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Category: Stock Market and American Airlines
Date: 23 July 2020 Stock Price of American Airlines : $11.37 We take a look at the 1st quarter earnings report of their 2020 fiscal year of American Airlines. The group (and all its peers) have been hit very hard by the Covid-19 pandemic and the impact is had on travel, both locally and abroad. For the quarter the group's revenue declined by -19.6% and they suffered a loss of -$2.24 billion. And its set to get worse when they report 2nd quarter 2020 earnings later today (23 July 2020)
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Never before has our airline, or our industry, faced such a significant challenge - American Airlines Chairman and CEO Doug Parker. "
About American Airlines
American Airlines and American Eagle offer an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. American is a founding member of the oneworld® alliance, whose members serve more than 1,000 destinations with about 14,250 daily flights to over 150 countries. Shares of American Airlines Group Inc. trade on NASDAQ under the ticker symbol AAL. In 2015, its stock joined the S&P 500 index
American Airline Plane
Overview of American Airlines 1st quarter 2020 earnings report
The data below refers to the numbers of the latest quarter (unless specified otherwise)
- Revenue: $8.515 billion (down from $10.584 billion for the same quarter of the previous year)
- Revenue decreased by -19.6% over the last 12 months
- Total operating expenses: $11.064 billion (up from $10.209 billion for the same quarter of the previous year)
- Total operating expenses increased by 8.4% over the last 12 months
- Net loss: -$2.24 billion (down from $185 million for the same quarter of the previous year)
- Diluted loss per share: -$5.26 (down from $0.41 for the same quarter of the previous year)
- Weighted average shares outstanding-diluted: 425.713 million (down from 453.429 million for the same quarter of the previous year)
- Cash and equivalents: $474 million
- Cash and cash equivalents per share: $1.13
- Cash and cash equivalents makes up 0.8% of the American Airlines' total assets
- Cash and cash equivalents makes up 9.8% of American Airlines' current market capital
- Accounts and notes receivable: $1.020 billion
- Accounts and notes receivable makes up 1.7% of the group's total assets
- Goodwill of American Airlines: $4.091 billion
- Goodwill makes up 6.9% of American Airlines total assets
American Airlines management commentary on their 1st quarter 2020 earnings
FORT WORTH, Texas, April 30, 2020 (GLOBE NEWSWIRE) -- American Airlines Group Inc. (NASDAQ: AAL) today reported its first-quarter 2020 financial results, including:
“Never before has our airline, or our industry, faced such a significant challenge,” said American Airlines Chairman and CEO Doug Parker. “True to fashion, the American Airlines team has done a phenomenal job taking care of our customers and each other during such difficult and often heartbreaking times. We are incredibly proud of their selflessness and dedication to others."
“We have moved quickly and aggressively to reduce our costs and bolster our liquidity,” Parker continued. “We are particularly grateful for the $5.8 billion in financial assistance American will receive through the Payroll Support Program, and we appreciate the bipartisan congressional and U.S. Department of the Treasury and Department of Transportation support to protect airline jobs and ensure a strong and competitive U.S. airline industry.
“We have a lot of difficult work ahead of us. And while there is still uncertainty in what’s to come, we are confident that through the dedication of the American Airlines team and our swift actions, we will get through this for our team, our customers and our shareholders.”
COVID-19 response
In response to the precipitous drop-off in demand, American has acted quickly to take care of its team members, customers and communities; reduce costs; and improve its liquidity position.
- First-quarter net loss of $2.2 billion, or ($5.26) per share. Excluding net special items1, first-quarter net loss of $1.1 billion, or ($2.65) per share.
- Ended first quarter with $6.8 billion of available liquidity and expects to end second quarter with approximately $11 billion of liquidity.
“Never before has our airline, or our industry, faced such a significant challenge,” said American Airlines Chairman and CEO Doug Parker. “True to fashion, the American Airlines team has done a phenomenal job taking care of our customers and each other during such difficult and often heartbreaking times. We are incredibly proud of their selflessness and dedication to others."
“We have moved quickly and aggressively to reduce our costs and bolster our liquidity,” Parker continued. “We are particularly grateful for the $5.8 billion in financial assistance American will receive through the Payroll Support Program, and we appreciate the bipartisan congressional and U.S. Department of the Treasury and Department of Transportation support to protect airline jobs and ensure a strong and competitive U.S. airline industry.
“We have a lot of difficult work ahead of us. And while there is still uncertainty in what’s to come, we are confident that through the dedication of the American Airlines team and our swift actions, we will get through this for our team, our customers and our shareholders.”
COVID-19 response
In response to the precipitous drop-off in demand, American has acted quickly to take care of its team members, customers and communities; reduce costs; and improve its liquidity position.
Rightsizing the airline and its cost structure
American estimates a reduction of more than $12 billion in its 2020 operating and capital expenditures, achieved through lower fuel expense and a series of actions. The company:
To bolster liquidity, the company:
American’s average estimated second-quarter 2020 cash burn rate is expected to be approximately $70 million per day. As the company’s cost initiatives gain traction, its estimated daily cash burn rate is expected to decline over time to approximately $50 million per day for the month of June. Based on its current forecast, the company expects to have approximately $11 billion of liquidity at the end of the second quarter.
American estimates a reduction of more than $12 billion in its 2020 operating and capital expenditures, achieved through lower fuel expense and a series of actions. The company:
- Reduced system capacity by approximately 80% in both April and May, and 70% in June, including schedule changes announced today.
- Accelerated the retirement of four aircraft types, consisting of 20 Embraer 190s, 34 Boeing 757s, 17 Boeing 767s and nine Airbus A330-300s, along with a number of older regional aircraft. These changes remove operating complexity and bring forward cost savings and efficiencies associated with operating fewer aircraft types.
