American Airlines Group Inc (AAL) : No Reason to Be Skeptical

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American Airlines Group Inc (NASDAQ:AAL) is in the spotlight after JPMorgan upgraded the stock and rejected Wall Street’s fears amid a weak third quarter report. JPMorgan’s analyst Jamie Baker said in his report that American Airlines’ plans to increase revenue which will boost the stock price in the near future. The analyst is bullish about American Airlines’ efforts to expand no-frills basic economy class and bring key changes to the domestic premium cabin. Baker said that he was “somewhat skeptical” of the airliner’s plan, but based on the fourth quarter forecast, it seems the company is benefiting from “prudent revenue management.” In the fourth quarter, American Airlines expects its revenue per available seat mile to increase by approximately 2.5% to 4.5% year over year. This shows that the company is experiencing growth amid increasing leisure travel. JPMorgan’s report said that the latest sell-off was the result of an overreaction. JPMorgan gave a price target of $65 for American Airlines stock.

American Airlines Group Inc (NASDAQ:AAL) revenue in the quarter was weak because the company had to cancel at least 8,000 flights amid massive hurricanes and bad weather conditions. The company also suffered due to rising fuel costs. The company reported revenue per mile growth of just 1.1% in the third quarter.

American Airlines Group Inc (NASDAQ:AAL) is working to increase its fuel efficiency. According to an estimate, by the end of 2021, American Airlines fleet will be 10% more fuel efficient.

On October 23, Cowen’s analyst Helane Becke issued an upbeat report on American Airlines Group Inc (NASDAQ:AAL) stock. The analyst thinks that investors should “move on” from United and load up on American and Southwest. The analyst also thinks that the travel industry will experience a comeback in 2018 as tensions between North Korea and the US will abate. Becke published another bullish report on American Airlines on November 7. Becke said that AA management is focusing on what it can control while trying to mitigate external problems. The analyst maintained an “Outperform” rating and a $56 price target.

Last month, Buckingham Research reiterated a “Buy” rating for American Airlines Group Inc (NASDAQ:AAL) stock.

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