Morningstar

American Airlines Earnings: Ticket Distribution Misstep Affected Results

We’re reducing our fair value estimate of American’s stock.

The American Airlines logo on top of the American Airlines Center.
Securities In This Article
American Airlines Group Inc
(AAL)

Key Morningstar Metrics for American Airlines

What We Thought of American Airlines’ Earnings

American Airlines AAL released its second-quarter results on July 25 and lowered its financial forecast for the rest of the year. We have reduced our fair value estimate to $12.00 per share from $13.10. The firm’s aggressive moves in late 2023 to modernize how it digitally sells and distributes its tickets disrupted distribution, thanks to travel management companies and global distribution systems that aren’t yet using the latest digital protocols to capture the many nuanced offers airlines put forth. As a result, the firm has lost market share in the lucrative business travel market.

American parted ways with its chief commercial officer in June and reversed tactics intended to incentivize the adoption of digital ticketing platforms, such as withholding mileage rewards from passengers who booked through legacy systems. We believe it will take until next year for the company’s distribution to return to previous patterns. The commercial misstep occurred at an inopportune time, as US airline capacity outstripped demand in early 2024, leading to aggressive ticket discounting, further dismantling profitability.

American Airlines Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Nicolas Owens

Equity Analyst
More from Author

Nicolas Owens is an equity analyst, AM Industrials, for Morningstar*. He covers the aerospace and defense sector, including Boeing, Airbus, major North American commercial airlines and defense contractors, and key suppliers to the aerospace industry.

Before joining Morningstar in 2002 as an equity analyst, Owens worked in financial services. Owens previously covered the aerospace sector for Morningstar from 2002-05. Until 2022, he filled a range of business roles commercializing Morningstar research across a wide swath of the investment audience.

Owens holds a bachelor's degree in politics from Princeton University. He also holds a Master of Business Administration in finance and strategic management from the University of Chicago Booth School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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