아메리칸 항공(AAL) 2026년 3분기 실적 발표: 연료 비용이 19.3% 매출 성장을 상쇄

아메리칸 항공 그룹(NASDAQ: AAL)이 2026년 3분기에 견조한 매출 및 유닛 레버뉴 성장을 기록했으나, 연료비의 급격한 상승으로 인해 조정순손실을 기록했다. 경영진은 운임 수익률, 프리미엄 매출 및 수익성을 최우선 과제로 삼는 한편 2027년 공급 성장세를 대폭 축소할 계획이다.

핵심 요약

• 3분기 매출은 전년 동기 대비 19.3% 증가한 163억 달러를 기록하며 회사 가이던스 상단을 상회했다.
• 아메리칸 항공은 연료비 지출이 전년 동기 대비 19억 달러 증가함에 따라 희석주당 조정순손실 0.28달러를 기록했다. 평균 연료 가격은 갤런당 1.48달러 상승한 3.85달러를 기록했다.
• 전체 유닛 레버뉴는 모든 지역과 좌석 등급에서의 성장에 힘입어 14.5% 증가했다. 프리미엄 유닛 레버뉴는 18.5% 증가해 일반석(Main Cabin)보다 4%포인트 이상 빠른 성장세를 보였다.
• 경영진은 4분기 매출이 19.5%~22.5% 증가할 것으로 예상했으나, 갤런당 약 4.70달러로 추정되는 연료 가격 등의 영향으로 희석주당 0.50달러~1.10달러의 조정순손실을 기록할 것으로 전망했다.
• 아메리칸 항공은 현재 연간 희석주당 조정순손실을 1.00달러~1.60달러로 예상하고 있으며, 2025년 대비 70억 달러 이상의 추가 연료비가 발생할 것으로 전망한다.
• 상승한 연료 가격을 고려할 때, 경영진은 2027년 공급 성장세가 크게 둔화될 것으로 예상한다. 회사는 공급을 수요에 맞추고 마진이 가장 높은 노선 및 자산에 배치를 집중할 계획이다.

핵심 재무 데이터

아메리칸 항공은 다년간의 효율화 프로그램이 2026년 말까지 연간 약 10억 달러의 런레이트 절감액과 9억 달러 이상의 운전자본 개선을 달성하는 목표에 맞춰 순조롭게 진행 중이라고 밝혔다.

사업 및 운항 실적

국내선 여객 유닛 레버뉴는 뉴욕과 마이애미에서의 두드러진 강세에 힘입어 13.6% 증가했다. 국제선 여객 유닛 레버뉴는 16.4% 상승했으며, 라틴 아메리카가 21.1%로 성장을 이끌었고 대서양 노선이 14.5%, 태평양 노선이 11.3%로 뒤를 이었다.

경영진은 이번 분기 동안 탑승률보다 높은 운임 수익률 확보를 의도적으로 우선시했다. 회사는 이러한 접근 방식 덕분에 탑승률이 소폭 낮아졌음에도 매출의 질이 향상되었다고 밝혔다. 아메리칸 항공은 4분기에도 국제선 유닛 레버뉴 성과가 국내선을 다시 한번 상회할 것으로 전망하고 있다.

프리미엄 상품은 여전히 핵심 매출 동력으로 작용했다. 프리미엄 제품은 전체 좌석의 약 30%에서 아메리칸 항공 여권 매출의 대략 절반을 창출한다. 기업 상용 고객 매출은 28% 증가해 6분기 연속 두 자릿수 성장을 기록했다. 경영진은 또한 여가 여행객이 현재 프리미엄 매출의 거의 65%를 차지한다고 밝혔다.

'AAdvantage' 로열티 프로그램 회원 수는 전년 동기 대비 27% 증가하며 가파른 성장세를 보였다. 뉴욕, 로스앤젤레스, 시카고 지역의 회원 가입 증가율은 35%~65%를 기록했다. 씨티(Citi) 제휴 카드 지출액은 10% 가까이 증가했다.

아메리칸 항공은 노선 네트워크 및 고객 경험에 대한 투자를 지속했다. 회사는 댈러스-포트워스와 필라델피아에서의 운항 일정 재조정(rebanking)과 마이애미, 피닉스, 시카고에서의 성장으로 성과가 강화되었다고 강조했다. 2027년까지 10개의 라운지를 신규 오픈하고 향후 약 1년 동안 주력 협동체 및 광동체 항공기 전체에 스타링크를 설치할 계획이다.

회사는 2026년에 47대의 신규 항공기를 인도받을 것으로 예상한다. 개조 프로그램은 향후 3년간 200대 이상의 보잉 777, 에어버스 A320 및 에어버스 A319 항공기를 대상으로 진행되며, 추가 프리미엄 좌석 설치 및 기내 서비스 제품 업그레이드를 지원한다.

경영진 가이던스

경영진은 2027년 공급 성장이 2026년 대비 현저히 둔화될 것으로 예상한다. 초기 조치에는 항공기 가동률 낮추기가 포함될 수 있으며, 이는 객실 개조 및 스타링크 설치를 위한 여력을 확보하는 효과도 있다. 회사는 공급 성장 둔화가 유닛 비용에 상승 압력을 가할 수 있다고 밝혔다.

아메리칸 항공은 부채를 감축하여 BB 신용 등급 지표에 부합하는 EBITDA 대비 순부채 비율 3배를 달성하는 데 계속 전념하고 있다. 경영진은 대차대조표상의 거래보다는 이익 증대 및 마진 개선이 레버리지를 개선하는 주요 경로라고 강조했다.

리스크 및 주시 분야

연료비는 여전히 가장 주요한 단기 부담 요인이다. 아메리칸 항공은 4분기 연료 가격이 전년 동기 수준의 거의 두 배에 달해 지속적인 매출 증가 및 비용 집행 성과를 상쇄할 가능성이 있다고 보고 있다.

