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American Airlines share price: Q2 earnings preview

American Airline Q2 earnings are forecast within a broad range, with the traders’ focus within.

When are the American Airline results?

American Airlines, the network air carrier operator for passengers and cargo, is set to report quarter two (Q2) 2021 earnings on 21 July 2021.

What to expect from American Airlines Q2 2021 results?

A Covid-19-ridden economy in 2020 and in turn severely restricted travel, has seen guidance from American Airlines use the 2019 pre-pandemic results as a base of comparison for the upcoming earnings release.

The company has issued the following guidance in terms of the upcoming Q2 2021 results:

  • Q2 total revenue to be down approximately 37.5% versus Q2 2019
  • A slight Q2 2021 pre-tax profit is expected
  • Excluding net-special items, the American Airlines expects to report pre-tax margin of approximately -19% to -20%
  • Operations are expected to produce within the range of a net-loss of $35 million to a net-profit of $25 million in the Q2 2021

How to trade American Airline results

Short-term traders will be monitoring where within the guided net-profit to net-loss range earnings will be realised for the group. A net-profit, no matter how small, is likely to be applauded by investors with a short term rebound expected to follow, while a loss closer to the lower end of the guided range is likely to see renewed weakness in the company’s share price. The upside and downside targets from these scenarios can be viewed in the technical analysis section below.

American Airlines, while having been hard hit with operations halted in the heart of the pandemic, has cyclical appeal for those with a view of a sustainable post-pandemic economic recovery. However, short-term gains see the share price currently trading ahead of a perceived longer-term fair value for the company.

In terms of an institutional view, as of 16 July 2021, a Refinitiv poll of 21 analysts has an average rating of ‘hold’ for American Airlines, with a long-term price target (mean) of $18.56.

American Airlines share price: technical view

The American Airlines share price is currently testing a key level of support at the 20.10 level. A close below this level would place the ‘M’ shaped double top into action with 16.80 the initial support target. A double top is suggesting that the preceding uptrend is now starting to reverse into a new downtrend.

Alternatively, should the 20.10 level mange to hold and we see a bullish reversal and rebound off this level a range trading opportunity could be considered with 25.24 providing the initial upside resistance target.

The ambiguous nature of the chart could however see traders waiting for the results outcome to be realised and catalyse on of the aforementioned trading opportunities.

Summary

  • Q2 2021 total revenue is expected to be 37.5% lower than that of Q2 2019
  • Operations are expected to produce within the range of a net-loss of $35 million to a net-profit of $25 million in Q2 2021
  • A Refinitiv poll of 21 analysts has an average rating of ‘hold’ for American Airlines, with a long-term price target (mean) of $18.56
  • The share price of American Airlines is currently testing a key area of support

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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