2024-07-02 14:55:58 ET
Summary
- American Airlines emerged from the pandemic with optimism, but continues to underperform in revenue generation compared to its competitors.
- Labor issues, including flight attendant contract negotiations, are impacting American Airlines' service levels and financial performance.
- Despite efforts to reduce costs and improve service, American Airlines' stock has declined significantly and faces challenges that make a turnaround unlikely.
American Airlines Group Inc. ( AAL ) came out of the pandemic with optimism that the industry reset that impacted all airlines would give it a chance to change the trajectory of its financial underperformance to the industry that included much of the decade before the COVID crisis. Even though American Airlines (under AMR Corporation) was restructured under Chapter 11 of the U.S. bankruptcy code from 2011 to 2013, ending in its emergence as AAL and its merger with US Airways, AAL's revenue generation remained below its peers and its costs were high, in part due to deals which were made with labor to secure their backing for the US Airways merger over AMR's standalone restructuring plan. Although American and US Airways stated that one of the primary objectives of the merger was to be able to compete with Delta Air Lines, Inc. ( DAL ), which initiated the megamerger cycle via its merger with Northwest, United Airlines Holdings, Inc. ( UAL ), which merged with Continental, and Southwest Airlines Co. ( LUV ), which acquired AirTran Airways, American struggled to compete in the major competitive coastal markets including New York City as well as international markets in the late 2010s, resulting in its reduced attractiveness to high-value business travelers....
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Dark Clouds Envelop American Airlines (Rating Downgrade)