AAL - Embedded Expectations Analysis - 2021 09 13
American Airlines Group Inc. (AAL:USA) currently trades near historical averages relative to UAFRS-based (Uniform) assets, with a 1.3x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, and management is confident about their debt reduction plans, the benefits of fleet harmonization, and business travel.Specifically, management generated an excitement marker when saying they will use their excess liquidity to accelerate deleveraging plans for the foreseeable future. In addition, they are confident fleet harmonization will increase available seat miles (ASMs) and lower costs per available seat miles (CASM) and are encouraged by trends in business travel. Moreover, they are confident a return to school will lead to an acceleration in leisure travel demand and their codeshare agreements with JetBlue have been a success.
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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