Key Takeaways
- American Airlines (AAL) is valued at a mere 0.2x price-to-sales ratio, while Citi’s analyst projects a $21 price target — representing approximately 60% upside from current trading levels.
- Management forecasts 2026 EPS between $1.70 and $2.70, with Wall Street consensus at $2.09, marking a nearly sixfold increase from 2025’s 36-cent result.
- The carrier eliminated over $2 billion in debt during the past year and aims to reduce total debt below $35 billion in 2026, ahead of its original timeline.
- An exclusive Citigroup credit card partnership that launched January 1 is projected to contribute $1.5 billion in annual EBIT by decade’s end.
- A joint $1 billion investment with Miami-Dade County for a new Concourse D at Miami International Airport was announced, with construction beginning in 2027.
For years, American Airlines Group (AAL) has significantly underperformed its major legacy carrier competitors. While Delta has climbed 221% since the March 2020 pandemic trough and United has rocketed over 400%, AAL has posted a modest 28% gain.
American Airlines Group Inc., AAL
This performance disparity is becoming increasingly difficult to justify.
Currently trading near $13.32 with an $8.8 billion market capitalization, AAL faces a consensus analyst price target around $18, suggesting potential gains exceeding one-third from present levels.
Citi’s John Godyn takes a more aggressive stance with his $21 target — approximately 60% higher than today’s price. His thesis centers on the belief that bearish sentiment surrounding United’s competitive threat in Chicago has reached its peak.
Ryan Kelley, Chief Investment Officer at Hennessy Funds — where AAL ranks among the top 10 holdings across mid-cap strategies — emphasizes the valuation opportunity. Trading at 0.2 times price-to-sales, the shares represent a bargain. “American is very attractively priced, is cash-flow positive, and it has good momentum,” he noted.
While January’s earnings release appeared disappointing on the surface due to reduced government revenue during the federal shutdown and expenses from winter storm Fern, the full-year outlook revealed a more optimistic picture.
Profitability Turnaround Gaining Momentum
AAL provided 2026 EPS guidance ranging from $1.70 to $2.70. The midpoint exceeded the then-prevailing consensus of $1.97. Analysts have subsequently raised their estimates to $2.09 — representing almost six times the 36-cent earnings delivered in 2025.
Following two straight years of declining profits, 2026 appears positioned to mark an inflection point.
Analysts project approximately 30% EPS expansion in 2027, reaching roughly $2.72 per share.
Bernstein’s David Vernon suggested that consensus 2026 EPS forecasts “could go up double digits” driven by strong premium ticket sales, resilient corporate travel demand, and strengthening booking patterns.
Morgan Stanley’s Ravi Shanker observed that the most recent earnings call resembled commentary from a conventional mainline carrier rather than a company defending past missteps.
Balance Sheet Strength, Strategic Partnerships, and Hub Expansion
Regarding financial position, AAL reduced its debt load by more than $2 billion over the past year. Management now anticipates bringing total debt under $35 billion during 2026 — accelerating the timeline by one year.
The newly launched exclusive credit card partnership with Citigroup, effective January 1, is anticipated to deliver an incremental $1.5 billion in annual EBIT by 2030, while providing immediate accretion to 2026 earnings per share.
Premium travel demand remains a supporting factor for the investment case. Delta disclosed that premium cabin revenue exceeded main cabin revenue for the first time during Q4. AAL has experienced comparable strength from affluent travelers.
Tuesday’s options activity revealed calls outpacing puts at a 0.33 ratio, significantly below the standard 1.18, indicating bullish sentiment in the derivatives market.
On Tuesday, AAL and Miami-Dade County unveiled plans for a $1 billion investment to construct a new Concourse D at Miami International Airport. Chief Executive Robert Isom characterized it as “a transformational project.” Construction commences in 2027.
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