공급 성장 둔화는 수급 조율을 개선할 수 있지만, 연료 제외 CASM을 증가시킬 수 있다. 경영진은 공급 관련 결정이 연료 가격, GDP, 수요 및 경쟁력 있는 네트워크 유지 필요성에 따라 좌우될 것이라고 말했다.

회사는 또한 현재 재무 실적이 내부 목표치에 미치지 못하고 있음을 인정했다. 수익성을 회복하는 역량은 비연료 비용을 통제하면서 프리미엄, 네트워크, 로열티 및 고객 경험에 대한 투자를 더 강력한 마진으로 전환할 수 있느냐에 달려 있다.

아메리칸 항공은 연료 가격이 안정될 경우 2027년 수익성이 수혜를 입을 것으로 예상한다. 경영진은 매출 증대 이니셔티브, 공급 조율 및 효율성 향상에 힘입어 내년에 흑자를 달성할 수 있을 것으로 믿는다고 밝혔으나, 정식 2027년 실적 가이던스를 제시하지는 않았다.

애널리스트 Q&A 하이라이트

• 2027년 공급량: 경영진은 2026년 성장의 대부분이 노선 네트워크 재건을 위한 것이었다고 밝혔다. 해당 투자가 연간 실적에 반영된 후에는 성장이 둔화될 것이며, 항공기 가동률이 1차 조정 수단 역할을 할 것으로 보인다.
• 운임 수익률 대 탑승률: 아메리칸 항공은 더 높은 운임 수익률을 확보하기 위해 탑승률이 소폭 낮아지는 것을 의도적으로 수용했다. 경영진은 이러한 손익 상충 관계를 면밀히 모니터링하면서 매출의 질과 프리미엄 수요를 지속적으로 우선시할 계획이다.
• 국제선 확장: 회사는 일본항공(JAL), 퀀타스(Qantas), IAG와의 합작 사업 및 알래스카 항공과의 파트너십을 목표로 하는 국제선 성장의 기반으로 언급했다. 2027년에 7개의 신규 장거리 노선이 계획되어 있다.
• 자본 배분: 경영진은 2026년 자본 지출이 40억 달러~45억 달러 수준으로 감당 가능한 범위 내에 있다고 밝혔다. 2027년 지출은 소폭 증가할 수 있으나, 공급이 둔화되면 일부 프로젝트가 축소될 수도 있다.
• 광동체 기종: 아메리칸 항공은 광동체 항공기 프로젝트가 마무리 단계에 있으며 향후 10년 이내에 보잉 777-200 교체 및 미래 성장을 지원할 수 있을 것이라고 밝혔다. 경영진은 연말까지 이 절차를 마무리하기를 희망하고 있다.
• 대차대조표: 총부채는 팬데믹 기간 중 540억 달러에서 현재 약 360억 달러로 감소했다. 경영진은 마진 확대와 잉여현금흐름이 추가적인 부채 감축의 주요 기전으로 유지될 것이라고 밝혔다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Thank you for standing by, and welcome to American Airlines Group Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Neil Russell, Vice President, Investor Relations. Please go ahead.

Neil Russell

Thanks, Latif, and good morning, everyone. Welcome to the American Airlines Earnings Conference Call. On the call with prepared remarks, we have our Chief Executive Officer, Robert Isom, our Chief Commercial Officer, Matt Piper; and our Chief Financial Officer, Devon May. After our prepared remarks, we will open the call for analyst questions followed by questions from the media. To get in as many questions as possible, please limit yourself to 1 question and 1 follow-up.

Before we begin, please note that today's call contains forward-looking statements, including statements concerning future events, costs, forecast of capacity and fleet plans. These statements represent our predictions and expectations of future events, numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings news release that was issued earlier this morning, Form 10-K for the year ended December 31, 2025, and subsequent quarterly reports on Form 10-Q.

Unless otherwise specified, all rents to loss per share on an adjusted and diluted basis. Additionally, we will be discussing certain non-GAAP financial measures, which exclude the impact of net special items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings news release and investor presentation, each of which can be found in the Investor Relations section of our website. A webcast of this call will also be archived on our website. The information we're giving you on this call this morning is as of today's date, and we undertake no obligation to update the information subsequently.

Thank you for your interest in American and for joining us this morning. With that, I'll turn the call over to our CEO, Robert Isom.

Robert Isom

Thanks, Neil, and good morning, everyone. American's third quarter revenue grew 19.3% year-over-year to $16.3 billion. above the high end of our guidance. Excluding the years following the pandemic, that's the strongest quarterly revenue growth of my career. Unfortunately, the significant increase in fuel prices more than offset that strength. Higher fuel added $1.9 billion to our costs in the third quarter, nearly 70% more than we paid during the same period last year. We produced a loss in the quarter that but for this fuel spike would have been solidly profitable, but short-term pressure is notwithstanding.

We're moving in the right direction and with urgency. We're not satisfied with no matter the reason, and we will do better. The work we're doing now is laying the foundation for solid profitability as we move to 2027. Our confidence comes from the strength we see in the underlying business. bolstered by encouraging results from our commercial initiatives and delivering on our commitments, even as higher fuel prices obscure some of that progress in our reported results.

We said we would elevate the customer experience, and we are. You've seen our announcement modernizing our fleet, installing StarLink on our entire mainline fleet, expanding seat-back entertainment to our narrowbody aircraft, adding premium amenities, creating and updating lounges and more. We said we would rebuild our network and we have. We grew in Miami and Phoenix and are investing in Charlotte. We've rebanked our DFW and Philadelphia operations, producing meaningfully stronger operational and financial performance.

