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Citi maintains Buy on American Airlines, stock price target at $20

EditorNatashya Angelica
Published 03/01/2024, 01:04 AM
© Reuters.

On Thursday, Citi reaffirmed its Buy rating on American Airlines (NASDAQ:AAL) with a consistent price target of $20.00. The firm anticipates that the airline's free cash flow (FCF) narrative will persist, suggesting that upcoming communications from the company could offer further clarity.

According to the analyst, American Airlines is likely to share insights into its revenue outlook for 2024 during an investor event scheduled for March 4th.

The airline's recent fee adjustments are part of this revenue strategy, with baggage fees increasing from $30 to $35 when paid online, and to $40 for payments made at the airport. The analyst pointed out that these changes have the potential to bolster unit revenue strength for American Airlines.

Looking ahead, the company is expected to keep its annual capital expenditures under approximately $3.5 billion through 2026. The analyst speculates that a significant order for MAX8 or A321 aircraft could start impacting capital expenditures in 2027, potentially leading to a 20% increase compared to 2026.

The report suggests that the combination of revenue initiatives and controlled capital spending will underpin strong free cash flow generation for American Airlines. The investor event on March 4th is anticipated to provide further details that could confirm these expectations.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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