AAL And ALK Explore Revenue Sharing Deal As Fuel Costs Dent Margins: Report

• Alaska might join American’s existing joint business arrangements with British Airways and Japan Airlines. 
• Partnership to improve AAL’s competing power against UAL and provide ALK with long-haul flight prospects.
• Analysts see 29% potential upside for AAL stock and 42% for ALK over the next 12 months. 

American Airlines (AAL) and Alaska Airlines (ALK) are pursuing potential revenue-sharing agreements and other strategic partnerships, according to a media report. 

The discussions include adding Alaska into American’s existing joint business arrangements, principally its transatlantic partnership with IAG SA’s British Airways, as well as its Pacific joint business with Japan Airlines, Bloomberg reported. 

The arrangements are expected to give AAL access to the U.S. West Coast as it looks to boost sales and pare down debt and provide ALK access to long-haul flights that AAL specializes in. 

Alaska Air, earlier this year, ordered 105 narrowbody 737 Max 10 models and five 787-10 widebody aircraft, in a bid to increase long-haul flight coverage, building on its $1.9 billion acquisition of Hawaiian Airlines. 

Hawaiian Airlines said on Wednesday it transitioned to the same Sabre (SABR) passenger service system used by Alaska Airlines, a significant integration milestone that provides guests flying with Alaska Airlines and Hawaiian Airlines a more seamless and consistent travel experience from booking to boarding across a growing global network. 

The war in the Middle-East has dented optimism around airline stocks with higher fuel costs squeezing margins of aircraft operators. 

United Airlines (UAL) faced a $340 million increase in fuel costs in Q1’26 compared to last year and Delta Airlines (DAL) cited a $2 billion fuel headwind but expects its refinery to offset a portion of those costs moving forward.

What Do Analysts Say?

13 out of 26 analysts rated AAL stock ‘buy’ or higher, 11 rated ‘hold’ and 2 rated it ‘sell’. The average 12-month price target for the stock was $14.82, representing a 29% upside.

Whereas, 16 analysts rated ALK ‘buy’ or higher with an average 12-month price target of $58, marking a 42% upside. 

Retail View

Retail sentiment on AAL and ALK were ‘extremely bullish’ with ‘high’ message volumes. 

One user on Stocktwits highlighted the demand-supply mismatch in the U.S. for air travel. 

AAL stock dropped 25% and ALK eased 19% year-to-date.  

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