And we've reestablished ourselves in Chicago, and we're restoring our presence in Los Angeles over time. That's competitive growth we needed to do. At the same time, we're focused on achieving profitable sustainable growth in any environment. And given today's elevated fuel prices, we now expect our growth rate in 2027 to decelerate considerably. We said we would grow premium revenue, and we have. Premium generates roughly half of our ticket revenue up only about 30% of our seats, and we're adding more premium seats with every new aircraft and retrofit.

This is the most profitable real estate in our planes, and these moves position us well as demand for premium continues to grow. And finally, we said we'd lead in loyalty, and we are. Advantage enrollments in spending on our co-branded credit cards are up year-over-year, and the Advantage program remains 1 of our strongest competitive advantages. The U.S. economy remains strong, supported by healthy employment, rising household incomes and significant wealth accumulation.

Consumers continue to prioritize travel and recent yield strength is allowing airlines to regain our historical share of the travel wallet. In the near term, our focus is on what we can control. We continue to have industry-leading cost performance. The efficiency efforts we prioritized are reducing meaningful savings that will benefit us well beyond this year. Our premium product investments are paying off both now and in the future. Our year-over-year revenue growth has accelerated every quarter this year, and we expect that momentum to continue in the fourth quarter, with revenue up 19.5% to 22.5% year-over-year. and we will adjust our capacity to support profitability as high fuel costs persist.

American is taking the right actions for long-term success. Our job now is to convert all of this progress into better margins free cash flow and an even stronger balance sheet. We expect the benefits of our strategy and the investments to become increasingly apparent, especially as fuel prices stabilize. Of course, none of this happens without the American Airlines team. And I want to thank all of our team members for taking care of our customers and each other.

And with that, I'll turn it over to Nate.

Nathan Gatten

Thank you, Robert. The work we have done across the commercial organization is resonating with customers, and it showed up in our third quarter results. Total unit revenue increased 14.5% year-over-year with strength across every geography and every cabin. Domestic passenger unit revenue increased 13.6% year-over-year with notable strength in New York and Miami. Internationally, passenger unit of an increased 16.4% year-over-year. Latin America led the way up 21.1%, followed by the Atlantic at 14.5% and the Pacific up 11.3%.

We were deliberate in how we managed revenue during the quarter. We prioritized yield over load factor proactively securing meaningfully higher yields in exchange for slightly lower loads. We see opportunities to further improve revenue quality through pricing, premium products merchandising and loyalty and are taking advantage, especially in this high fuel cost environment.

Now let's go through each of our 4 commercial priorities. First is to elevate the customer experience. We now have enough scale to more consistently deploy our world-class product. Our new Boeing 787-9 premium aircraft finished the summer with the highest NPS of any aircraft in our fleet. With 11 flying and another 19 our way, our NPS scores will continue to rise as we introduce them further into the network. And across the system, our Net Promoter Scores for on-time flights have improved in 6 of the last 7 quarters.

In addition to the Starlink installations and seatback entertainment that will greatly enhance the customer experience in the air, giving us a hard product that will lead the industry we are improving our premium ground game, too. We will open 10 lounges through 2027 and have additional investments planned across our network, including the largest Admirals Club in our system in Charlotte. We are also investing in our digital experience across the board. Customers will see this as we manage disruptions better and deliver more timely information and we are already seeing improvements in our missile baggage rate and customer misconnections, among other customer-focused metrics.

Second is to grow the global network. Dallas-Fort Worth is our epicenter. Following this year's Rebak, DFW handled record passenger volumes in the quarter with significantly fewer misconnections, fewer mishandled bags and unit revenue that outpaced the rest of the system. Beyond DFW, we're building stronger schedules for local customers in our hubs, especially Chicago, Miami, Philadelphia and Phoenix. These travelers tend to be higher yielding and a better schedule is how we earn more of their business. Internationally, our Latin America franchise anchored by our Miami hub remains 1 of the strongest parts of our network.

Our long-haul international growth for 2027 is focus with 7 new routes, including Chicago, Tokyo for our corporate customers and Charlotte Barcelona for high-demand leisure travel. The network is creating value beyond the passenger business, too. Cargo revenue increased 29% year-over-year in the third quarter, and we see future growth as we expand our wide-body fleet.

Third is driving premium revenue. Premium unit revenue increased 18.5% year-over-year, outperforming Main Cabin unit revenue by more than 4 points. expanding our premium seating volume with new deliveries and retrofit programs, which include more than 200 aircraft across our 777, A320 and 319 fleets over the next 3 years is already bearing fruit. Corporate demand remains strong, and American is capturing meaningful share as our managed corporate revenue increased 28% year-over-year, our sixth consecutive quarter of double-digit growth.

And we are improving our revenue qualities, we deliver customers more product choices demonstrated by a 6-point increase in the up-sell rate from Basic Economy to ManCabin. Finally, loyalty. The Advantage program is a differentiator for American, and we intend to keep it that way. Enrollments were up 27% year-over-year in the third quarter, with growth of 35% to 65% in New York Los Angeles and Chicago. During the quarter, we launched an enhancement for customers to use a combination of cash and miles for flight bookings.

The early results are encouraging. Spending on our City co-branded cards during the third quarter increased nearly 10% year-over-year, and we see opportunity for even better performance in our expanded partnership with Citi going forward. To close, we are delivering on our commercial strategy, centered on customer experience, network, premium and loyalty. We are encouraged by the progress and optimistic about continued future improvement and the revenue opportunity ahead.

I'll now hand it over to Devin to walk through our financial performance and outlook.

Devon May

Thank you, Nate. Our third quarter results reflect strong commercial and cost execution in a very challenging fuel environment. We reported an adjusted loss of $0.28 per diluted share ahead of the midpoint of our guidance range. The biggest factor in the quarter was we paid $3.85 per gallon. $1.48 more per gallon in the same period last year, which increased fuel expense by $1.9 billion year-over-year. For the full year, we now expect fuel expense to be more than $7 billion higher than in 2025. We continue to deliver on what we can control in this environment.

