One Reason Why American Airlines (AAL) Stock Is Falling Today

American Airlines (AAL) stock is lower this afternoon amid forecasts for a drop in U.K. outbound traffic during the next four years.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of American Airlines (AAL) - Get Report are declining 1.84% to $28.79 in late-afternoon trading on Tuesday as concerns about the fallout from Britain's decision to leave the European Union persist. 

The International Air Transport Association (IATA) estimates that the number of U.K. air passengers could fall between 3% and 5% by 2020, driven by the anticipated economic downturn and decline in the sterling exchange rate. 

But Cowen noted that the U.S. should experience an uptick in domestic traffic if people are afraid to travel internationally, Barron's reports.

Additionally, rival airline operator Delta Air Lines (DAL) announced earlier today that consolidated passenger unit revenue in June dropped 5% from a year ago, partly due to continued weakness in foreign currencies. 

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C-.

American Airlines' strengths such as its notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find 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 article's author. 

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