The history of American Airlines Group Inc. dates back to 1926. This is one of the biggest airline businesses in the world that takes leading positions in passenger transportation. It provides high-quality services to thousands of people every year. Even the lockdown, which had a great impact on the travel industry, didn’t deprive the brand of the top positions in this sector.
The restrictions are now not as severe as they were at the beginning, so major airline companies, including American Airlines, have can provide the full range of their services. How does it impact today’s conditions of the AAL stock? Is it a good idea to invest in it right now? Let’s see what are the advantages and disadvantages.
Performance of the Company
Analysts forecasted that the revenue for Q1 would amount to around $9 billion. The company managed to meet the expectations and generated $8.9 bin. This is a great result compared to the 2019 Q1. The general increase amounts to more than 80%.
Such growth is caused by the easing up of the restrictions of the lockdown. The business managed to open its local offices again and increased the passenger capacity. It was reported that this quarter’s number of bookings is the highest one over the last 3 years.
Despite the growing revenue, the company didn’t see profits, since the net losses increased to $2.52 per share. American Airlines reported that an increase in profits is expected for Q2.
If you take a look at the price movement history of the American Airlines stock, you’ll see that the chart shows the unstable dynamics. This is common for other airline stocks as well because their performance depends on many global events. Here is how these events have been changing American Airlines’ stock price.
- In 2007-2008, oil prices all over the world started surging at an extreme pace. The costs were marking new records regularly, which made U.S. airline companies’ stocks go down. The American Airlines stock was one of the assets that were impacted by this fuel crisis. As a result, it decreased from $55 at the beginning of 2007 down to $2.50 by the middle of 2008.
- In October 2018, the oil prices impacted the AAL stock price again. In the third quarter of the year, the company didn’t manage to meet the revenue expectations because of the growing fuel costs. As a result, over that year, the stock decreased by 35%. In October 2018, it fell down to its lowest closing price since August 2016. The stock was closed at $33.55.
- The pandemic of COVID-19 made the airline companies cut down the number of passenger transportation. Of course, this had a huge influence on the financial reports and the revenues of the businesses. The beginning of the pandemic was the worst period for the AAL stock throughout these 2 years. Between December 2019 and April 2020, its price dropped from $28 to $10.50. After the restrictions were eased up, the company managed to recover its earnings and the stock price stabilized to today’s $13 per share.
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- Passengers are starting to return to airline companies. This will increase their annual revenue and stabilize the conditions in the financial sector. We may see a positive impact from the satisfying first-quarter report.
- American Airlines is one of the biggest airline services providers that have the capabilities to perform successfully even in harsh market conditions.
- The company has taken steps to decrease its expenses and improve its liquidity.
- The American Airlines stock has a low entry-level, which might attract more investors and decrease the demand for the company’s shares.
- International and business travels are the main source of the company’s profits. According to recent research, there’s no chance that the number of international and business flights will recover to its pre-pandemic level soon.
- Despite the growing quarter revenue, the company isn’t profitable yet. It needs time to recover.
If the pandemic doesn’t come back, the company has a great chance to recover over time. It’s expected to increase its passenger capacity and the total quarter revenue by 8%, compared to Q2 2019. That’s why the American Airlines stock might be considered a good long-term investment.