Third quarter CASM ex increased approximately 3% year-over-year, better than the midpoint of the guidance range we provided in July. And we have now met or beat our CASM ex guidance in 14 of the past 15 quarters. For the full year, we expect to lead the network carriers in the spread between year-over-year unit revenue and CASM ex growth. That cost performance is not a 1-quarter result. Our multiyear reengineering efforts focused on technology investments, procurement excellence and process improvements that drive efficiencies throughout the business are working.

By the end of this year, we expect to have achieved nearly $1 billion in annual run rate savings and more than $900 million in working capital improvements through these efforts. Turning to the outlook. Demand and pricing trends remain strong across the network, and we expect fourth quarter revenue to grow 19.5% to 22.5% year-over-year, continuing the momentum we saw in the third quarter. Fuel will remain a significant headwind in the fourth quarter.

Based on the forward curve as of October 19, we expect an average fuel price of approximately $4.70 per gallon in the quarter, nearly double what we paid a year ago. At that price, we expect fourth quarter fuel expense to be approximately $2.8 billion higher year-over-year. We expect fourth quarter CASM ex to increase 2.5% to 3.5% year-over-year. and we are guiding to an adjusted loss per diluted share of between $0.50 and $1.10.

For the full year, we now expect an adjusted loss per diluted share of between $1 and $1.60. Our revenue performance and cost execution remain on track. And when fuel prices stabilize, we expect them to drive meaningful margin expansion. Turning to fleet and capital expenditures. This year, we expect to take delivery of 47 new aircraft and expect $4 billion to $4.5 billion of capital expenditures. We are making good progress on our fleet retrofit programs, which support our strategy to expand premium seating and improve customer experience.

Finally, an update on the balance sheet. We ended the third quarter with $11.8 billion of total available liquidity and more than $26 billion of unencumbered assets and first lien capacity. We now expect to end the year with net debt of approximately $30.5 billion, which is flat to where we closed 2025. We remain committed to reducing debt, lowering interest expense and reaching our target of 3x net debt to EBITDA, in line with BB credit metrics.

Now I will turn it back over to Robert for closing remarks.

Robert Isom

Thanks, Devon. In summary, we've rebuilt the network, invested in the customer experience, expanded our premium product offerings and strengthen our advantaged loyalty program, reinforcing the fact that we're a premium global airline. With those investments now in place, we're seeing the benefits in our revenue performance. At the same time, we're not satisfied with our financial results. We expect American to perform better regardless of the external environment.

Our focus now is on translating the commercial progress we're seeing into stronger margins and improved profitability. We're confident in the direction of the business, but we recognize that ultimately will be measured by our results. That's the standard we're holding ourselves to. Operator, please open the line for questions.

Operator

[Operator Instructions]

Our first question comes from the line of Catherine O'Brien of Goldman Sachs.

질의응답

Catherine O'Brien

So you noted that 2027 capacity is expected to slow from 2026, given elevated prices, which I think is very prudent. I realize delivery schedules are still fairly fluid post-pandemic versus history, but your deliveries are set to step up into '27. What will be the offset to get to slower growth? Is that retirement gauge utilization? And forgive me, but any additional color on how we should translate what a considerable slowdown means like in percentage point ranges?

Neil Russell

Thanks, Cathy. I'll just start with this. American our growth in 2026 has all been about reestablishing our network. I think everybody knows that we considerably undergrew our network competitors since the pandemic. And we're really pleased that we're in a position now where we have Chicago reestablished and have been able to flesh out the hubs in Philadelphia and Phoenix and a little bit of growth in Miami. As we take a look at next year, yes, we're taking into account the high price of fuel and we're going to be adjusting appropriately.

First order of business there is just aircraft utilization, we can step that down quite a bit. And we'll use that to help us with our reconfiguration lines and StarLink WiFi installs, and that's a great place to start. The rest of it, our aircraft deliveries are largely weighted towards the back end. But we're going to be really conscious of making sure that we match capacity with demand. And the kind of things that we take into account, certainly price of fuel will certainly take into account GDP and make sure that we have a competitive network.

Catherine O'Brien

Okay. Great. And maybe just as my related follow-up. As growth slows, how will that impact CASM ex trend? Should we expect that to be more pressured year-over-year? Or really just like any high-level algo you would point us to on the relationship between capacity growth and CASMex fuel?

Devon May

Cathy, it's Devon. We have talked in the past that with capacity growth in the mid-single-digit range, we would expect CASM ex growth to be low single digit. Obviously, as we reduce our growth rate, that will put some upward pressure on our unit costs. But it's something we're really good at, and we'll continue to drive efficiencies throughout the business, but lower growth rates will drive some impact to our cost.

Operator

Our next question comes from the line of Jamie Baker of JPMorgan Securities.

Jamie Baker

One probably for Nate, we've never debated or right breadth of your domestic network. Just yesterday, United even acknowledged that fact. And I'm sure you're aware they don't pay you a lot of complements these days. But now the push at American is obviously to bolster the international footprint. But these were also particularly in the Pacific some of the very first routes that you cut during COVID. So my assumption is they were challenging then, and they can be challenging now. So I guess my question is, won't the international push, at least initially caused the margin gap to worsen or put differently, what's different this time with going back into those markets?

Nathan Gatten

Jamie, thanks for your question. this business tells you to have a tough skin. So you don't count on complements from many competitors over time. Look, our capacity growth in 2016 was really to reestablish our hubs. And domestically, that's where you saw us allocate our resources, and we think that's been successful. It's interesting to know that our -- in the third quarter, our international unit revenue outpaced our domestic.