- Suspended all nonessential hiring, paused noncontractual pay increases, reduced executive and board compensation, and implemented voluntary leave and early retirement programs to reduce labor costs. In total, nearly 39,000 team members have opted for an early retirement, a reduced work schedule or a partially paid leave.
- Deferred marketing expenditures and reduced contractor, event and training expenses.
- Consolidated its footprint at its airport facilities.
To bolster liquidity, the company:
- Ended the first quarter with $6.8 billion of available liquidity, including approximately $2 billion raised during the quarter.
- Obtained the right to access $10.6 billion in financial assistance through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- Recently had its unencumbered assets appraised and believes the value of those assets is in excess of $10 billion, excluding the value of the AAdvantage program. The company expects to pledge a portion of its assets as collateral for future financings, including the approximately $4.75 billion secured loan American has applied for under the CARES Act.
- Suspended its capital return program, including share repurchases and the payment of future dividends, in accordance with the CARES Act.
- Does not have any large non-aircraft debt maturities for more than 24 months, outside of the recently arranged $1 billion, 364-day delayed draw term loan facility.
American’s average estimated second-quarter 2020 cash burn rate is expected to be approximately $70 million per day. As the company’s cost initiatives gain traction, its estimated daily cash burn rate is expected to decline over time to approximately $50 million per day for the month of June. Based on its current forecast, the company expects to have approximately $11 billion of liquidity at the end of the second quarter.
American Airlines (AAL) stock price history
The image below, obtained from Google, shows the stock price history of American Airlines (AAL) over the last 5 years. And it's not been a very good time for American Airlines. 5 years ago the stock of American Airlines was trading at $39.70 a stock and its currently trading at $11 That's a loss of -71.3% suffered by American Airlines stockholders over the last 5 years
The stock of American Airlines is trading at a lot closer to its 52 week low of $8.25 than it is to its 52 week high of $34.99 which to us is a clear indication that the short term sentiment and momentum of American Airlines stock is very negative at this point in time.
The stock of American Airlines is trading at a lot closer to its 52 week low of $8.25 than it is to its 52 week high of $34.99 which to us is a clear indication that the short term sentiment and momentum of American Airlines stock is very negative at this point in time.
American Airlines (AAL) stock price history over the last 5 years
American Airlines (AAL) vs Delta Airlines (DAL) vs Southwest (LUV) stock over the last 3 years
The image below shows the stock price performance of American Airlines (AAL), Delta Airlines (DAL) and Southwest Airlines (LUV) over the last 3 years. As the image shows all three airlines suffered major stock price declines since the start of 2020 as the impact of Covid-19 on travel started being felt. Over the 3 year period they provided the following returns to investors, sorted from best to worst performer
- Southwest Airlines (LUV): -39.86$
- Delta Airlines (DAL): -48.3%
- American Airlines: -77.5%
American Airlines (AAL) vs Delta Airlines (DAL) vs Southwest (LUV) stock over the last 3 years
Recent coverage of American Airlines (AAL)
The extract regarding American Airlines below is as obtained from Forbes.com
The hopes of a vaccine by Moderna helped drive the markets higher this week with Dow up by 2.3% and S&P 500 gained 1.3%. The Nasdaq NDAQ +2.4% lost 1.1% in contrast, as Tech stocks were under pressure in the latter half of the week. We saw several companies declare their quarterly results with many of them beating the estimates that were projected, with a glaring exception in Netflix, which lost 6.5% on Friday after missing estimates and guidance. Economic data also showed some signs of revival in the housing sector as retail sales picked up. Hopes of a fiscal stimulus also seemed to lift investor spirits. The US consumer sentiment index was below expectation on account of the pandemic resurging, putting a check on the rally. If you’re trying to analyze the data and want some help, our deep learning algorithms paired with Artificial Intelligence (“AI”) technology have rated some Trending Stocks this week below.
Read the full article here
The hopes of a vaccine by Moderna helped drive the markets higher this week with Dow up by 2.3% and S&P 500 gained 1.3%. The Nasdaq NDAQ +2.4% lost 1.1% in contrast, as Tech stocks were under pressure in the latter half of the week. We saw several companies declare their quarterly results with many of them beating the estimates that were projected, with a glaring exception in Netflix, which lost 6.5% on Friday after missing estimates and guidance. Economic data also showed some signs of revival in the housing sector as retail sales picked up. Hopes of a fiscal stimulus also seemed to lift investor spirits. The US consumer sentiment index was below expectation on account of the pandemic resurging, putting a check on the rally. If you’re trying to analyze the data and want some help, our deep learning algorithms paired with Artificial Intelligence (“AI”) technology have rated some Trending Stocks this week below.
Read the full article here
Inside an American Airline Plane
American Airlines (AAL) latest stock valuation
So based on American Airlines 1st quarter 2020 earnings report what do value the stock of American Airlines at? Based on the earnings report our valuation model provides a target price (full value price) for American Airlines at $9.30 a stock. We therefore believe the stock of American Airlines is overvalued.
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $9.30. A good entry point into the stock of American Airlines would therefore be at $8.40 or below. Since the stock of American Airlines is trading at well above our full value price we rate the stock of American Airlines as a sell
We usually recommend that investors look to enter a stock at least 10% below our target price which in this case s $9.30. A good entry point into the stock of American Airlines would therefore be at $8.40 or below. Since the stock of American Airlines is trading at well above our full value price we rate the stock of American Airlines as a sell
American Airlines (AAL) next earnings release
American Airlines is expected to release their 2nd quarter 2020 earnings report on 23 July 2020