AAL stock forecast: Is American Airlines taking off?

What’s the AAL stock forecast as American Airlines comes back from the pandemic?

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Considering that it is the US’ number one airline, 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 hadn’t 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 have helped paint a perhaps rosier view of things than might otherwise be the case. However, with 2022 fast approaching, what’s the American Airlines (AAL) stock forecast? 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 21 October provided some good news for the company. American Airlines managed to generate an overall profit of $169m over the three months ending on 30 September, against an overall loss of $2.4bn in the same quarter last year. It scored revenues of $8.9bn compared to $3.1bn in the same time period in 2020. Money from passenger flights more than trebled, going from $2.5bn to $7.9bn. Both money coming in from cargo and other streams were up 59.8%, with cargo coming in at $332m and other sources of revenue scoring $680m for the business. 

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 than $990m in federal payroll support, without which it made losses of $0.99 per share, admittedly less than the $1.04 expected by analysts, according to CNBC. However, with the government support, the diluted earnings per share were $0.25, which absolutely smashed last year’s third quarter score of a $4.71 loss. 

One of the more encouraging signs of recovery came in the statistic for international passenger miles. This came in at 9.2 billion, up nearly six times year-on-year from 1.6 billion, showing that more people were travelling further distances. With the US government cutting restrictions on who can enter the country in early November, it will be interesting to see how American responds.

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 Airlines warned that it would be some time before things were at pre-Covid levels, saying: “Based on current trends, the company expects its fourth-quarter capacity to be down approximately 11% to 13% compared to the fourth quarter of 2019. American expects its fourth-quarter total revenue to be down approximately 20% versus the fourth quarter of 2019. The company also expects its fourth quarter pre-tax margin excluding net special items will be between negative 16% and negative 18%.”

There was some positivity, though, with CEO and chairman, Doug Parker, saying he was optimistic about how his company could come out of the pandemic: “The American Airlines team continues to demonstrate its resilience and ability to execute, enabling us to deliver our best quarter since the pandemic began as measured by pre-tax financial results. 

“While the rise of the Covid-19 delta variant delayed some of our revenue recovery, it has not stopped our progress. We are incredibly proud of the team’s hard work to operate a great airline, and with the network, cost and fleet simplification actions we have taken, we’re confident American is well-positioned as the recovery takes hold.”

The markets react

American Airlines price chart
American Airlines price history - Credit: Currency.com

In all, the markets were very slightly impressed by how American Airlines had performed over the quarter. When the markets closed on 20 October AAL stock price was $19.52, but when they opened on 21 October, after the results were announced, the share price was up to $19.62. That may only be a rise of 0.5%, but it was a rise nevertheless. The AAL stock price went up to break the $20 mark with an intraday high of $20.01 before dropping down slightly to finish the day at $19.89, up a little under 2% from where it was 24 hours earlier. 

These results do need a little bit of context , the AAL share price has been on a bit of a journey lately. If we look back to 22 October 2020, the stock started the day at $12.60, which means that over the last 12 months AAL stock has gone up by almost 60%. On the other hand, the 52-week high was the intraday score of $26.09, which the current price is down from by about 23.7%. There has also been a recent downward trend, although it is possible that this might be changing, we don’t know for sure.

AAL price forecast

When it comes to making an AAL stock forecast, the overall view was fairly spread out with slight optimism winning out. The median American Airlines stock forecast of 18 analysts asked by CNN Money for their 12-month AAL stock predictions was $20.75, which would see it up about 5% from its recent levels.

The most optimistic of the stock predictions was $28, which would see it rise by around 41%. On the other hand, there is always the possibility of disaster striking the shares, with the most pessimistic prediction coming in at $5, down by about 75%. 

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 22 analysts for their recommendations for AAL stock, there was a slight majority in favour of holding. In total, nine of the experts said to hold. Slightly worrying for the stock is that seven analysts suggested selling, while one thought it would underperform against expectations.

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

FAQs

It might be. AAL has certainly done well 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.

Maybe. It’s worth noticing that American Airlines stock has risen a lot overall over the last 12 months, so we do have to wonder when and if this will stop, even if it’s down from where it was in March. 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.

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, gov.capital says that, on 22 October 2025, the price could be anywhere between $155.74 and $210.71. Even then, that figure might seem to be a bit optimistic. You have to realise that forecasts so far in the future are very often very wrong. You will need to do your own research and apply caution.

Further reading

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