And so we are a premium global airline. And as we focus on growth going forward, whether it's in the Atlantic with our great joint business there and our Heathrow franchise has been very successful, Latin America through Miami and terrific. And then the Pacific in and of itself, we've got 2 really good joint businesses and 2 great joint business partners out there. Dallas and Los Angeles to Haneda, strong results in concert with JAL. You've seen us announce for 2027, Chicago, Tokyo, for American and [indiscernible] will continue to fly that also.

And then Oceana, our great partner, Qantas and the joint business there. Pleased with the way that we're working together with them. And I think the foundation that we've got with international partners, Alaska partnership on the West Coast, help feed that too. We think there's great opportunity for us to expand in the Pacific over time.

Jamie Baker

Okay. Makes sense. And then just thinking about the premium push and granted we're in a high fuel environment at the moment. But I personally find the United CRJ550 with some regularity and American is obviously long RJs. I know there are some scope nuances, but have you ruled out doing a lower density premium-centric E170 or something like that?

Devon May

Jamie, if you look at our regional fleet today, it's pretty high premium as it sits right now. The 175s have premium seats. We have a whole lot of other dual class regional jets between the CRJ-700, the CRJ900s and the E170s, to have a really nice premium footprint. We have looked at a few different LOPAs that will allow us to add some more premium seating there. But for the most part, the RJ fleet offers a lot of premium seating today, and we like where we're at.

Operator

Our next question comes from the line of Ravi Shanker of Morgan Stanley.

Ravi Shanker

So not asking for 2027 guidance at all, but if you -- but you already spoke of the CASM ex Algo in the new low growth environment. How do you think about RASM versus load factor in 2027? And can you remind us again if there any specific drivers of idiosyncratic RASM for you guys next year in addition to industry-wide jet fuel faster?

Robert Isom

Thanks, Ravi. Look, we're sitting down and taking a look at what we're going to do for 2027 right now. you'll have more about that as we get to the first quarter. As I've said, our bias in terms of capacity is to the downside. In regard to what we're doing, it's all about improving revenue performance, specifically unit revenue performance. And as Matt said in his comments, it's a director around our 4 pillars. And we believe that there's significant upside there.

We're going to be the best in the business at efficient capacity production and the investments that we're making whether it's elevation of our customer experience, the network that is now fully fleshed out and especially our drive to premium revenue and finding ways for customers to find value and to pay more and leading loyalty, that's what is going to be the driver for American. And we think that right now, there's more upside at American given where we stand in terms of those investments.

Ravi Shanker

Great. That's really helpful. And maybe just a quick follow-up. Is this new lower growth algorithm only as long as we have a high fuel environment? Or is that a new normal for you guys?

Robert Isom

No, we're always going to be out making sure that we are matching our capacity to demand and doing that in a profitable way. there's obviously some things that we had to do that are going to be beneficial long term with our network this past year. That's the reason we have the growth, and we're going to be lapping some of that growth as we get into next year.

But at the end of the day, our interest is improving profitability, driving margins -- and ultimately, the capacity that we do deploy, it's going to be focused on our assets and where we can generate the best margins.

Operator

Our next question comes from the line of Atul Maheswari of UBS.

Atul Maheswari

One of your peers talked about the ability to get to 100% if you will recapture next year, assuming his similar objective, the question is what would you need to do from where you are today to get there? Is there room for industry pricing to go up further should fuel remain these levels? Or realistically, at this point, capacity management is the major lever given all the price increases that have already been passed through by the industry?

Robert Isom

So Atul, thanks for the question. Look, in this environment, profitability for all carriers is under pressure. And we're going to make sure that we react to the marketplace. And in terms of the value that's out there. We're just now getting back to airfares that on an inflation-adjusted basis, so where they were in 2019 and 2014. So we know that there's value in the product today. And in terms of the ability to hold on to that and push it further, I think the fuel price increase that we've experienced has just been a catalyst to allow us to realize that there is value. Now where we go from here, it's going to be all about how we monetize the investments that we're making in our product.

And from a premium perspective, I see great things in terms of dynamics. In the past, that would have all been a corporate-related trend. But now there's so much leisure premium that's driving that. I think it's almost 65% of our premium business now. it's really a sign that people want to take care of themselves, and we're going to make sure that we have a product that meets them where they want to fly.

Atul Maheswari

Got it. And then just a quick follow-up on the fourth quarter revenue performance. Could you provide some color on expectations by various regions? And is there any expectation for trend change for any reason relative to what you saw in the third quarter?

Neil Russell

Q4 revenue, obviously, pleased with our third quarter performance, and we see a sequential increase going forward into the fourth quarter. from an entity perspective, we see international performance continuing to be terrific, and we see international unit revenue to exceed domestic again in Q4 as it did in Q3.

Operator

Our next question comes from the line of Tom Fitzgerald of TD Cowen.

Thomas Fitzgerald

Curious where things stand with corporate demand in your shared corporate within the indirect channels and how some of your conversations are going with accounts across your network? And what we should be thinking about for maybe outside in that area in 2020?

Robert Isom

Tom, thanks for the question. Our corporate sales performance really strong in third quarter. Managed corporates up 28%. And success in the TMC channel is up 27% and maybe most exciting, our small and medium business performance, what we call advantaged business was up 46%. You guys know this, but yields on all of those 3 channels are really attractive, and we're pleased with our performance there. And as we look forward into we just see continued good news coming to American's way. And it's all related to the products that we're putting on the shelf.

They're attractive to folks through all of our priorities, whether it's network, all the customer experience announcements we've made driving premium revenue in our sales team and then lastly, our loyalty program. So all working together and this is great feedback from extremely discerning customers that what we're putting out there is attractive.

