JBLU - American Airlines is viewed cautiously at Bank of America
2023-07-21 06:57:36 ET
Bank of America kept an Underperform rating on American Airlines Group ( NASDAQ: AAL ) after factoring in the airline company's Q2 earnings report and other recent developments.
"While AAL is running a solid network that helps unit costs, the airline’s smaller international footprint and tougher domestic comps is keeping revenue growth below network peers," noted analyst Andrew Didora.
Didora also warned that the recent ruling requiring AAL and JetBlue ( JBLU ) to unwind the Northeast Alliance is likely to require a change for the carrier with its competitive strategy in the New York area.
American Airlines' ( AAL ) elevated leverage compared to peers is another factor in BofA's bearish view. The firm also sees a long road ahead for balance sheet repair coming out of the pandemic, with management focused on gross debt reduction rather than net debt reduction. It was noted that higher fuel prices and inflationary cost pressures make it difficult to generate meaningful free cash flow in the near term.
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American Airlines is viewed cautiously at Bank of America