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American Airlines Group Inc AAL

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Morningstar’s Analysis

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Capital Allocation


American Airlines Is Deploying Capacity Aggressively to Gain Share in a Recovering Market

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

No-moat-rated American Airlines reported a solid third quarter, as its domestic- and Latin America-focused network recovered faster than peer network carriers. Sales of $9 billion and adjusted loss per share of $0.99 beat FactSet consensus by 0.5% and 4.7%, respectively. We are maintaining our $19 fair value estimate, as we reduce our midcycle operating margin by about 30 basis points to reflect the significant increase in landing fees and other rents, though the effect of the reduced midcycle operating margin is partially offset by the time value of money and faster recovery assumptions. We are also reducing our uncertainty rating to very high from extreme, as balance sheet risk has decreased materially for the firm since we originally increased the uncertainty rating.

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Company Profile

Business Description

American Airlines is the world’s largest airline by scheduled revenue passenger miles. The firm’s major hubs are Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. After completing a major fleet renewal, the company has the youngest fleet of U.S. legacy carriers.

1 Skyview Drive
Fort Worth, TX, 76155
T +1 817 963-1234
Sector Industrials
Industry Airlines
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 119,800