Thomas Fitzgerald

That's really great color. And then I can just have a follow-up on the fleet. You guys have been evaluating a wide-body order. I'm just curious, holistically, especially as you go into the next round of labor CVAs, just how are you thinking about the right mix of mainline and regional? I know looking backwards, our regional your scope advantages have been a major lever for you guys. But I'm just wondering, just given a lot of the changes in regional economics over the last 5 years, if the current mix is optimal and maybe if there's any way to kind of dial that around in the years ahead.

Devon May

Sure. On the wide-body side, we've been working on a campaign there for the past 6 or 7 months. I think we're getting close. And as you know, this allows us to replace the 777-200 fleet in the next decade. -- and have some additional growth in addition to the 19 or so 787s we have coming on and the options there. Mainline versus regional, the economics have changed a bit, but we still really like our regional performance. It just serves these small- and medium-sized communities perfectly.

What will change over time now are just the aircraft that we operate. some of the smallest airplanes are out of production. Embraer continues to do a fantastic job for us, and that's the only manufacturer out there for that size of aircraft. So the mix of that fleet will change over time. I don't expect the overall size of that fleet to grow too much, although there may be some growth over the years on large side.

But right now, we're really pleased with the economics of the regional fleet, happy with where we're at. And the mix probably does change slightly going forward, but not a huge amount.

Operator

Our next question comes from the line of Duane Pfennigwerth of Evercore ISI.

Duane Pfennigwerth

Welcome the shift in body language capacity, just follow-ups. I wonder if you can flesh that out a bit how long we need to wait before we see it. And as we just like maybe 3Q or the trends you're seeing into 4Q, what geographies do you think need that the most?

Robert Isom

Thanks, Duane. Look, as we go out into the fourth quarter, A lot of what you're seeing in terms of our growth is just annualization of where we've made investments so far. You'll see a little bit more of that as we move into the first quarter. But beyond that, we've more or less lapped the growth that we've focused on for competitive purposes. And so as you move out into 2027, that's where you're going to see the reductions.

Duane Pfennigwerth

Okay. And then maybe just a related follow-up. If you think about the opportunity for seasonally shaping your capacity which should help margins. Maybe you feel like you're doing this already, but is there anything structurally different about American versus your network peers that limits this and maybe where you would score yourselves on that journey?

Robert Isom

Thanks, Duane. And on that, we're working on that as we speak. But 1 of the things we've seen is the fourth quarter has actually been with higher demand than we had, had in the past. October has been a really significant benefit to the network. We're going to continue to make adjustments. We're really conscious of making sure that we have a network that appeals to the highest-yielding customers.

And from that perspective, there are some things that we have to do on a really consistent basis. And so you'll probably see the schedule level out more throughout the time as opposed to a lot of the peakiness that maybe you've seen in the past.

Operator

Our next question comes from the line of Scott Group of Wolfe Research.

Scott Group

So if we look at Q3 relative to the other network airlines best yield performance, but biggest drop in load. I guess why do you think we saw that outcome? And how do we think about Q4? And then I guess, I never thought I would be the 1 like questioning an airline lowering capacity. But Q4, you're going to have capacity up 6% and RASM up 14%. So like there's at least some degree of like decoupling of pricing and capacity like what is 1% or 2% capacity instead of 3 or 4 next year, what does that actually unlock for you from a pricing standpoint?

Nathan Gatten

Scott, it's Nate. There's like 9 questions in there. So I'm going to start with the first 2. Listen, we actively in the third quarter, prioritize yield over load factor. And we're pleased with the way that, that worked out with our 19.3% growth above the high end of our guide. American traditionally has been a leader in load factor. And as we looked at our performance relative to our peers, really identified yield improvement as a top priority, and that's partially what's driven and you've seen the way that we've scheduled the airline, focusing on rebuilding our hubs and chasing yield from that perspective and willing to accept marginal load factor, Manisha from doing that.

We obviously monitor that trade-off extremely closely and feel good about where that played out. As we look forward to Q4, again, good capacity growth lined up, and we'll adjust that as it goes. But from a unit revenue perspective, we see that as being healthy as well. We'll continue to prioritize yield the way that the economy is playing out. As Robert mentioned in the script, I think I did too, our premium product and our premium performance continues to be really strong, which drives you to let's go secure yield and that's been the right approach for us.

Scott Group

Yes. I mean, I guess like the second part of the question was just like what is the relationship between capacity and RASM changing? Or is this just a temporary thing and like there's no way to like actually decouple it? Or is this just about -- is less capacity like cutting some unprofitable routes. And if it is, I got to think that like there's a lot of them, like it's like is there a chance capacity could be down next year?

Robert Isom

Scott, thanks for that. Again, 1 of the reasons that we're seeing the revenue performance that we are is because that we've actually built back our network in a way that is appealing to customers. So we're not going to decouple that from all the other work that we're doing. As we take a look into next year, as I said before, you're going to see our growth decelerate.

And with that, we're going to be able to actually really fill in some of the capacity that we put out. And no doubt Nat and team are going to be able to make good use of that. The supply-demand dynamics of the business, there's absolutely that aspect that we have to manage as well as the drive to premium products. We're going to be really sensitive to making sure that our capacity doesn't get out in front of demand.

Operator

Our next question comes from the line of John Godyn of Citi.

John Godyn

Robert, I just wanted to kind of plug into your kind of bigger picture thinking on the shape of the industry and Americans roll in. We've had -- there may be a case that the industry is kind of 1 decent M&A deal away from an industry structure that really takes it to the next level. you have experience integrating large airlines successfully over many years. And I'm just curious if there's a state of the world where American takes a more proactive view on M&A. Maybe you could just brainstorm on that a bit.

Robert Isom

Thanks for the question I'll just start with this. American has always been a leader in the business and finding new and creative ways to make sure that our customers have the best network available to them. Matt talked a little bit earlier about our partnerships. The joint business as we pioneered those. We have more than anyone else. And I think that they are absolutely things that we're going to look to build on in the future.

