AAL Inventory: American Airways Appears Poised to Maintain Climbing


To American Airlines (NASDAQ:EEL) posted strong second quarter results on July 22nd and was very positive on the outlook, I recommend investors buy AAL shares.

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Because concerns about the Delta variant, which will lead to new closures or a significant restriction on air traffic, are exaggerated. American financial results should continue to improve.

The appeal of AAL stock also makes the fact that American Airlines has taken steps that show that they are very confident about their medium- and long-term prospects.

Good Q2 results

American reported a loss per share of $ 1.69 for the second quarter. That was 92 cents better than the average forecast of the analysts. The company’s revenue was slightly below average estimate, but up 87% from the first quarter.

Additionally, American’s passenger revenue more than doubled from the first quarter, while passenger revenue per available seat mile increased 42% from the previous quarter. In another very good piece of news, the company said it was profitable in June.

Additionally, American said its net bookings had reached similar levels to the same quarter of 2019. For the current quarter, airlines expect total revenue to decline only about 20% over the same period in 2019.Because the loss in the third quarter will be minimal, American forecast a pre-tax margin excluding special items between -3% and – for the third quarter. 7%.

Consistent with my previous forecast for business aviation recovery, American reported that the company’s sales to business travelers increased from about 20% of 2019 sales in March to about 45% of 2019 sales in June.

“Looking ahead, we expect the recovery {the} business {travel} to continue and accelerate,” said US President Robert Isom on the company’s second quarter earnings conference call.

Finally, Marek Hake, another columnist for InvestorPlace, noted that American cash flow from operations was $ 3.47 billion.

Signs of strong trust

In the past few weeks, American has taken several steps that suggest the company is very optimistic about its medium- and long-term prospects.

For example, on its second quarter results conference call, the company announced that it had repaid a $ 950 million loan that was not due in April 2023 and the company was hiring nearly 3,5,000 new employees, and 3,000 more brought back from vacation. The airline now expects to reduce its debt by more than $ 15 billion by the end of 2025, CFO Derek Kerr reported on the conference call.

And in the current quarter, American wants 20,777 planes from Boeing (NYSE:BA). Finally, the company plans to add over 150 routes over the summer months.

The delta variant

Undeniably, the 2020 lockdowns seriously injured children, many of them with illnesses other than Covid-19, as well as the American and global economies. However, I didn’t see any concrete evidence that the lockdowns helped prevent the spread of the coronavirus.

In fact, there is speculation that the disease might spread less when people are in the world (but avoiding the crowds) than when they are locked in a house or apartment together.

The vaccines are now helping a lot. Serious illnesses are very rare in vaccinated people. For example, Houston Methodist Hospital CEO Marc Boom said on Bloomberg TV on July 26th that 85 to 90% of his hospital’s current coronavirus patients were not vaccinated.

And daily deaths from coronavirus in the US recently ranged from 200 to 400, well below the daily average for the roughly five-month 2017-2018 flu season when over 80,000 people died from the virus in the US. (That’s an average of around 530 deaths per day).

And on an individual level, with relatively few exceptions, those who are very afraid of the coronavirus have been given a vaccine, while those who have not been vaccinated are not very afraid of the disease. In addition, several people who had been vaccinated, who had been very afraid of the coronavirus in the previous year, told me that they flew after the vaccination.

In view of these points, I am convinced that the demand for flight tickets will continue to approach the level of 2019 in the future.

The bottom line of the AAL share

Travel trends are strengthening and will continue to improve in the future as American reported strong earnings for the second quarter and optimistic outlooks for the third quarter. In addition, fears that the Delta variant could harm the airlines are unfounded.

With American’s bright outlook, I’m confident AAL stock will do the S&P 500 for the rest of the year.

On the day of publication, Larry Ramer had no positions (either directly or indirectly) in any of the securities referred to in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s posting guidelines.