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1. Company Snapshot

1.a. Company Description

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier.The company provides scheduled air transportation services for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C., as well as through partner gateways in London, Madrid, Seattle/Tacoma, Sydney, and Tokyo.As of December 31, 2021, it operated a mainline fleet of 865 aircraft.


The company was formerly known as AMR Corporation and changed its name to American Airlines Group Inc.in December 2013.American Airlines Group Inc.


was founded in 1930 and is headquartered in Fort Worth, Texas.

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1.b. Last Insights on AAL

Breaking News: American Airlines Group Inc shares fell 5.32% to $13.35 after rising fuel costs pressured airline margins. The company's 10-K filing and an upcoming safety-related vote are being closely watched by investors. American Airlines faces challenges, including criticism from unions and weak performance. However, its regional airline PSA recently reached a tentative contract agreement with flight attendants. Delta Air Lines appears to be a stronger play, with earnings beats and dividend hikes. No recent earnings release was available, and no analyst recommendation was provided.

1.c. Company Highlights

2. American Airlines' 2025 Earnings: A Resilient Performance Amidst Challenges

American Airlines reported fourth-quarter adjusted earnings per share of $0.06 and full-year adjusted earnings per share of $0.36, with the latter being below analyst estimates of $0.38, actual EPS came out at $0.16. The company's revenue was impacted by the prolonged government shutdown, which resulted in a revenue loss of approximately $325 million, primarily in the domestic entity. Despite this, bookings strengthened in January, with system-wide revenue up double digits year over year. Premium continued to outperform main cabin, with premium unit revenue up 4 points year over year.

Publication Date: Feb -15

📋 Highlights
  • Balance Sheet Strength:: Total debt reduced by $2.1B in 2025, projected to reach $35B by 2026 (down from $36.5B) with over $2B free cash flow.
  • 2026 Earnings Guidance:: Adjusted EPS expected at $1.70–$2.70, with Q1 adjusted loss of $0.15–$0.50 due to Winter Storm Fern impacts.
  • Capacity & Revenue Growth:: 3–5% capacity growth in 2026, 7–10% revenue growth, driven by 55 new aircraft deliveries and expanded premium offerings.
  • Cost Efficiency & Savings:: $250M in 2026 savings target (cumulative $1B since 2023) offsetting 1.5% CASM impact from Winter Storm Fern.
  • Premium Revenue Outperformance:: Premium unit revenue up 4% YoY in 2025, with 7-point RASM advantage over non-premium; 50% of revenue from premium in 2025.

Financial Performance

The company's financial performance was marked by a strong balance sheet, with total debt reduced by $2.1 billion in 2025, bringing total debt to $36.5 billion. The company's guidance for 2026 reflects a preliminary estimate of winter storm Fern, with capacity projected to be up 3-5% year over year, and revenue up 7-10% year over year. CASM ex fuel ex profit sharing and net special items is anticipated to be up 3-5%, with a one-and-a-half-point impact from winter storm Fern.

Operational Highlights

The company is focused on delivering a consistent, elevated customer experience, with investments in premium products and services, including its new flagship suite, lounge network, and onboard experience. As Robert Isom stated, "We're investing in premium products and services... and high-speed satellite Wi-Fi." The company is also maximizing the power of its network and fleet, with plans to expand its international fleet, increase premium seat growth, and grow its hubs in Philadelphia, Miami, and Phoenix.

Valuation and Outlook

With a P/E Ratio of 82.59 and an EV/EBITDA of 11.2, the company's valuation suggests that investors are pricing in significant growth expectations. Analysts estimate next year's revenue growth at 5.7%. The company's focus on premium growth, loyalty proposition, and efficient capacity is expected to drive margin growth. However, the company's ROE (%) is -2.76, and Net Debt / EBITDA is 8.84, indicating that there is still work to be done to achieve a strong financial position.

Future Prospects

The company expects to continue improving its premium mix in 2026, with a focus on delivering a rich and evolving customer experience. With plans to take delivery of 55 new aircraft in 2026, total capital expenditures are expected to be between $4 and $4.5 billion. The company anticipates free cash flow generation of more than $2 billion for the full year, further strengthening its balance sheet.

3. NewsRoom

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Anglo American shares on front foot as annual earnings rise

Feb -20

Source: proactiveinvestors.co.uk

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Stock Market Today, Feb. 19: American Airlines Falls as Rising Fuel Costs Test 2026 Earnings Outlook

Feb -19

Source: fool.com

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American Airlines Partner PSA Reaches Flight Attendant Contract Deal

Feb -19

Source: forbes.com

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Teck Resources reports strong Q4 earnings, advances Anglo American merger

Feb -19

Source: proactiveinvestors.com

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American Airlines CEO Can't Catch A Break, Even When Yale Praises Him

Feb -19

Source: forbes.com

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UATP Partners with MICA to Bring Credential-less Multi-Tender Payment Solution to Merchants

Feb -19

Source: prnewswire.com

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DAL vs. AAL: Which Airline Stock Is a Stronger Play Now?