As we grow, it's going to be in conjunction with JAL and with Qantas and with IAG with Qatar. So really pleased with that. as well, you've known that we've been very creative in trying to find ways to partner. And so whether it's the West Coast international lines that we have with Alaska that I think that there's a lot more that we can do, you've seen that we're intent on bringing them into the Atlantic joint business as well as the Pacific joint business. I think that it will be very beneficial for their customers and ours. We're going to be opportunistic, we're going to be mindful and going to be active in ways that improve our network as we go forward.

John Godyn

That makes a lot of sense. And we are in a domestic backdrop as well where some of the low-cost carriers are struggling in different ways, and that may create opportunities. We saw an example of that earlier this year, obviously, with Spirit. Does that create opportunities for you? And maybe we could discuss that a bit?

Robert Isom

We'll see. Spirit, their eventual bankruptcy filing and liquidation. We took a look at some of those assets weren't successful in getting those. But we'll keep our eyes open on any others that may have issues. Look, we've been -- 1 of the things I pride myself in and I know the airline has been just great at it. We're fantastic partners. There's no doubt that American has the best network from a North American perspective, and that has enabled us to partner in ways that continue to drive our reach across the globe.

So you're going to continue to see us make sure that we have just incredible strength within the U.S. and North America, and that's going to be something that's just very appealing, and I think going to be a driver of our growth and profitability long into the future.

Operator

Our next question comes from the line of Andrew Didora of Bank of America.

Andrew Didora

Maybe first 1 for Devon or if Robert wants to chime in. Just on kind of capital spend, capital allocation in this environment, are we at the point just given where fuel prices are, where you maybe begin to think about CapEx differently? Are there areas to cut or kind of reduce spend in order to preserve some to drug some free cash flow? Or is that really not part of the thought process yet?

Robert Isom

Well, as we small capacity, it's something we can look at. But right now, we really like the economics of the aircraft that are coming our way. we don't have massive CapEx requirements right now. So we don't have any fleet retirements. So there's no CapEx replacement needs. We have a guide out there for this year with $4 billion to $4.5 billion of total capital expenditures. It might step up slightly next year, but it's still well below our run rate needs, well below our peer set. So we feel really good about the investments we're making. There may be some trimming around the edges. But for the most part, the investments we're making support our revenue initiatives, and we expect to drive margin.

Andrew Didora

Got it. Understood. And maybe for Nate. Just thinking about -- you've been in the seat for a little bit now. Just bigger picture. You're investing in LAX, growing your Pacific Gateway. This has historically been a smaller part of your network. When you think out over the next couple of years, what are the areas of the strength that you want to continue to lean on and then maybe some areas of weakness or geographies that you're that are smaller today that you would really like to improve?

Nathan Gatten

Thanks, Andrew. Yes, it's been 11 months, and it's hard to believe that it's only been that. I actually feel really good about the commercial strategy that we have and really building on what was in place when I came and took the job. I think American has been really clear in articulating our 4 priorities. It's network, it's customer experience, it's premium revenue and its loyalty.

And I think not only have we made considerable strides on each of those, we've got initiatives in the pipeline that are going to continue to deliver revenue performance, continue to help us close the gap versus our peers and drive margin expansion. So excited about it. I'm excited about the next few years and really continue to push American forward together.

Operator

Our next question comes from the line of David Vernon of Bernstein.

David Vernon

So Devon, I'm just wondering if you and the Board are talking more about sort of the balance sheet. I think the promise has been we can close the margin gap, pay down our debt and kind of get to a little bit more, I think footing from a credit perspective. But obviously, the fuel crisis that we're going through right now is postponing that.

Are you kind of having more precisions about different ways to maybe recapitalize the company, whether it's a transaction with the credit card program or other efforts to try to kind of alternatively repair the balance sheet just given the impact of fuel?

Devon May

Yes. We've made a ton of progress on the balance sheet. Like you look where we're 3 to 4 years ago, midst he pandemic, we had $54 billion of total debt. We've reduced that to around $36 billion today. We have total debt today than we did 10 years ago. We have less net debt today than we did 10 years ago. So the balance sheet, we're going to continue to make progress on -- but the key to us driving improved credit ratings is earnings.

And so while you can try to do some different transactions to improve our debt levels, the real key unlock for leverage improvement is on the earnings side. And that's where we're focused. We're focused on driving margin improvement. We know it's going to come from the revenue side of the business. When we do that, our limited CapEx requirements allow us to produce meaningful free cash, and then we'll use that to continue to improve the balance sheet. But our focus right now is on margins.

David Vernon

All right. And then the decision to get a little closer to American on the joint venture side, could you talk a little bit, Robert, maybe about the strategic rationale for that? And other things you can do to kind of strengthen that relationship. It seems like you guys are drifting a little bit closer together. And I don't want to turn this into a consolidation question because I know that's not something that you're going to address. But when you think about the motivation, the attention, the benefits that Alaska, maybe bring to that JV, if you could kind of give your perspective on that, that would be helpful?

Devon May

Perspective on this is just Alaska has been a great partner, and they complement a lot of what we do in a very great way. They've been part of One World now for a few years, super happy about that. And my relationship with Alaska dates back well prior to the pandemic. And it's always been about.

Robert Isom

Trying to find ways that we can serve our customers in a better way. And to that end, I think we've really been able to develop a great partnership. West Coast International Alliance is doing what we had hoped and really looking forward to bring Alaska into the joint businesses as time goes by here in the next year.

Operator

Thank you SP1 Our next question comes from the line of Sheila Kahyaoglu of Jefferies.

