Where next for American Airlines’ share price in 2020?

The airline continues to trade at a 60% upside a week after it announced plans to ramp up flight capacity both domestically and internationally.

American Airlines Group remains one of the top five traded stocks on IG, nearly a week after the company said it is planning to ramp up its domestic capacity and flight schedule.

The stock is currently trading with a 56% upside from the price when the announcement was first made. Shares closed at US$18.52 per share on Tuesday 09 June 2020 – nearly US$7 higher than last week’s levels, IG data showed.

American Airlines to increase domestic and international capacity

Last Thursday 04 June, the airline announced via a press release that it is aiming to resume more than 55% of its July 2019 domestic routes in July 2020, ‘in response to improving demand for air travel’.

The airline noted that it saw an increase in demand in May 2020. By the last week of May, the airline carried a daily average of about 110,000 customers per day — an increase over the approximately 32,000 average daily customers the airline served in April.

Vasu Raja, American Airline’s Senior Vice President of Network Strategy, said that the move was implemented after a ‘careful review of data’, adding that the July schedule includes the smallest year-over-year capacity reduction since March.

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The Fort Worth-based airline also hopes to restore close to 20% of its July 2019 international routes starting from July 2020, although it expects international demand to recover at a slower rate.

Nevertheless, it has restarted service to eight global destinations, including from Dallas-Fort Worth (DFW) to Amsterdam (AMS), Paris (CDG) and Frankfurt (FRA), as well as service from Miami (MIA) to Antigua (ANU) in the Caribbean and Guayaquil (GYE) and Quito (UIO) in South America.

Starting from 05 August, American Airlines will also resume flights from Philadelphia and Charlotte to various European hubs.

American Airlines stock has more room to grow?

This decision to ramp up the flight schedule has also come on the back of improved market sentiments of recent weeks, as economies and countries begin to ease their Covid-19 lockdown restrictions.

US stock markets have also reflected the gradual return to normalcy, with the S&P 500, Dow Jones Industrial Average and Nasdaq indexes each experiencing daily gains averaging 1% last week.

For now, the American Airlines share price is still trading roughly 68% below its 2020 high of US$58 per share, which indicates that there is more room for the stock to grow in the coming months.

On a year-to-date basis, American Airlines shares are down over 35%. This is how it stacks up against its domestic competition: United Airlines – down by 49%; Delta Air Lines – down by 42%; and Southwest Airlines – down by 30%.

The current consensus on the stock among 19 investment analysts polled by FactSet is to ‘sell’, with eight analysts rating it so. Meanwhile six analysts have rated it a ‘hold’ with two others rating it a ‘buy’.

How to trade US airline stocks with IG

Are you feeling bullish or bearish on American Airlines, Delta Air Lines and other US aviation shares? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs in a few easy steps:

  • Create a live or demo IG Trading Account or log in to your existing account
  • Enter <company name> or <ticket code> in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

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