American Airlines Earnings: Lowering Fair Value Estimate on 2026 Losses

Key Morningstar Metrics for American Airlines Group

• Fair Value Estimate
  : $6.10
• Morningstar Rating
  : ★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of American Airlines Group’s Earnings

American Airlines Group AAL earned $115 million in operating income on third-quarter sales of $16.3 billion. Management is catching up with Delta and United in the premium-segmentation game, and it announced it will slow capacity growth in 2027 and trade load factor for revenue yield this quarter.

Why it matters: American is locked in a struggle to catch up with Delta and United and win back loyal customers willing to pay more or spend mileage points for perks such as lounges, preferred seating, and fancy meals. Recent spikes in fuel prices did not mar competitors’ results the way they did American’s.

• We think American may have started playing by the new rules, raising ticket prices to recoup fuel costs even if it fills somewhat fewer seats, rather than trying to recapture market share from a time gone by.
• It may save the airline, since its $28 billion in net debt is not very far off from our estimated enterprise value in most scenarios, meaning the equity value left after subtracting debt from the EV could easily end up at zero.

The bottom line: We lowered our fair value estimate for no-moat American to $6.10 from $10.00 per share, reflecting 2026 losses the company blames on fuel cost growth and our forecast that the airline will eke out a profit in coming years on slower capacity growth.

• The shares trade around twice our revised fair value estimate.