Key Takeaways
- American Airlines (AAL) is valued at merely 0.2x price-to-sales, while Citi maintains a $21 price target — representing approximately 60% potential upside from current trading levels.
- Management projects 2026 earnings per share between $1.70 and $2.70, with analyst consensus settling at $2.09, representing nearly a sixfold increase from 2025’s $0.36.
- The carrier eliminated more than $2 billion in debt during the past year and aims to push total debt under $35 billion in 2026, beating its original timeline by twelve months.
- A newly launched exclusive Citigroup credit card partnership, effective January 1, should contribute an additional $1.5 billion to annual EBIT by decade’s end.
- Miami International Airport will see a $1 billion Concourse D development backed by AAL and Miami-Dade County, with construction launching in 2027.
For years, American Airlines Group (AAL) has trailed significantly behind its major legacy competitors. While Delta has climbed 221% since the March 2020 pandemic bottom and United has skyrocketed over 400%, AAL has mustered only a 28% gain.
American Airlines Group Inc., AAL
That performance gap is becoming increasingly difficult to justify.
Currently trading near $13.32 with an $8.8 billion market capitalization, AAL faces an average analyst price target hovering around $18, suggesting more than 33% upside potential.
Citi’s John Godyn projects even greater gains with his $21 target — roughly 60% above today’s price. Godyn believes concerns about competitive pressure from United in the Chicago market have already been fully reflected in the stock price.
Ryan Kelley, Chief Investment Officer at Hennessy Funds — where AAL ranks among the top 10 holdings across mid-cap strategies — emphasizes the compelling valuation case. Trading at 0.2 times price-to-sales, the shares are historically cheap. “American is very attractively priced, is cash-flow positive, and it has good momentum,” Kelley explained.
While January’s earnings report appeared disappointing initially due to reduced government revenue during the federal shutdown and expenses related to winter storm Fern, the company’s full-year outlook painted a more optimistic picture.
The Path to Profitability Recovery
AAL issued 2026 EPS guidance ranging from $1.70 to $2.70. The midpoint exceeded the Street’s then-consensus estimate of $1.97. Analysts have subsequently raised their projections to $2.09 — almost six times the $0.36 AAL generated in 2025.
Following two straight years of declining earnings, 2026 appears poised to mark a critical inflection point.
Wall Street models anticipate approximately 30% EPS expansion in 2027, reaching about $2.72 per share.
Bernstein’s David Vernon suggested that consensus 2026 EPS forecasts “could go up double digits” based on strong premium cabin sales, resilient corporate demand, and encouraging reservation patterns.
Morgan Stanley’s Ravi Shanker observed that the most recent earnings call resembled that of a typical legacy carrier rather than a company defending past strategic missteps.
Financial Strength, Strategic Partnerships, and Hub Investment
Regarding balance sheet health, AAL retired over $2 billion in debt last year. Management now anticipates bringing total debt below $35 billion during 2026 — one year earlier than initially planned.
The exclusive credit card partnership with Citigroup that commenced January 1 is projected to deliver an incremental $1.5 billion in annual EBIT by 2030, with immediate accretion to 2026 earnings per share.
Premium travel momentum continues strengthening the investment case. Delta disclosed that premium cabin revenue exceeded main cabin revenue for the first time during Q4. AAL has experienced comparable trends among affluent travelers.
Tuesday’s options flow showed calls trailing puts at a 0.33 ratio, substantially below the standard 1.18 level, indicating bullish positioning among derivatives traders.
On Tuesday, AAL joined Miami-Dade County in announcing a $1 billion commitment to construct a new Concourse D at Miami International Airport. CEO Robert Isom characterized it as “a transformational project.” Construction commences in 2027.
