American Airlines: Much To Potentially Gain From Recovery, But High Leverage Is A Concern


  • American Airlines has returned to profitability and is seeing top-line strength with record unit and quarterly revenues achieved.
  • The airline added billions in debt to keep going through the pandemic, which will serve as a headwind for the foreseeable future.
  • While American attempts to navigate the recovery, it seems appropriate to observe from a distance and pursue other airlines if looking to invest in the sector.

Taxiing Passenger Jet

shaunl/E+ via Getty Images

I rate American Airlines (NASDAQ:AAL) shares a Hold at the current time. I’d generally want to wait until the shares got cheaper to consider investing, and would avoid them in favor of several other U.S. airlines given how

Operating margin (Q3 2022) 7.2% 10.4% 11.3%
Non-passenger revenue as % of total (YTD 2022) 9.3% 21.0% 11.4%
Debt / EBITDA (Q3 2022, annualized EBITDA) 6.3 3.6 4.3

2023 2024 2025
Gross Debt / EBITDA 5.0 – 5.5 4.0 – 5.0 3.5 – 4.0
Net Debt / EBITDA 4.0 – 4.5 3.5 – 4.5 3.0 – 3.5

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Leave a Reply

Your email address will not be published. Required fields are marked *