American Airlines Earnings: Margins Grew in 2023, Giving Some Leeway; Fair Value Up 17%

After reviewing 2023 results, we've raised our fair value estimate for American Airlines to $12.30 per share from $10.50. The primary driver of this increase was a stabilization of American's cost structure, augmented by overall revenue growth. Though the company grew revenue faster than costs, benefiting its bottom line and providing a buffer of sorts should industry conditions soften, we will keep an eye on American's ability to fill its planes—we noted the airline didn't fill as many seats in 2023 as we had expected, but it managed to garner more revenue per seat than we had forecast.