Unknown Analyst

This is Jack on for Sheila. I just want to -- you've announced a flurry of customer experience investments this year across Wiborturnto feedback and continued fleet upgrades among others. When you contemplate these investments, can you just talk about the return thresholds you look at once reaching maturity whether it's an ROIC target or maybe an expected RASM yield uplift?

Devon May

Yes, obviously, these types of investments don't have a direct return. What they do is they support all of our commercial initiatives. And so in some cases, there are like obvious and direct returns, but it doesn't cover all of the capital or all of the operating expense that goes with it. And so for the most part, you're expecting an uplift on yields or an improvement in market share. And that's how we view it. We view it from a broader lens and just kind of 1 investment or 1 initiative at a time. But we think we're taking the right steps and making the right investments to drive closure on this revenue gap that we have today.

Unknown Analyst

Absolutely. That's really helpful. And so I don't just kind of follow-up there. In May, you announced starting would be added to 500 narrow-bodies and then quickly rolled it out that you're going to go across the entire fleet. I'm just wondering would inform that decision to go across the whole fleet. And do you generally view WiFi installations as a race to the finish in order to maintain and attract higher yielding loyalty members across the major brand oil airlines in the U.S?

Robert Isom

I'll just take a step back. We laid out our pillar to elevate our customer experience and whether it's what we're doing on the ground with lounges, some of the new concourses and terminal developments that are going on throughout our system. The drive to put premium seats, the flagship suites on our aircraft. The aircraft that we're bringing in. All of that is designed to make sure that we have a hard product and also the amenities that customers really want.

One of the things we know we've been the leader in satellite-based WiFi, having it on more of our aircraft than any other airline for some time now. We know that our customers value connectivity, and that is something that we are confident is going to be table stakes. And right now, I think it can be a differentiator for American.

We're going to move as fast as we can to get Starlink installed on our entire fleet of narrow-bodies and wide-body aircraft over the next year or so. and super excited about that. And I know that our customers will value that greatly.

Operator

And we will be taking media questions. [Operator Instructions] Again, at this time, we will be taking media questions. Thank you. Our first question comes from the line of Alison Sider of Wall Street Journal.

Alison Sider

Sorry about that. Sorry. Sorry. I was curious about fees if there's -- given sort of the trade-offs that came out between pricing and filling seats, if there's any further thought or opportunity you're seeing to increase things like bag fees or other fees or if you expect more increases there across the industry?

Robert Isom

Ali, Nate can chime in here. Look, we don't talk about pricing or fees specifically. Look, we're all about making sure our customers get great value for the products that we offer. And I'd tell you, it's at every end of the spectrum. So we want to make sure that our customers in business class have that live flat flagship suite. We want to make sure that we have the best lounges. And it goes down even to those that are the most price conscious budget-minded and so for our basic economy fares, we're really intent on making sure that our customers have just a great product.

And you know what, we offer incredible value. We don't charge for a carry-on bag for that product like some of our competitors do. we want to make sure that our customers are finding real value throughout the spectrum of products that we offer. And we're really pleased with the investments we're making and what it will do ultimately for our customers and the loyalty that we'll get for that too.

Alison Sider

And then I guess on the changes that you've made an approach to involuntary denied boardings, I mean it seems like that's really been paying off and been successful in getting those rates down. Like why is that not something you chose to tackle earlier?

Robert Isom

I guess the new guy gets to answer that question. That's fine. Listen, I think from a customer experience perspective and what we want to deliver and making America and the airline of choice it really is just something that's terrific to promote. And I know our teammates at the airport feel so much better about it, and certainly, the proposition that we're delivering to customers and having that -- so choosing just to focus on the way forward, the technology that's in place for it, we feel really good about how that rolls out and where it's leading to American.

Operator

Our next question comes from the line of Leslie Josephs of CNBC.

Leslie Josephs

The passenger counts loads are down, not just for you but other airlines. At what point does that worry you or become an issue to your results? And then secondly, do you think you have a chance at these fuel prices or similar to be profitable in 2017?

Nathan Gatten

Leslie, I'll take -- it's Nate. I'll take the first one. Listen, as I said earlier, we're actively prioritizing yield versus load factor and really happy as we see it. It fits right in with the premium investments that we're making. It fits right in with a lot of the merchandising and the value that we're delivering to different customers at different price points. So we feel good about that, and we're going to continue to prioritize that as we go into the fourth quarter. But obviously, that's a relationship that you watch closely.

Robert Isom

And regarding profitability, of course, we think we can be profitable next year. And that's driven by what we've seen this year. We've had fuel expense now grow $7 billion over the course of the year. But for that, we'd be solidly profitable. We'd be certainly 1 of the companies that have had the greatest percentage growth in profitability year-over-year, but for the dramatic increase in fuel. Fuel prices, whether they stay higher and they move lower. It's really about the volatility that we've been dealing with. And as fuel prices stabilize, I'm confident we're going to be able to manage our supply and demand to make sure that we're in balance and then on top of that, all the investments that we're making in terms of driving revenue performance are going to show up.

And on top of the industry-leading performance in terms of efficiency and cost management, that is going to lead to profitability. So I have great confidence in our ability to get back to profitability everything that we see in terms of how we're performing versus others and then also the revenue performance, which is the primary focus leads us to believe that we have a great chance to get back to profitability and really be the airline with the most upside for our investors.

Leslie Josephs

And just 1 follow-up on the wide-body order. You said you're really close. Are you looking at a split fleet or a split provider order or a single provider and what's the pros and cons of each?

Devon May

No real comment on what we're thinking right now other than just to say the campaign is going really well, and we hope to wrap it up this year.

Operator

Thank you. I would now like to turn the conference back to Robert Isom for closing remarks. Sir?

Robert Isom

Thanks, Latif, and thanks, everybody, for listening in. We're going to back to work. Thank you very much.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.