued at par and bear interest at a rate of 8.50 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50 % Senior Secured Notes is payable semiannually in arrears on May 15 and November 15 of each year, which began on May 15, 2024. The 8.50 % Senior Secured Notes will mature on May 15, 2029. The obligations of American under the 8.50 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG.
The 8.50 % Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland (collectively, the 8.50 % Senior Secured Notes Collateral). The 8.50 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 8.50 % Senior Secured Notes, the 2023 Term Loan Facility.
American may redeem the 8.50 % Senior Secured Notes, in whole or in part, at the redemption prices described in the 8.50 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption.
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Twice per year, American is required to deliver an appraisal of the 8.50 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 8.50 % Senior Secured Notes Collateral (the 8.50 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 8.50 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 8.50 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.00 % per annum of the principal amount of the 8.50 % Senior Secured Notes until the 8.50 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0.
(c) AAdvantage Financing
On March 24, 2021 (the 2021 AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, the AAdvantage Issuers), completed the offering of $ 3.5 billion aggregate principal amount of 5.50 % Senior Secured Notes due 2026 (the 2026 Notes) and $ 3.0 billion aggregate principal amount of 5.75 % Senior Secured Notes due 2029 (the 2029 Notes, and together with the 2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed (the AAdvantage Note Guarantees) by an indirect, wholly-owned subsidiary of American, and other wholly-owned subsidiaries (together, the SPV Guarantors) and AAG.
Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and guaranty agreement, dated March 24, 2021, as amended, providing for a $ 3.5 billion term loan facility (the 2021 AAdvantage Term Loan Facility). On March 24, 2025, the AAdvantage Issuers entered into a second amendment to the term loan credit and guaranty agreement dated March 24, 2021 (the Second Amendment). As a result of the Second Amendment, the term loans outstanding with a principal amount of approximately $ 2.3  billion were replaced with new term loans in the same principal amount. The terms of the new term loans are substantially similar to the prior term loans; however, the new term loans bear interest at a base rate (subject to a floor of 0.00 %) plus an applicable margin of 1.25 % 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 2.25 % per annum. Additionally, the scheduled quarterly principal amortization amount was reduced to 0.25 % of the principal amount of term loans outstanding as of March 24, 2025 (approximately $ 6  million each quarter), which began in July 2025, and the remaining balance is due at maturity in April 2028. Pursuant to the Second Amendment, the new term loans are not subject to a cost spread adjustment. As of December 31, 2025, the margin elected for the 2021 AAdvantage Term Loan Facility was 2.25 %.
On May 28, 2025, the AAdvantage Issuers entered into a third amendment to the term loan credit and guaranty agreement dated March 24, 2021 (the Third Amendment). As a result of the Third Amendment, the AAdvantage Issuers incurred $ 1.0  billion of incremental term loans (the 2025 AAdvantage Term Loan Facility) due on May 28, 2032. The terms of the 2025 AAdvantage Term Loan Facility are substantially similar to the 2021 AAdvantage Term Loan Facility; however, the 2025 AAdvantage Term Loan Facility bears interest at a base rate (subject to a floor of 0.00 %) plus an applicable margin of 2.25 % 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 3.25 % per annum. Additionally, the scheduled quarterly principal amortization amount is equal to 0.25 % of the original aggregate principal amount of the 2025 AAdvantage Term Loan Facility (approximately $ 3  million each quarter), which began in July 2025, and the remaining balance is due at maturity in May 2032. Pursuant to the Third Amendment, the 2025 AAdvantage Term Loan Facility is not subject to a cost spread adjustment. The net proceeds from the 2025 AAdvantage Term Loan Facility were used, in part, to repay the Convertible Notes described further below. As of December 31, 2025, the margin elected for the 2025 AAdvantage Term Loan Facility was 3.25 %.
The AAdvantage Notes, 2021 AAdvantage Term Loan Facility and 2025 AAdvantage Term Loan Facility are collectively referred to as the AAdvantage Financing. The term loans drawn under the 2021 AAdvantage Term Loan Facility and 2025 AAdvantage Term Loan Facility (collectively, the AAdvantage Loans) are fully and unconditionally guaranteed (together with the AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG.
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Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors, including American’s rights to certain data and other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral).
Payment Terms of the AAdvantage Financing
Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature on April 20, 2029. The outstanding principal on the 2026 Notes are repaid in quarterly installments of $ 292 million on each AAdvantage Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $ 250 million on each AAdvantage Payment Date, beginning on July 20, 2026.
The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole or in part, at a redemption price equal to 100 % of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest to the date of redemption.
The scheduled maturity date of the term loans under the 2021 AAdvantage Term Loan Facility is April 20, 2028. The outstanding principal on the loans due under such facility will be repaid in quarterly installments of approximately $ 6  million, on each AAdvantage Payment Date. The scheduled maturity date of the term loans under the 2025 AAdvantage Term Loan Facility is May 28, 2032. The outstanding principal on the loans due under such facility will be repaid in quarterly installments of approximately $ 3  million, on each AAdvantage Payment Date. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates.
Prepayment of some or all of the outstanding amounts under the AAdvantage Loans is permitted, although payment of an applicable premium is required as specified in the term loans of the AAdvantage Loans.
The AAdvantage Indenture and the AAdvantage Loans contain mandatory prepayment provisions triggered upon (i) the issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mileage credit sales exceeding $ 505 million. Each of these prepayments would also require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment provisions under the AAdvantage Indenture and the AAdvantage Loans, respectively.
(d) EETCs issued in 2025
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 or to be delivered to American from October 2025 through March 2026 (the 2025-1 Aircraft). As of December 31, 2025, approximately $ 978 million of the proceeds had been used to purchase equipment notes issued by American in connection with the financing of 21 aircraft under the 2025-1 Aircraft EETCs. 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 scheduled to begin in May 2026 and principal payments scheduled to begin in November 2026. The remaining proceeds of approximately $ 127 million as of December 31, 2025 were being held in escrow with a depositary for the benefit of the holders of the 2025-1 Aircraft EETCs until such time as American issues additional equipment notes with respect to the remaining 2025-1 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 consolidated balance sheet because the proceeds held by the depositary for the benefit of the holders of the 2025-1 Aircraft EETCs are not American’s assets.
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Certain information regarding the 2025-1 Aircraft EETC equipment notes, as of December 31, 2025, is set forth in the table below:

  2025-1 Aircraft EETCs
  Series A Series B
Aggregate principal issued $ 884 million $ 221 million
Remaining escrowed proceeds $ 102 million $ 25 million
Fixed interest rate per annum 4.90 % 5.65 %
Maturity date May 2038 November 2034

(e) Equipment Loans and Other Notes Payable Issued in 2025
In 2025, American entered into agreements under which it borrowed $ 1.2 billion in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2036 through 2037 and bears interest at variable rates (comprised of SOFR plus an applicable margin) averaging 5.72 % as of December 31, 2025.
(f) PSP Promissory Notes
As partial compensation to the U.S. Government for the provision of financial assistance under the various payroll support program agreements, AAG issued promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP Promissory Notes), in the aggregate principal amount of $ 3.7  billion which provides for the guarantee of our obligations under the PSP Promissory Notes by AAG’s subsidiaries American, Envoy Air Inc., Piedmont and PSA (together, the Subsidiaries).
The PSP1 Promissory Note bears interest at 2.00 % plus an interest rate based on SOFR. The PSP2 Promissory Note and PSP3 Promissory Note bear interest at a fixed interest rate of 1.00 % until the first and second quarters of 2026, respectively. Thereafter, the notes bear interest at 2.00 % plus an interest rate based on SOFR. Interest accrued thereon is payable in arrears on the last business day of March and September of each year. The aggregate principal amount outstanding under the PSP Promissory Notes, together with all accrued and unpaid interest thereon and all other amounts payable under the PSP Promissory Notes, will be due and payable on the applicable maturity date.
The PSP Promissory Notes are our senior unsecured obligation and each guarantee of the PSP Promissory Notes is the senior unsecured obligation of each of the Subsidiaries, respectively.
We may, at any time and from time to time, voluntarily prepay amounts outstanding under the PSP Promissory Notes, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the aggregate outstanding principal amount of the PSP Promissory Notes at such time, together with any accrued interest or other amounts owing under the PSP Promissory Notes at such time.
(g) 6.50 % Convertible Senior Notes
In June 2020, AAG completed the public offering of $ 1.0 billion aggregate principal amount of AAG’s 6.50 % convertible senior notes due 2025 (the Convertible Notes). On March 27, 2025, we provided notice to the holders of our Convertible Notes that we would settle our Convertible Notes at their maturity in cash (including any conversions up to a price per share of AAG common stock of approximately $ 22.00 ) if the volume-weighted average price per share of AAG common stock did not exceed approximately $ 22.00 on any trading day of the 20 -trading day “observation period” over which the consideration due upon conversion is calculated and determined. On July 1, 2025, the volume-weighted average price per share of AAG common stock did not exceed $ 22.00 on any trading day of the 20 -trading day “observation period” and therefore the Convertible Notes were settled at their maturity in cash for $ 1.0  billion.
(h) Short-Term Term Loan Facility
In October 2025, American borrowed $ 629  million under a senior unsecured short-term term loan facility to refinance in full the $ 629  million outstanding principal amount of the 10.75 % Senior Secured Notes, described above. Term loans under the facility were scheduled to mature on January 21, 2026 and bore interest at SOFR for a tenor of one month plus an applicable margin of 2.375 % per annum, payable monthly. The term loans were fully and unconditionally guaranteed by AAG. On January 2, 2026, American voluntarily prepaid the remaining outstanding principal amount of the short-term term loan facility.
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Other Financing Activities
In 2025, American prepaid $ 487  million of the outstanding principal amounts of certain equipment notes issued under EETCs, and these amounts were applied to repay the related trust certificates.
Guarantees
As of December 31, 2025, AAG had issued guarantees covering approximately $ 14.1 billion of American’s debt (and interest thereon), including the Credit Facilities, the AAdvantage Financing, senior secured notes, certain equipment loans and special facility revenue bonds.
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, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually. 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, and our 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.
Specifically, we are required to meet certain collateral coverage tests for our Credit Facilities, 7.25 % Senior Secured Notes and 8.50 % Senior Secured Notes, as described below:

