Rothschild & Co Upgrades American Airlines to Buy with $17.50 Price Target
Rothschild & Co. Redburn has upgraded American Airlines Group (AAL) from neutral to a buy rating, setting a price target of $17.50. This upgrade implies a potential 24% upside from recent trading levels. Analyst Gavin Tennant noted that the airline's re-established network and strategic investments in key travel hubs, combined with a high-fare growth environment, create significant opportunities for revenue expansion and balance sheet deleveraging. Despite facing headwinds from rising jet fuel costs due to geopolitical tensions, American Airlines has implemented cost-cutting measures including fleet reduction and service curtailment. The bank expects robust U.S. travel demand and rational capacity growth to keep passenger fares elevated through 2027. If fuel volatility subsides, the airline is positioned to benefit from sustained higher pricing, driving margin expansion.