American Airlines' Shares Hit Some Turbulence Due to Cost Pressures; Maintaining $43 FVE
No-moat American Airlines reported fourth-quarter and full-year results in line with consensus. Unlike its peers, the carrier managed to post positive unit revenue in the fourth quarter, but its shares have sold off heavily on the back of cost pressure concerns and slowing share-buyback activity. We think the key pacing items in 2017 are continued unit revenue growth coupled with constrained domestic capacity, while seeing a sequential ramp-down in unit cost growth. We also think the ongoing int...American Airlines Group is a holding company. Through its subsidiaries, the company's business activity is the operation of a primary network carrier, providing scheduled air transportation for passengers and cargo. The company's regional carriers provide scheduled air transportation under American Eagle. The American Eagle carriers include the company's regional carriers Envoy Aviation Group Inc., PSA Airlines, Inc. and Piedmont Airlines, Inc., as well as third-party regional carriers including Republic Airline Inc., Mesa Airlines, Inc., SkyWest Airlines, Inc. and Compass Airlines, LLC. The company's cargo division provides freight and mail services, with facilities and interline connections available across the globe.
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