Three Risks Facing American Airlines
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 26 2026
0mins
Source: Yahoo Finance
- Weak Revenue Passenger Miles: American Airlines reported 58.55 billion revenue passenger miles in the latest quarter, with a disappointing average growth of 10.6% over the past two years, indicating potential price cuts or product investments may be necessary, which could hinder short-term profitability.
- Declining Return on Invested Capital: The company's ROIC has averaged a 1 percentage point decline annually, suggesting limited profitable growth opportunities, which may negatively impact investor confidence and future business quality.
- High Debt Levels: With $34.53 billion in debt compared to $7.29 billion in cash, American Airlines' 7× net-debt-to-EBITDA ratio indicates over-leverage, increasing bankruptcy risk and potential credit rating downgrades if profitability declines.
- Underwhelming Market Performance: Although American Airlines' stock has recently outperformed the market at $17.53 per share, its 7.8× forward EV-to-EBITDA valuation suggests limited upside potential, prompting investors to consider higher-quality alternatives.
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Analyst Views on AAL
Wall Street analysts forecast AAL stock price to rise
15 Analyst Rating
7 Buy
7 Hold
1 Sell
Moderate Buy
Current: 17.750
Low
11.00
Averages
17.93
High
22.00
Current: 17.750
Low
11.00
Averages
17.93
High
22.00
About AAL
American Airlines Group Inc. is a holding company. Its primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo, among others. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle. Its cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. It operates approximately 977 mainline aircraft supported by its regional airline subsidiaries and third-party regional carriers, which together operate an additional 585 regional aircraft. Its subsidiaries include American Airlines, Inc., Envoy Aviation Group Inc., PSA Airlines, Inc. and Piedmont Airlines, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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