2013 Credit 
Facilities 7.25 % Senior Secured Notes
2014 Credit 
Facilities 2023 Credit Facilities 8.50 % Senior Secured Notes

LTV Requirement 1.6 x Collateral valuation to amount of debt outstanding ( 62.5 % LTV)

LTV as of Last Measurement Date 38.4 % 15.3 % 25.4 %
Frequency of Appraisals of Appraised Collateral Semi-Annual
Collateral Description Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and South America and New Zealand Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and European Union (including London Heathrow) Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland

At December 31, 2025, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates.
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5.  Leases
We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2025, we operated 677 leased aircraft, including 171 aircraft leased under capacity purchase agreements, with remaining terms ranging from less than one year to approximately 13 years.
At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our consolidated balance sheets as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we lease administrative offices, catering, cargo, training, maintenance and other facilities.
The components of lease expense were as follows (in millions):

Year Ended December 31,
2025 2024 2023
Operating lease cost $ 1,704   $ 1,851   $ 2,016  
Finance lease cost:
Amortization of assets 128   132   128  
Interest on lease liabilities 48   39   45  
Variable lease cost 3,395   3,075   2,720  
Total net lease cost $ 5,275   $ 5,097   $ 4,909  

Included in the table above are $ 248 million, $ 225 million and $ 274 million of lease costs under our capacity purchase agreement with Republic for the years ended December 31, 2025, 2024 and 2023, respectively. We hold a 20.8 % equity interest in Republic Holdings, the parent company of Republic.
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Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

December 31,
2025 2024
Operating leases:
Operating lease ROU assets $ 7,091   $ 7,333  

Current operating lease liabilities $ 1,058   $ 1,092  
Noncurrent operating lease liabilities 5,905   5,976  
Total operating lease liabilities $ 6,963   $ 7,068  

Finance leases:
Property and equipment, at cost $ 1,445   $ 1,632  
Accumulated amortization ( 673 ) ( 952 )
Property and equipment, net $ 772   $ 680  

Current finance lease liabilities $ 117   $ 132  
Noncurrent finance lease liabilities 610   531  
Total finance lease liabilities $ 727   $ 663  

Weighted average remaining lease term (in years):
Operating leases 8.4 8.2
Finance leases 7.8 7.4

Weighted average discount rate:
Operating leases 7.4   % 7.5   %
Finance leases 7.1   % 7.0   %

Supplemental cash flow and other information related to leases was as follows (in millions):

Year Ended December 31,
2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,647   $ 1,830   $ 2,033  
Operating cash flows from finance leases 48   40   48  
Financing cash flows from finance leases 122   152   265  

