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American Airlines Pops 10% Amid Financial Aid Bets

Shares of American Airlines soared 9.5% on Wednesday after CNBC reported that some senators have backed an additional $25 billion in federal aid to support the aviation industry amid a derailed recovery in travel demand due to the spike in COVID-19 cases.

American Airlines (AAL) has been one of the most affected airline companies grappling with travel restrictions imposed by governments across the world as coronavirus risks rise. In 2Q, the company reported a 86.4% revenue decline year-over-year with a pretax loss of $4.3 billion.

Last month, American Airlines had warned that it might cut 25,000 jobs as the coronavirus pandemic continues to hurt travel demand.

Meanwhile, Raymond James analyst Savanthi Syth on July 27 upgraded the stock to Hold from Sell stating a more balanced risk-reward scenario for the air carrier. Syth said, “Our view remains that bankruptcy is not in the cards for American in 2020 with Chapter 11 only a potential avenue if the earnings recovery stalls over multiple years.”

Overall, AAL has Hold analyst consensus. With shares down over 56% year-to-date, the average price target of $15.40 implies upside potential of about 23% to current levels. (See AAL stock analysis on TipRanks).

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Amit Singh
Amit Singh has over eight years of strong experience (both sell-side and buy-side) in analyzing financial reports and filings as well as identifying strategic investment opportunities. Over the years, Amit has covered various industries and geographies, with a primary focus on consumer staples and the consumer discretionary sector. Amit’s background spans evaluating company portfolios, building complex financial models, writing financial articles, and identifying the overall financial worth of companies. He has a post-graduate diploma in finance.

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