American Airlines Stock Dives 9% Post-Earnings: Is Now the Time to Buy?

American Airlines stock dropped 9% following the company’s earnings report early Thursday.  The drop provides what investors are likely to view as a “buy the dip” opportunity.

American Airlines (AAL) reported earnings that beat the company’s fourth-quarter expectations.  Earnings per share were a full $0.20 above analysts’ target.  American Airlines also beat the company’s top line revenue target handily resulting in 4.6% sales growth compared to last year.

The company’s strong showing was tempered by a weaker than expected outlook.

American’s management offered a less optimistic outlook compared to its competitors Delta Air Lines (DAL) and United Airlines (UAL). 

Despite a record-breaking holiday travel season, AAL is projecting weaker-than-expected earnings for the first quarter and the full year of 2025. 

The company anticipates a first quarter earnings in a range from a loss of $0.40 to $0.20.  American also set its FY25 EPS guidance at $1.70 to $2.70, disappointing analysts who expected more robust figures.

AAL attributes the cautious outlook to current demand trends and rising fuel costs as jet fuel prices have increased approximately 12% since early December. 

Despite a generally strong demand environment American’s outlook suggests challenges that are company specific.  Last year, American focused on maximizing profits from its existing corporate accounts rather than expanding its customer base.  That strategy appears to have backfired as competitors enhanced their services and added premium offerings.

CEO Robert Isom is now prioritizing the revitalization of AAL's corporate business, which grew 6% last quarter. However, AAL also faces rising unit costs, expecting a high-single-digit increase in non-fuel costs due to capacity reductions.  That’s in contrast to other operators in the industry like Delta Airlines.

American Airlines stock has been in a strong bull market trend, from both the short- and long-term perspective.

Shares have been trading above their bullish 50-day moving average, providing a strong background for a recover of today’s losses.  That trendline is currently positioned just below current prices at $16.35.

The stock recently started a new long-term bull market trend after moving above their 20-month moving average in October.  That trend is likely to remain intact, though prolonged selling could draw American Airline shares as low as $15.



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