Feb -19

Source: zacks.com

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American Airlines picks CFM International to power upcoming Airbus A321neo jets

Feb -19

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.41%)

6. Segments

Passenger Travel

Expected Growth: 4.5%

The 4.5% growth in Passenger Travel from American Airlines Group Inc. is driven by increasing demand for air travel, fueled by a strong US economy, rising consumer spending, and a growing middle class. Additionally, American Airlines' strategic efforts to enhance customer experience, expand route networks, and invest in digital technologies have contributed to the growth.

Loyalty Revenue - Travel

Expected Growth: 3.8%

The 3.8% growth in Loyalty Revenue - Travel from American Airlines Group Inc. is driven by increased AAdvantage loyalty program membership, higher redemption rates, and strategic partnerships with hotels and car rental companies, resulting in more bookings and revenue. Additionally, enhanced customer experiences and personalized offers contribute to the growth.

Loyalty Revenue - Marketing Services

Expected Growth: 4.2%

American Airlines' 4.2% growth in Loyalty Revenue - Marketing Services is driven by increased demand for AAdvantage loyalty program, strategic partnerships with credit card companies, and effective targeted marketing campaigns, resulting in higher redemption rates and new member acquisitions.

Cargo

Expected Growth: 3.5%

The 3.5% growth in cargo from American Airlines Group Inc. is driven by increasing e-commerce demand, rising air freight rates, and a strong US economy. Additionally, the airline's investments in digitalization and expansion of its cargo network have improved operational efficiency, further boosting growth.

Other

Expected Growth: 3.2%

American Airlines' 'Other' segment growth of 3.2% is driven by increased demand for cargo services, higher revenue from loyalty program sales, and growth in airport and baggage fees. Additionally, the company's investments in digital transformation and cost-saving initiatives have improved operational efficiency, contributing to the segment's growth.

7. Detailed Products

Scheduled Passenger Flights

American Airlines operates a vast network of scheduled passenger flights to over 350 destinations worldwide, offering a range of fare options and amenities.

Cargo Services

American Airlines Cargo provides air freight services to transport goods, including perishables, pharmaceuticals, and other specialty items.

AAdvantage Loyalty Program

AAdvantage is American Airlines' loyalty program, offering rewards, upgrades, and benefits to frequent flyers.

Airport Lounges

American Airlines operates airport lounges, offering a comfortable and convenient space for passengers to relax and work.

Travel Insurance

American Airlines offers travel insurance options to protect passengers against trip cancellations, interruptions, and medical emergencies.

Vacation Packages

American Airlines Vacations offers bundled travel packages, including flights, hotels, and car rentals.

Meetings and Events

American Airlines provides customized travel solutions for corporate meetings, conferences, and events.

8. American Airlines Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

American Airlines Group Inc. faces moderate threat from substitutes, as customers have limited alternatives for long-haul flights, but can choose other modes of transportation for shorter distances.

Bargaining Power Of Customers

American Airlines Group Inc. has a large customer base, but individual customers have limited bargaining power due to the airline's large scale of operations.

Bargaining Power Of Suppliers

American Airlines Group Inc. has a diverse supplier base, and no single supplier has significant bargaining power over the airline.

Threat Of New Entrants

The airline industry has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to join the market.

Intensity Of Rivalry

The airline industry is highly competitive, with multiple players competing for market share, leading to intense rivalry among airlines.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 117.93%
Debt Cost 7.19%
Equity Weight -17.93%
Equity Cost 11.40%
WACC 6.44%
Leverage -657.65%

11. Quality Control: American Airlines Group Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Dycom Industries

A-Score: 5.0/10

Value: 2.0

Growth: 8.0

Quality: 5.2

Yield: 0.0

Momentum: 9.5

Volatility: 5.3

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Aramark

A-Score: 4.9/10

Value: 4.6

Growth: 5.9

Quality: 3.4

Yield: 2.0

Momentum: 5.0

Volatility: 8.3

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Southwest Airlines

A-Score: 4.4/10

Value: 5.3

Growth: 3.0

Quality: 3.6

Yield: 3.0

Momentum: 6.0

Volatility: 5.3

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Air Canada

A-Score: 4.3/10

Value: 8.1

Growth: 6.1

Quality: 2.2

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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American Airlines

A-Score: 3.9/10

Value: 7.6

Growth: 4.8

Quality: 3.4

Yield: 0.0

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

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Alaska Air

A-Score: 3.5/10

Value: 6.4

Growth: 4.6

Quality: 3.1

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.92$

Current Price

12.92$

Potential

-0.00%

Expected Cash-Flows