Imperial Capital Upgrades American Airlines (AAL) to Outperform
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Imperial Capital upgraded American Airlines (NASDAQ: AAL) from In-Line to Outperform with a price target of $46.00 (from $49.00).
Analyst Mike Derchin comments "We expect AAL to announce capacity reductions for the post labor day shoulder period by its July earnings call due to: 1) higher fuel prices pressuring pre-margins, given AAL is 100% unhedged, 2) weaker demand in the off-peak periods with capacity reductions likely to improve AAL’s pricing power, in our view, and 3) management bonuses tied to AAL reaching at least $3bn in pre-tax income, which we now estimate AAL to reach assuming it reduces post-labor day capacity. We now estimate AAL limits capacity growth to 1% in FY19, consistent with FY17 levels."
Shares of American Airlines closed at $43.54 yesterday.
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