Airlines · #55 in the Retail 100

American Airlines

AAL

Our rating: sellhigh conviction
12-month target: $12.24 -4.5%
Expected vs. S&P 500: -23 ptsSee the math
Next earnings: Jan 26In 82 daysEarnings calls page ↗

Fuel costs cut Delta's profit forecast, but Delta still expects to earn over $5 a share; American now expects a full-year loss of $1.00 to $1.60.

Summary

American is a major U.S. airline that earns its profit from business travelers, premium cabins and its Citi credit card deal, and it carries debt and leases worth more than four times its stock market value. Demand is strong and running ahead of its own forecasts. But American doesn't hedge fuel, and this year's jump in oil prices has pushed it to a loss. The stock depends on fares rising fast enough in 2027 to cover fuel.

$12.82

+$0.65 (+5.34%)Past year

What American Airlines does

American flies travelers through nine U.S. hubs, including Dallas/Fort Worth and Charlotte. Labor is its biggest cost and it doesn't hedge fuel, so small moves in fares or oil prices swing its profit.³⁷

What it sells

Domestic flights64% of revenue, FY2025
Tickets within the U.S., fed by regional American Eagle flights that connect smaller cities to its hubs.
International flights26% of revenue, FY2025
Routes to Latin America, Europe and Asia, many run jointly with partners like British Airways and Japan Airlines.
AAdvantage miles6% of revenue, FY2025
Fees Citi and other partners pay for miles. Counting miles later redeemed for flights, the program brought in about 14% of revenue.
Cargo and other3% of revenue, FY2025
Freight carried in the bellies of passenger planes, plus airport lounges and vacation packages.

Who buys it

Mostly U.S. leisure and business travelers. Domestic routes made up 71% of 2025 ticket revenue, Latin America and the Atlantic about 13% each, and the Pacific 3%. Citi, which issues the AAdvantage credit card, is the biggest buyer of miles.

Where you've seen it

Every purchase on a Citi AAdvantage credit card earns miles that Citi buys from American.

The backstory

American's recent trouble started with its own decision. Under then-commercial chief Vasu Raja, it pulled up to 40% of its fares from travel agents' systems in 2023, and corporate customers went elsewhere. American estimates that cost about $1.5B of revenue in 2024. CEO Robert Isom reversed course in May 2024, and Raja left. The plan now is to win back business travelers, sell more premium seats and lean on the Citi card deal while paying down debt.

How the business makes money

Why American's profit rides on fares beating fuel^{1,2,3,5,6,7,8,9,10,18}

Step 1
Business travelers are coming back now that travel agents can sell American's fares again. Managed corporate sales rose 27.6% last quarter.
Step 2
Hubs in big cities feed connecting flights, and premium seats earn the most per passenger, bringing in nearly half of ticket sales.
Step 3
The Citi credit card pays steadily for miles whatever fuel costs: $6.1B in cash in 2024.
Step 4
American buys fuel at market prices with no hedges. It paid $4.05 a gallon last quarter, up from $2.29, which pushed 2026 to a loss.
What shareholders get
Leftover cash goes to paying down debt, $2.1B in 2025, rather than to shareholders. The stock is betting fares rise faster than fuel in 2027.

Advantages

Loyalty cash from the Citi card

Strong advantage

American's steadiest earner. Card and other partners paid it $6.1B in cash in 2024, money that doesn't depend on fuel prices.^1,2,5,34

Hubs in the biggest cities

Strong advantage

Hard to copy. Eight of its hubs sit in the 10 largest U.S. metro areas, and the new Terminal F will make Dallas-Fort Worth the world's largest single-airline hub.³

More premium seats

Supporting

Helpful, not decisive. American says it offered more premium seats than any other airline this summer, but rivals sell them too.^1,3

What's changing

Fuel costs keep outrunning fares

Oil has driven American's year. Late-February strikes on Iran disrupted the Strait of Hormuz, and Brent oil topped $107 on September 28. American cut its 2026 forecast in April, in July and again on October 22. Flight attendants' union leaders voted no confidence in CEO Robert Isom in February, American rebuffed United's merger approach in April, and Isom reshuffled executives in August.^{1,3,11,12,13,14,15,27,29,30,34}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with American Airlines Group
American Airlines Groupthis stock	$8.50B	American flies travelers through nine U.S. hubs, including Dallas/Fort Worth and Charlotte. Labor is its biggest cost and it doesn't hedge fuel, so small moves in fares or oil prices swing its profit.
Delta Air LinesDAL	$52.10B	Premium-leaning U.S. airline that owns a refinery, cutting its own fuel costs.	Delta makes solid profits; American expects roughly breakeven in 2026.^16,1
United AirlinesUAL	$32.72B	Global airline built on big international hubs and premium cabins for business travelers.	United turns premium travel into far bigger profits than American does.^17,1
Southwest AirlinesLUV	$20.98B	Low-fare domestic airline that grew on simple, cheap point-to-point flights.	Southwest fights on cheap Main Cabin fares; American leans on premium seats.¹²

Leadership

Who runs the company, and how the stock has done under the CEO.

AAL -29.8%S&P 500 +77.4%Total return with dividends since Mar 2022

2023202420252026

Robert IsomCEO4.5 yrs

Devon MayEVP and CFO3.8 yrs

Nat PieperChief Commercial Officer11 mo

When Isom was named (Dec 2021), the stock moved -0.2% that day; the S&P 500 moved +2.1%.

