AAL stock forecast: Is American Airlines taking off?

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What is the AAL stock forecast as American Airlines recovers from the pandemic?

Contents

Considering that it is the number one airline in the US, the Covid-19 pandemic and the world’s gradual recovery have had a major impact on American Airlines. In the first quarter of 2020, as the pandemic took hold, the company racked up a loss of $2.2bn over that period, a dip into the red that had not been seen in seven years. The business was losing $70m a day as travel restrictions and social distancing on flights took their toll on the company.

Thus, 2020 was very much a year to forget for American Airlines and the aviation industry as a whole. Things have started to get better lately, US government bailouts helped paint a perhaps rosier view of things than might otherwise be the case. However, what is the AAL stock forecast for the rest of 2022? Will it take to the skies, will it crash land, or will it circle around in a holding pattern?

American Airlines quarterly update: Taking off

Before we get into the future, though, let’s take a look at some very recent history. Its latest set of quarterly results on 20 January provided some good news for the company. American Airlines managed to cut its losses to a net $2bn for the full year 2021. It scored revenues of $9.4bn compared with $3.1bn in the same time period in 2019. Money from passenger flights more than doubled, going from $3.2bn in 2020’s fourth quarter to $8.4bn in 2021. Both money coming in from cargo and other streams were up 71% and 22%, respectively, with cargo coming in at $341m and other sources of revenue scoring $704m for the business. 

AAL boasted transporting 165 million passengers, more than any other carrier in the US, and counted $15.8bn of liquidity at the end of the fourth quarter. The highest year-end balance in company history.

It should be noted that last year was one of the worst years ever for the aviation industry as a whole, as pandemic-related travel restrictions grounded flights and left staff on various forms of furlough. More to the point, perhaps, American Airlines bagged itself more $4.2bn in federal payroll support. However, with the government support, the diluted loss per share was $1.44, compared with $3.09 loss per share in the same period a year earlier. 

One of the more encouraging signs of recovery came in the statistic for international passenger miles. This came in at 10.4 billion, triple year-on-year from 3.4 billion, showing that more people were travelling longer distances. Domestic leisure and short-haul international are approaching 100% recovery, while domestic revenue is near 70% of 2019 levels in the fourth quarter.

American Airlines quarterly update: Is the sky the limit?

One other thing to note is what the company thinks it can do in the next quarter. In a statement, American CEO Doug Parker passed the torch to his successor, Robert Isom, to finish the recovery from the pandemic.

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“Over the past year, we have experienced periods of high travel demand countered by periods of decreased demand due to new COVID-19 variants,” Parker said. “This volatility has created the most challenging planning environment in the history of commercial aviation. Yet the American team has delivered, growing back faster and further than any other U.S. airline to meet this unpredictable demand.”

The markets react

In all, the markets were not very impressed by how American Airlines had performed over the quarter. When the markets closed on 20 January AAL stock price was $16.76. It fell slowly to $15.64 just over a week later on 28 January. Back on 2 June 2021, it closed at a 52-week high of $25.82.

AAL price forecast

When it comes to making an AAL stock forecast, the overall view was fairly spread out with slight optimism winning out. CNN Money’s American Airlines stock forecast by 18 analysts settled on a 12-month AAL stock prediction of $19, which would see it up about 12% from its recent levels.

The most optimistic of the stock predictions was $28. On the other hand, there is always the possibility of disaster striking the shares, with the most pessimistic prediction coming in at $8, down by about 52%. 

In terms of what to do with American Airlines stock, the overall view from the experts was a cautious one, bordering on the negative. When CNN asked 24 analysts for their recommendations for AAL stock, the consensus was hold. In total, 15 of the experts said to hold. Slightly worrying for the stock is that four analysts suggested selling, while one thought it would underperform against expectations.

There was some room for positivity, though, with three experts recommending buying into American Airlines and another one saying that it would outperform expectations. 

FAQs

Is American Airlines a good stock to buy?

It might be. AAL has certainly done better over the last 12 months, even if there has been some pull back from the 52-week high. That said, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose.

Will American Airlines stock go up?

Maybe. Analysts are expecting an increase, to about $18. Nevertheless, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose.

What is the American Airlines stock forecast for 2025?

This is a tricky question to answer. Most forecasts for so far in the future are, if we are honest with ourselves, rather vague. For instance, AI Pickup says that by 2025, the price could be anywhere between $28.04 and $29.01. You have to realise that forecasts so far in the future are very often very wrong.

Further reading

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