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American Airlines (AAL)
NASDAQ:AAL
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American Airlines
(NASDAQ:AAL)58Neutral
Positive Factors
Deleveraging and Debt Management
Deleveraging is running ahead of schedule, which is seen as a positive development for the company.
Revenue and Growth
A positive revenue trajectory: 4Q’24 saw broad-based revenue per available seat mile or RASM led US carriers, according to management.
Negative Factors
Cost Pressures
The steep increase in costs, particularly in regional flying, is a concern for financial performance.
American Airlines (AAL) vs. S&P 500 (SPY)
Market Cap
$8.71B
Dividend YieldN/A
Average Volume (3M)39.82M
Price to Earnings (P/E)11.8
Beta (1Y)0.91
Revenue Growth2.70%
EPS Growth2.20%
CountryUS
Employees133,300
SectorIndustrials
Sector Strength66
IndustryTransportation
Share Statistics
EPS (TTM)1.11
Shares Outstanding657,575,560
10 Day Avg. Volume55,872,802
30 Day Avg. Volume39,820,290
Financial Highlights & Ratios
PEG Ratio5.34
Price to Book (P/B)N/A
Price to Sales (P/S)0.16
Price to Cash Flow (P/CF)5.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$22.18Price Target Upside70.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
American Airlines Business Overview & Revenue Model
Company DescriptionAmerican Airlines Group Inc. (AAL) is a major American airline headquartered in Fort Worth, Texas. It operates an extensive international and domestic network, with a significant presence in the passenger air transportation sector. American Airlines provides scheduled air transportation services for passengers and cargo, primarily serving North America, the Caribbean, South America, Europe, and Asia. The company offers a range of products and services including basic economy, main cabin, and premium seating options. Additionally, it provides loyalty programs and various travel-related services.
How the Company Makes MoneyAmerican Airlines primarily generates revenue through the sale of passenger tickets, which accounts for the majority of its income. This includes different classes of seating such as economy, business, and first-class, each with varying price points. The company also earns revenue from ancillary services such as checked baggage fees, seat selection fees, and in-flight sales, including food and beverage purchases. Cargo transportation services contribute to its revenue streams as well. Moreover, American Airlines benefits from its AAdvantage loyalty program, which not only enhances customer retention but also generates additional income through partnerships with credit card companies and other travel-related businesses. Strategic alliances and joint ventures with other airlines also play a role in expanding its network and optimizing earnings.
American Airlines Financial Statement Overview
Summary
American Airlines shows a recovering revenue trend and positive cash flow developments. However, it struggles with high debt levels and negative equity, indicative of financial instability. The income statement and cash flow improvements are offset by a weak balance sheet, necessitating strategic financial adjustments.Income Statement
American Airlines has demonstrated recovering revenue growth, with a 2.7% increase from 2023 to 2024. However, the gross profit margin of 30.8% and net profit margin of 1.56% in 2024 indicate moderate profitability, with room for improvement. The EBIT margin stands at 4.82% and EBITDA margin at 2.11%, showing challenges in operational efficiency despite improvements from negative margins in previous years.65
Positive
Balance Sheet
The balance sheet reveals a concerning negative stockholders' equity, indicating financial instability. The debt-to-equity ratio cannot be calculated due to negative equity, highlighting the company's heavy reliance on debt financing. The equity ratio is negative, further emphasizing the need for improved financial health and reduced liabilities.45
Neutral
Cash Flow
Cash flow analysis shows positive developments in free cash flow, with significant growth from 2023 to 2024. The operating cash flow to net income ratio of 4.71 suggests a strong conversion of income into cash. However, the free cash flow to net income ratio at 4.71 indicates that while cash flow generation is robust, sustainability may be challenged by existing debt obligations.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 54.21B | 52.79B | 48.97B | 29.88B | 17.34B | Gross Profit |
| 16.69B | 11.81B | 9.04B | 27.00M | -7.60B | EBIT |
| 2.61B | 3.03B | -150.00M | -5.07B | -10.42B | EBITDA |
| 5.33B | 5.20B | 4.13B | 1.59B | -7.86B | Net Income Common Stockholders |
| 846.00M | 822.00M | 127.00M | -1.99B | -8.88B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 6.98B | 7.58B | 9.81B | 13.29B | 6.86B | Total Assets |
| 61.78B | 63.06B | 64.72B | 66.47B | 62.01B | Total Debt |
| 37.54B | 40.66B | 42.01B | 44.50B | 39.27B | Net Debt |
| 36.74B | 40.09B | 41.57B | 44.22B | 39.02B | Total Liabilities |
| 65.76B | 68.26B | 70.52B | 73.81B | 68.88B | Stockholders Equity |
| -3.98B | -5.20B | -5.80B | -7.34B | -6.87B |
| Cash Flow | Free Cash Flow | |||
| 3.98B | 1.21B | -733.00M | 496.00M | -8.50B | Operating Cash Flow |
| 3.98B | 3.80B | 2.17B | 704.00M | -6.54B | Investing Cash Flow |
| -968.00M | -502.00M | 636.00M | -5.98B | -4.34B | Financing Cash Flow |
| -2.79B | -3.21B | -2.63B | 5.29B | 10.99B |
American Airlines Technical Analysis
Negative
13.03
Price Trends
16.55
Negative
15.52
Negative
13.27
Negative
Market Momentum
-0.91
Positive
25.65
Positive
19.56
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAL, the sentiment is Negative. The current price of 13.03 is below the 20-day moving average (MA) of 15.17, below the 50-day MA of 16.55, and below the 200-day MA of 13.27, indicating a bearish trend. The MACD of -0.91 indicates Positive momentum. The RSI at 25.65 is Positive, neither overbought nor oversold. The STOCH value of 19.56 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAL.
