- UBS cut AAL's price target to $14 from $15, citing rising fuel costs.
- Analysts prefer "higher-quality" airlines with stronger margins.
- Stocktwits sentiment has slipped to 'bearish' over the past three months.
Shares of American Airlines Group Inc. (AAL) rose nearly 1% overnight heading into Friday and are on track for a second straight weekly gain, tracking a broader rebound in airline stocks after U.S. President Donald Trump signaled progress in de-escalation talks with Iran.
AAL, along with peers such as Delta Air Lines, Inc. (DAL) and Southwest Airlines Co. (LUV), have managed to eke out solid gains this week even as the S&P 500 and Nasdaq Composite head for a fifth straight week of losses.
U.S. stock futures are also rising after Trump extended a deadline tied to potential attacks on Iran's energy facilities to April 6, easing near-term escalation fears even as fears on oil supply lingered.
Analysts Stay Constructive Despite Cost Pressures
UBS on Monday maintained a 'buy' rating on AAL but trimmed its price target to $14 from $15, citing rising jet fuel costs following the Iran conflict and a resulting shift in investor preference toward higher-margin carriers like Delta Air Lines, Inc. and United Airlines Holdings, Inc. The firm added that, despite strength in revenue per available seat mile and fare hikes, elevated fuel costs are likely to weigh on second-quarter earnings.
Meanwhile, TD Cowen reiterated its 'buy' rating and raised its price target to $17 from $13 last week, citing better-than-expected first-quarter fuel-cost impact and encouraging forward-booking trends. The firm continues to view AAL as its top pick among U.S. airlines.
AAL's In-Flight Experience Push Gains Attention
Separately, CNBC reported that American Airlines is in talks with SpaceX's Starlink and Amazon.com, Inc. to overhaul its in-flight internet and entertainment offerings.
The discussions reportedly center on enhancing onboard Wi-Fi and seatback content, potentially including Amazon Prime video, music, and even shopping features.
AAL has already rolled out Wi-Fi access for AAdvantage members, sponsored by AT&T Inc., across most domestic flights and select international routes. The airline has also partnered with Apple Inc. to offer content from Apple TV+ and Apple Music.
Financial Outlook
For the full year 2025, American Airlines reported revenue of $54.6 billion, including $14 billion in the fourth quarter. The company said Q4 revenue was hit by about $325 million due to the government shutdown.
CEO Robert Isom said the airline sees "significant" upside into 2026 and beyond, with expectations for 7% to 10% total revenue growth and more than $2 billion in free cash flow this year. AAL also forecast full-year adjusted earnings per share of $1.70 to $2.70.
Retail Sentiment Remains Cautious
On Stocktwits, sentiment around AAL has slipped to 'bearish' from 'neutral' over the past three months, with message volumes remaining relatively low, though up about 32% over the past year.
One user said, "$AAL Sounds like AAL will be looking to spending a lot of cash on upgrade, first thought is that might bring a few more customers. Reality is that's revenue spent during an already low travel period while fuel prices skyrocket."
Another user added, "$AAL Let see how this turns out!"
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