American Airlines at 20-month low

American Airlines Group Inc. tumbled to a 20-month low after an analyst cut its stock rating and trimmed earnings estimates for the industry, citing recent terrorist attacks, higher fuel prices, and a chance that Britain will leave the European Union.

American dropped 4.6 percent to $29.09 at midday, reaching its lowest intraday price since October 2014. The stock closed at $29.14, down $1.35 a share, or 1.35 percent. American operates 70 percent of the flights from Philadelphia International Airport.

Bank of America Merrill Lynch cut American’s stock rating to underperform, the equivalent of sell, from neutral, in part because of increasing debt. American, the world’s largest airline, will represent more than 50 percent of the U.S. industry’s net debt by the end of 2016, wrote analyst Andrew Didora.

Rival carriers, meanwhile, are reducing their borrowing. Merrill Lynch cut its price target for American to $27 from $42.

“A revenue environment that is not improving during a time of rising oil prices leaves the balance sheet strategy of American a bigger risk than three months ago,” Didora wrote.

American typically doesn’t comment on analyst reports, according to a spokesman.

Rising capacity, combined with stagnant revenue from each seat flown per mile, means airlines are ill-prepared to deal with events that might reduce travel demand, such as the attack on nightclub patrons in Orlando and the possibility that Britain will leave the EU, Didora said.

He cut his average estimate for industry earnings per share by 7 percent for this year and 13 percent for 2017.

Leave a Comment

Apple Music Turns One Year Old With 15 Million Subscribers on Board and a Redesign on the Way

Today marks the one year anniversary of Apple Music, which launched in 110 countries on June 30, 2015. The streaming music service was initially limited to the Mac and iOS devices, and it has since expanded to Apple TV and…
READ THE WHOLE ARTICLE

World’s Largest Uncut Diamond Fails to Sell at Sotheby’s Auction

After much admiration and anticipation, the world’s largest uncut diamond failed to sell at a public auction Wednesday night. The 1,109 carat white diamond did not meet the minimum reserve price, which was not specified by Sotheby’s auction house in…
READ THE WHOLE ARTICLE

What’s the Biggest Thing You Can Rent?

Some companies go all out when it comes to renting the biggest and most expensive venues for their holiday parties. For example, in 2014, Facebook took over the San Francisco Giants’ AT&T Park. Not wanting to be outdone, LinkedIn employees…
READ THE WHOLE ARTICLE
GET THE REAL & UNBIASED NEWS
Get the daily digest right into your inbox, and stay on top of what's going on in the world...
GET THE REAL & UNBIASED NEWS
Get the daily digest right into your inbox, and stay on top of what's going on in the world...
YOU WILL NOW GET THE REAL NEWS
Thanks for signing up! We are excited to have you with us. You will get one email from us everyday. This email will contain a list of the top news stories for the day, and a link for you to check those stories out. Occasionally, we'll send an extra email to tell you about special offers from our sponsors and partners.