|Instrument:AMERICAN AIRLINES GROUP INC|
|Trading Hours (GMT):14:30-20:59|
Headquartered in Fort Worth, Texas, US, American Airlines Group Inc. is a global air carrier that provides scheduled air transportation for passengers and cargo. The company was founded in 2013 following the merger of AMR Corporation and US Airways Group. The merger created the largest airline in the world as measured by fleet size and scheduled revenue passenger miles. But the company traces its roots way back to the 1920s, and it is the product of numerous mergers and demergers.
The 2013 merger was necessitated by a bankruptcy filing that almost pushed the previous company out of business. However, the company has recovered impressively and made important restructuring of its business activities to ensure that the American Airlines brand continues to be associated with success and excellence. For instance, the company implemented a fleet renewal program that has seen it boast the youngest fleet of US legacy carriers. American Airlines has also streamlined its flight routes, but through its subsidiaries and partner carriers, it is still able to operate over 3400 daily flights to over 240 destinations. The company is also a founding member of the Oneworld Alliance, a group of leading global airlines that serve over 1100 destinations in over 170 countries and territories around the world.
American Airlines has, over the years, forged a high-quality brand reputation for itself. The company was famously the first airline to offer full in-flight internet access in the US and the first major airline to partner with the US EPA to formulate environmentally friendly business strategies. These and a lucrative loyalty program have helped the company attract and retain customers in the fiercely competitive airline industry.
American Airlines is listed on the Nasdaq, where its stock trades under the ticker symbol AAL. The stock is categorised in the Industrials sector, under the Airlines industry.
AAL Stock History
The AAL stock picked up slight upward momentum in the aftermath of the 2013 merger as investors welcomed the impending cost savings as well as future business prospects. The stock rose from circa $25 in December 2013 to highs of just above $55 by January 2015. This period also coincided with falling oil prices in the international markets as a result of booming US Shale oil production.
AAL failed, however, to sustain the rally, and a period of consolidation was followed by a price dip that saw the stock fall to below $27 by mid-2016. The stock then, however, recovered and gradually rallied to highs of just below $60 by January 2018. After that temporary peak, American Airlines stock entered a long-term downtrend that was made worse by the 2020 coronavirus pandemic. The Great Lockdown saw AAL fall below $10 for the first time since the 2013 merger.
American Airlines is a willing dividend payout, but its business realities have seen the company average a low dividend yield of around 1%.
How to Trade American Airlines Stock
Here are the factors to consider when trading AAL stock:
- Legislative and Taxation Issues
The airline industry is one of the most regulated industries in most jurisdictions, with governments keen on enhancing operations as well as the safety and security of both passengers and cargo. Additionally, companies, such as American Airlines, must deal with various legal issues such as union strikes, aircraft financing and leasing, joint ventures, other partnerships, and passenger rights and third-party claims. Furthermore, taxation policies also vary across different jurisdictions.
The airline industry is fiercely competitive, with companies frequently offering promotions such as price discounts, frequent flyer programs, and other targeted offers. There is also space competition in major global hubs, which ultimately increases company costs. American Airlines faces tough competition domestically and internationally from rivals such as Delta, JetBlue, Southwest, United Airlines, and Alaska Air. The competition also comes from regional budget airline companies that enjoy massive local popularity.
- Fluctuating Oil Prices
Airline companies are very sensitive to oil prices because fuel expenses account for a sizeable portion of their overall costs. Beyond just costs, oil prices can also influence business strategies in areas such as fleet planning. For instance, some airlines have had to defer the retirement of fleets during periods of prolonged oil price volatility. Even though most airlines hedge on oil to reduce the risk of oil price fluctuations, higher prices of the commodity will tend to put pressure on airline stocks, whereas lower oil prices can inspire higher stock prices.
- Periodic Earnings Reports
The American Airlines fiscal year runs from January to December, and the company releases periodic earnings reports that update investors on its business health and performance. Some of the key metrics investors watch out for include passenger load factor, revenues, and future guidance. A positive report can inspire higher AAL stock prices, whereas a negative report could weigh heavily on the stock.
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