TD Cowen analysts Helane Becker and Thomas Fitzgerald downgraded American Airlines from buy to hold on July 16, 2024. The downgrade followed the analysts' concerns surrounding the carrier's ""aggressive discounting"" of its summer fares. The discounting came as fuel prices eased, they claimed.
The analysts added: ""American's network leaves it more exposed to the markets currently most oversupplied and less able to offset the higher cost environment.""
American will need ""difficult strategic shifts and large incremental CAPEX investments over multiple years"" to overcome the challenges for the carrier. In addition, the company will also need to appoint a new chief commercial officer in order to finalise a flight attendant contract. These factors combined will likely ""push off the possibility of generating free cash flow in the medium term as well as the chance for shareholder returns"" for American.
Fitzgerald and Becker lowered its price target for American from $16 to $10. The carrier will release its second quarter earnings report on July 25. As of 10:59 GMT, its shares were down over 1%.
TD Cowen downgrades American following ""aggressive discounting"" of fares