Gain (loss) on sale leaseback transactions, net ( 13 ) 76   12  

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Maturities of lease liabilities were as follows (in millions):

December 31, 2025
Operating Leases Finance Leases
2026 $ 1,501   $ 164  
2027 1,367   152  
2028 1,246   110  
2029 1,138   102  
2030 954   100  
2031 and thereafter 3,022   310  
Total lease payments 9,228   938  
Less: Imputed interest ( 2,265 ) ( 211 )
Total lease obligations 6,963   727  
Less: Current obligations ( 1,058 ) ( 117 )
Long-term lease obligations $ 5,905   $ 610  

6.  Income Taxes
The significant components of the income tax provision were (in millions):

  Year Ended December 31,
  2025 2024 2023

Deferred income tax provision:
Federal $ 72   $ 285   $ 268  
State and local 7   23   31  
Deferred income tax provision 79   308   299  
Total income tax provision $ 79   $ 308   $ 299  

The income tax provision differed from amounts computed at the U.S. federal statutory income tax rate as follows (amounts in millions):

Year Ended December 31,
2025 2024 2023
Amount Rate Amount Rate Amount Rate
U.S. federal statutory income tax rate $ 40   21.0   % $ 242   21.0   % $ 236   21.0   %
Domestic federal:
Nontaxable or nondeductible items
Nondeductible meals and other nondeductible employee benefits 28   15.3   % 22   1.9   % 22   2.0   %
Nondeductible officer compensation 10   5.2   % 12   1.1   % 11   1.0   %
Other nontaxable and nondeductible items —   —   % 11   0.9   % 9   0.8   %
Other ( 6 ) ( 3.3 ) % —   —   % —   —   %
Domestic state and local income taxes, net of federal effect 7   3.0   % 21   1.8   % 21   1.9   %

Effective tax rate $ 79   41.2   % $ 308   26.7   % $ 299   26.7   %

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The components of our deferred tax assets and liabilities were (in millions):

  December 31,
  2025 2024
Deferred tax assets:
Net operating loss and other carryforwards $ 4,095   $ 4,292  
Loyalty program liability 1,949   1,799  
Leases 1,566   1,596  
Pension benefits 109   234  
Postretirement benefits other than pension benefits 260   270  
Rent expense 37   60  

Other 676   775  
Total deferred tax assets 8,692   9,026  
Valuation allowance ( 22 ) ( 22 )
Net deferred tax assets 8,670   9,004  
Deferred tax liabilities:
Accelerated depreciation and amortization ( 4,543 ) ( 4,620 )
Leases ( 1,594 ) ( 1,656 )
Other ( 174 ) ( 252 )
Total deferred tax liabilities ( 6,311 ) ( 6,528 )
Net deferred tax asset $ 2,359   $ 2,476  

At December 31, 2025, we had approximately $ 11.9 billion of gross federal 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.
In 2025, we recorded an income tax provision of $ 79 million with an effective rate of approximately 41.2 %, which was substantially non-cash. Substantially all of our income before income taxes is attributable to the United States.
We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our 2022 through 2024 tax years are still subject to examination by the Internal Revenue Service. Various state, local and foreign jurisdiction tax years remain open to examination, and we are under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. We believe that the effect of any assessments will not be material to our consolidated financial statements.
The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We accrue interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively.
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7.  Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
• Level 1 – Observable inputs such as quoted prices in active markets;
• Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
• Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates.
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 year ended December 31, 2025.
Assets measured at fair value on a recurring basis are summarized below (in millions):

  Fair Value Measurements as of December 31, 2025
  Total     Level 1     Level 2     Level 3    
Short-term investments (1),   (2) :

Money market funds $ 829   $ 829   $ —   $ —  
Corporate obligations 3,063   —   3,063   —  
Bank notes/certificates of deposit/time deposits 590   —   590   —  
Repurchase agreements 400   —   400   —  

4,882   829   4,053   —  
Restricted cash and short-term investments (1), (3)
735   425   310   —  
Long-term investments (4)
209   209   —   —  
Total $ 5,826   $ 1,463   $ 4,363   $ —  

  Fair Value Measurements as of December 31, 2024
  Total     Level 1     Level 2     Level 3    
Short-term investments (1) :

Money market funds $ 680   $ 680   $ —   $ —  
Corporate obligations 2,909   —   2,909   —  
Bank notes/certificates of deposit/time deposits 2,041   —   2,041   —  
Repurchase agreements 550   —   550   —  

6,180   680   5,500   —  
Restricted cash and short-term investments (1), (3)
732   442   290   —  
Long-term investments (4)
161   161   —   —  
Total $ 7,073   $ 1,283   $ 5,790   $ —  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC .

