Gov. Action on Turkish Flights Expected, Former American Airlines (AAL) President Tells CNBC
NEW YORK (TheStreet) -- The Federal Aviation Association's (FAA) decision to suspend all flights to and from the U.S. and Turkey in the wake of the recent failed coup was expected, American Airlines (AAL) - Get Report former Chairman and President Bob Crandall told CNBC's Sara Eisen on "Squawk on the Street" Monday.
"It's not unusual for the U.S. government to in effect advise the airlines. The airlines obviously are interested in safeguarding their equipment, their people and their passengers," Crandall explained.
The FAA announced the suspension on Saturday citing security concerns, but did not give a time frame for when it would be lifted.
Airlines rely on the government to asses political situations to best direct them in uncertain and possibly dangerous times, as they are doing now during the aftermath of the failed Turkish military coup that left 232 people dead, according to Crandall.
"When you've got a circumstance where there's violence around, airlines, for the most part, will err on the side of caution and not fly," Crandall continued.
The Turkish coup came just days after the horrific terrorist attack in Nice, France that killed 84 people celebrating Bastille Day. There are about 85 Nice attack victims still in the hospital, with 18 of them in critical condition.
"The environment that we have today is a good deal more uncertain, a good deal more violent than it has been characteristic of the last 40, 50 years. I mean there are always trouble spots but the perception that trouble is widespread and can pop up at any moment is a greater problem today than it has been for many years," Crandall stated. That perception negatively affects airline companies as it prompts people to not travel as often.
Shares of American Airlines are up by 0.57% to $36.09 late this morning.
Separately, TheStreet Ratings rated American Airlines as a "hold" with a score of C-.
The company's strengths can be seen in multiple areas, such as its notable return on equity and good cash flow from operations. However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: AAL
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.