Wall Street on Isom: MixedMelius Research cut the stock to Hold, warning that adding too many flights could push down fares and margins, while crediting strong demand and cost control. Rothschild & Co Redburn moved to Hold on fuel costs.^L6,L7

Leadership sources (7) · researched Oct 2026

L1American Airlines Announces Leadership Succession Plan · American Airlines (via AviationPros), 2021-12-07
L2American Airlines Names Devon May Chief Financial Officer · American Airlines, 2022-12-13
L3American names Nathaniel Pieper Chief Commercial Officer · American Airlines, 2025-10-23
L4American Airlines may reduce capacity in response to fuel cost increases: CFO · CAPA - Centre for Aviation, 2026-09-16
L5American Airlines CEO Outlines C-Suite Overhaul to Close 'Meaningful Gap' · Skift, 2026-08-12
L6American Airlines Stock Downgraded As Capacity Risks Loom · StocksToTrade, 2026-07-22
L7Rothschild Downgrades American Airlines (AAL) to Neutral, Due To Higher Oil Prices · Finviz, 2026-03-05

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Can higher fares cover American's fuel costs, so earnings go from the $1.18 loss analysts expect in 2026 to the $1.29 a share they expect in 2027?^{1,3,10,11,12,14,16,17,21,23,30,34,35,36}

Bull case: why buyers buy

If fuel steadies and fares keep rising, American recovers its fuel costs in 2027, earnings turn positive, and the stock's low valuation against its own history closes.

Demand is running ahead of plan. Third-quarter revenue rose 19.3%, beating the top of American's own forecast.
Business travelers are coming back. Managed corporate revenue rose 27.6%, a sixth straight quarter of double-digit growth.
Costs outside fuel are under control. They rose only 3.0%, which American says was the best among large network airlines.
The stock is cheap against its own recent history. It trades at about 10 times average earnings for 2023 to 2028, against a typical 12 times since March 2025.

Bear case: why sellers sell

If oil stays high, an unhedged American carrying about $36B of debt keeps cutting forecasts, and losses continue through the winter.

American is fully exposed to oil prices. It buys no fuel hedges and expects to pay about $4.70 a gallon this quarter, up from $3.85.
Analysts keep cutting their forecasts. In the past 30 days there were 15 cuts to 2027 estimates and no increases.
The loss for this year keeps getting bigger. American now expects to lose $1.00 to $1.60 a share in 2026.
High fuel is forcing American to grow more slowly. It expects to add less flying in 2027 than in 2026.

Where Delphi landssellWe think the bear case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Revenue growth vs. fuel expense growth▼ worsening

Third quarter: revenue up 19.3%, fuel expense up 67.5%³⁴

The core question: whether fares catch up with fuel. American stopped saying what share of the fuel increase fares recover.

Premium vs. Main Cabin unit revenue▲ improving

Third quarter: premium unit revenue up 18.5%, Main Cabin up 14.4%³⁴

Premium seats drive nearly half of ticket revenue; Main Cabin fills the rest of the plane.

Loyalty revenue▲ improving

Third quarter: Citi card spending up nearly 10%; loyalty revenue not given³⁴

Credit card and mileage revenue is steady cash that does not depend on fuel prices.

Next earnings report

Jan 26

In 82 days

Earnings calls page ↗

Expected earnings per share: -$0.73
Expected revenue: $16.92B

What to listen for: Whether fares and the planned slower 2027 flying can offset fourth-quarter fuel near $4.70 a gallon. The January date is an estimate.²¹

What would prove this wrong

✕Fares again recover less than half of the fuel increase in the fourth quarter.
✕The Strait of Hormuz reopens and jet fuel falls quickly, lifting earnings.
✕Debt rises instead of falling over the next year as fuel costs eat cash flow.
✕Managed corporate revenue growth falls below 10%, showing the win-back has stalled.

Our ratingSellHigh convictionas of Nov 3 close, $12.82 · what ratings mean

Analysts have halved 2027 earnings estimates in 90 days and American guides to a fourth-quarter loss, so the stock should trail the S&P 500 despite a modest valuation.

12-month target: $12.24 (-4.5%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -23 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $12.82

Target $12.24

bull case15% likely

$18.58 +45%

Oil eases and fares keep rising, so American recovers the fuel increase by early 2027 and earnings reach the top of analysts' range.

$1.51 mid-cycle earnings per share × 12.3 = $18.58

base case50% likely

$12.89 +1%

Fuel stays high into 2027, but fares and slower flying slowly catch up, and 2027 earnings land near the $1.29 analysts expect.

$1.19 mid-cycle earnings per share × 10.8 = $12.89

bear case35% likely

$8.59 -33%

Oil stays high, fares recover only about half the fuel cost, and 2027 earnings land near the low end of analysts' range, about $0.40 a share.

$0.97 mid-cycle earnings per share × 8.9 = $8.59

Why these odds: Analysts cut 2027 estimates from $2.54 to $1.29 in 90 days, with no upward revisions. American cut its 2026 forecast a third time, though it beat the quarter's consensus and revenue guidance.

How the prices are built: Wall Street expects mid-cycle earnings per share of $1.19 for the year starting a year from now (analysts range from $0.75 to $1.83). Today the stock trades at 10.4 times next year's mid-cycle earnings per share; its five-year middle is 12.06.^{21,22,23,24,25,26,3,1,28,5,32,33,34,35,36}

What tests the call: Q4 2026 earnings: fuel recovery and 2027 flying plans (Jan 26)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 23; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $12.82, investors pay less for each dollar of American Airlines's mid-cycle earnings than for the average stock's

American Airlines trades at 10 times the mid-cycle earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's mid-cycle earnings. That is cheaper than it has been 80% of the time over the past five years, when the middle was 12.

Analysts expect mid-cycle earnings to fall about 3% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. At the market's multiple, today's price would only make sense if American Airlines earned about 44% less than forecast over the next year.

American Airlines multiple: 10×
S&P 500 multiple: 19×
Base case: +1%
Bear case: −33%

The skewOur bear case loses about $60.43 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

No reported quarters available.