American Reports Solid 1Q, Announced Pay Raises Make Operational Sense but Will Erode Earnings
No-moat American Airlines reported first-quarter results that beat consensus. However, its plan to raise employee pay will likely erode future earnings and we’re lowering our forecasts to reflect this. Concomitantly, we reduced our U.S. statutory tax rate to 25% from 35%, which reflects our view that tax reform is more likely to occur than not. We expect higher labor costs combined with this lower tax rate will lead to a net increase in our fair value of about $2 per share.Revenue rose 2% to $9...
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.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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