(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 as of December 31, 2025 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 Tulsa Maintenance Base. 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 fair value of the Convertible Notes, which would have been classified as Level 2, was $ 1.2 billion as of December 31, 2024.
The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):

  December 31, 2025
  Carrying
Value Fair Value
Total Level 1 Level 2 Level 3
Long-term debt, including current maturities $ 28,280   $ 28,582   $ —   $ 25,051   $ 3,531  

December 31, 2024
Carrying
Value Fair Value
Total Level 1 Level 2 Level 3
Long-term debt, including current maturities $ 29,813   $ 30,010   $ —   $ 26,402   $ 3,608  

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, ownership interest and carrying value were as follows:

Ownership Interest Carrying Value (in millions)
December 31, December 31,
Accounting Treatment 2025 2024 2025 2024
Republic Holdings (1)
Equity Method 20.8   % 25.0   % $ 254   $ 253  
China Southern Airlines Fair Value 1.5   % 1.5   % 203   142  
Other investments (2)
Various 146   120  
Total $ 603   $ 515  

(1) In November 2025, Republic Holdings completed a merger with Mesa Air Group, Inc. As a result, our equity interest in Republic Holdings decreased from 25.0 % to 20.8 %.
(2) Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method.
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9.  Employee Benefit Plans
We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance benefits to retired employees and notional retiree health reimbursement arrangements for eligible participants.
Benefit Obligations, Fair Value of Plan Assets and Funded Status
The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and funded status as of December 31, 2025 and 2024:

  Pension Benefits Retiree Medical and 
Other Postretirement Benefits
  2025 2024 2025 2024

  (In millions)
Benefit obligation at beginning of period $ 13,349   $ 14,410   $ 1,308   $ 1,325  
Service cost 3   2   23   29  
Interest cost 730   723   69   64  
Actuarial loss (gain) (1), (2)
168   ( 741 ) ( 11 ) ( 58 )

Plan amendments (3)
—   —   —   55  
Benefit payments ( 919 ) ( 913 ) ( 130 ) ( 107 )
Other —   ( 132 ) —   —  
Benefit obligation at end of period $ 13,331   $ 13,349   $ 1,259   $ 1,308  

Fair value of plan assets at beginning of period $ 12,254   $ 12,431   $ 128   $ 133  
Actual return on plan assets 1,229   568   15   9  
Employer contributions (4)
228   300   105   93  

Benefit payments ( 919 ) ( 913 ) ( 130 ) ( 107 )
Other —   ( 132 ) —   —  
Fair value of plan assets at end of period $ 12,792   $ 12,254   $ 118   $ 128  
Funded status at end of period $ ( 539 ) $ ( 1,095 ) $ ( 1,141 ) $ ( 1,180 )

(1) The 2025 and 2024 pension actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption.
(2) The 2025 and 2024 retiree medical and other postretirement benefits actuarial gain primarily relates to changes in certain retirement assumptions, offset in part by increases in health care premiums and health care cost assumptions. Changes in our weighted average discount rate assumption also impacted the net actuarial gain in 2025 and 2024.
(3) In 2024 we remeasured our retiree medical and other postretirement benefits to account for enhanced retirement benefits pursuant to the ratification of new CBAs. As a result, we increased our postretirement benefits obligation by $ 55 million, which was included as a component of prior service cost in accumulated other comprehensive loss.
(4) In 2025 and 2024, we made required contributions of $ 224 million and $ 285 million, respectively, to our defined benefit pension plans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC .

Balance Sheet Position

  Pension Benefits Retiree Medical and 
Other Postretirement Benefits
  2025 2024 2025 2024

  (In millions)
As of December 31:
Current liability $ 4   $ 5   $ 108   $ 142  
Noncurrent liability 535   1,090   1,033   1,038  
Total liabilities $ 539   $ 1,095   $ 1,141   $ 1,180  

Pension Benefits Retiree Medical and 
Other Postretirement Benefits
2025 2024 2025 2024