American Airlines Risk Analysis
American Airlines disclosed 41 risk factors in its most recent earnings report. American Airlines reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Airlines Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $27.13B | 8.79 | 28.63% | ― | 6.23% | 20.08% | |
77 Outperform | $35.50B | 10.30 | 26.19% | 1.00% | 6.19% | -25.26% | |
77 Outperform | $7.66B | 19.86 | 9.31% | ― | 12.56% | 69.33% | |
63 Neutral | $17.50B | 39.15 | 4.50% | 2.46% | 5.34% | -6.20% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
58 Neutral | $8.71B | 11.76 | -21.27% | ― | 2.70% | 2.20% | |
47 Neutral | $2.15B | ― | -26.60% | ― | -3.50% | -148.99% |
* Industrials Sector Average
Performance Comparison
AAL
American Airlines
13.03
-1.62
-11.06%
ALK
Alaska Air
60.64
23.28
62.31%
DAL
Delta Air Lines
53.28
11.06
26.20%
JBLU
JetBlue Airways
6.11
-0.93
-13.21%
LUV
Southwest Airlines
29.20
-3.99
-12.02%
UAL
United Airlines Holdings
82.88
39.99
93.24%
American Airlines Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -30.17% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial position with record free cash flow and strategic achievements, though it acknowledges challenges in cost management and specific markets. The outlook for 2025 is cautiously optimistic with potential for improved performance.Highlights
Record-Breaking Free Cash Flow
Generated record free cash flow of $2.2 billion in 2024, exceeding expectations and achieving debt reduction goals ahead of schedule.
Strong Revenue and Earnings Performance
Fourth quarter adjusted pretax profit of $808 million and full-year adjusted earnings per diluted share of $1.96, surpassing guidance.
Successful Cost Management Initiatives
Delivered nearly $500 million in savings through reengineering initiatives, exceeding the target by $100 million.
Strategic Partnerships and Growth
Announced a new 10-year agreement with Citi for the AAdvantage co-branded credit card, expected to grow cash payments by 10% annually.
Operational Achievements
Ranked second in completion factor and on-time departures among the four largest U.S. carriers for the year.
Lowlights
Higher Unit Costs and Capacity Constraints
First quarter nonfuel unit costs expected to rise high single digits year-over-year driven by reduced capacity and new labor agreements.
Challenges in Latin America Market
Latin unit revenue declined year-over-year, although short-haul revenue is expected to improve.
Potential First Quarter Loss
Forecasting a first quarter loss of $0.20 to $0.40 per diluted share due to various cost pressures and economic factors.
Company Guidance
During the American Airlines Group's Q4 2024 earnings call, the company provided comprehensive guidance, showcasing their strong financial performance and strategic outlook. The airline reported a fourth-quarter adjusted pretax profit of $808 million, translating to an adjusted earnings per diluted share of $0.86, surpassing their previous guidance. For the full year, they achieved an adjusted pretax profit of $1.8 billion, with adjusted earnings per diluted share of $1.96. Revenue for the fourth quarter grew by 4.6% year-over-year, with unit revenue increasing by 2%, driven by a 2.5% rise in capacity. The company achieved record free cash flow of $2.2 billion in 2024 and reduced total debt by over $15 billion since mid-2021. Looking ahead to 2025, American Airlines anticipates first-quarter capacity to be flat to down 2% year-over-year, with full-year revenue expected to grow between 4.5% and 7.5%. They forecast a first-quarter loss of $0.20 to $0.40 per diluted share, with full-year earnings projected at $1.70 to $2.70 per share. The company also highlighted future plans, including the delivery of 40 to 50 new aircraft in 2025 and the expectation of more than $2 billion in free cash flow for the year.American Airlines Corporate Events
Business Operations and StrategyFinancial Disclosures
American Airlines Reports Record Revenue and Debt Reduction
Positive
Jan 23, 2025
On January 23, 2025, American Airlines reported its financial results for the fourth quarter and full year 2024, showcasing record revenues and a significant reduction in total debt. The company achieved a record fourth-quarter revenue of $13.7 billion and a full-year revenue of $54.2 billion, alongside a successful reduction of its total debt by $15 billion, a year ahead of schedule. American Airlines also announced a new 10-year co-branded credit card partnership with Citi, expected to enhance value for cardmembers and expand the loyalty ecosystem. The airline maintained strong operational performance despite challenges, achieving its second-best annual completion factor since the merger with US Airways.
Executive/Board Changes
American Airlines Announces Executive Leadership Changes
Neutral
Jan 10, 2025
Priya R. Aiyar, Executive Vice President and Chief Legal Officer of American Airlines, is resigning effective February 21, 2025, to pursue a similar role outside the airline industry. The company has appointed Bruce Wark as Interim Chief Legal Officer during the search for her replacement, highlighting the importance of this leadership role for the airline’s legal team.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.