American Airlines Group Inc. (NASDAQ: AAL)

Sector: Industrials Industry: Airlines CIK: 0000006201
Market Cap 9.42 Bn
P/B -2.38
P/E 15.65
P/S 0.17
ROIC (Qtr) 5.28
Div Yield % 0.00
Rev 1y % (Qtr) 0.32
Total Debt (Qtr) 36.06 Bn
Debt/Equity (Qtr) -9.10
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About

American Airlines Group Inc., commonly known as American Airlines, operates in the airline industry, providing scheduled air transportation for passengers and cargo through its hubs in various locations across the United States, as well as in London, Doha, Madrid, Seattle/Tacoma, Sydney, and Tokyo. The company's subsidiaries include American Airlines, Inc., Envoy Aviation Group Inc., PSA Airlines, Inc., and Piedmont Airlines, Inc. American Airlines' main business activities involve operating a major network air carrier, providing scheduled air...

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Investment thesis

Bull case

  • Operating cash flow of 3.77B provides strong 40.99x coverage of stock compensation 92M, indicating sustainable incentive practices.
  • Retained earnings of (6.83B) represent substantial 1.72x of equity (3.96B), indicating strong internal capital generation.
  • Tangible assets of 56.01B provide robust 2.27x coverage of current liabilities 24.64B, showing strong asset backing.
  • Strong tangible asset base of 56.01B provides 9.14x coverage of intangibles 6.13B, indicating robust asset quality.
  • Tangible assets of 56.01B provide robust 27.62x coverage of receivables 2.03B, showing strong asset quality.

Bear case

  • Operating cash flow of 3.77B barely covers its investment activities of (638M), with a coverage ratio of -5.91, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Short-term investments of 6.02B significantly exceed cash reserves of 1.59B, which is 3.78x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.
  • Free cash flow of 1.18B provides weak coverage of capital expenditures of 2.59B, with a 0.46 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 2.61B show weak coverage of depreciation charges of 2.25B, with a 1.16 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 1.18B represents just -0.36x of debt issuance (3.27B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Airlines
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DAL Delta Air Lines, Inc. 45.93 Bn 9.18 0.72 20.27 Bn
2 UAL United Airlines Holdings, Inc. 37.05 Bn 11.05 0.63 31.04 Bn
3 LUV Southwest Airlines Co 29.18 Bn 66.17 1.04 5.98 Bn
4 AAL American Airlines Group Inc. 9.42 Bn 15.65 0.17 36.06 Bn
5 ALK Alaska Air Group, Inc. 6.72 Bn 67.15 0.47 6.89 Bn
6 SKYW Skywest Inc 4.33 Bn 10.12 1.07 2.47 Bn
7 AERO Grupo Aeromexico, S.A.B. de C.V. 2.64 Bn 7.49 0.49 4.06 Bn
8 JBLU Jetblue Airways Corp 2.20 Bn -3.66 0.24 9.42 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.72 0.75
EV to Cash from Ops. EV/CFO 11.93 -1.78
EV to Debt EV to Debt 1.25 1.92
EV to EBIT EV/EBIT 17.26 12.70
EV to EBITDA EV/EBITDA 10.24 -7.83
EV to Free Cash Flow [EV/FCF] EV/FCF 38.09 4.43
EV to Market Cap EV to Market Cap 4.77 2.37
EV to Revenue EV/Rev 0.83 1.05
Price to Book Value [P/B] P/B -2.38 0.89
Price to Earnings [P/E] P/E 15.65 14.33
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 22,529.03
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 7.43
Dividend per Basic Share Div per Share (Qtr) 0.00 0.11
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -2.56
Interest Coverage Int. cover (Qtr) 1.48 1.76
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.97 -69.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.57 40.07
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 2.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 11.50 -58.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.11 80.32
EBIT Growth (1y) % EBIT 1y % (Qtr) 9.82 -22.88
EBT Growth (1y) % EBT 1y % (Qtr) 115.60 -112.97
EPS Growth (1y) % EPS 1y % (Qtr) 124.39 -167.26
FCF Growth (1y) % FCF 1y % (Qtr) 1,971.93 2,772.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 5.38 7.74
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.87 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.06 0.24
Current Ratio Curr Ratio (Qtr) 0.54 0.56
Debt to Equity Ratio Debt/Equity (Qtr) -9.10 0.61
Interest Cover Ratio Int Coverage (Qtr) 1.48 1.76
Times Interest Earned Times Interest Earned (Qtr) 1.48 1.76
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.90 5.51
EBIT Margin % EBIT Margin % (Qtr) 4.80 -0.22
EBT Margin % EBT Margin % (Qtr) 1.55 -3.82
Gross Margin % Gross Margin % (Qtr) 55.20 41.52
Net Profit Margin % Net Margin % (Qtr) 1.10 -4.40