American Airlines (AAL) - Get Free Report shares gained on Monday, despite the cancellation of more than 2,000 flights due to bad weather as well as staff shortages, including an additional 250 cancelled flights on Monday.
The Fort Worth, Texas-based airline cancelled 1,058 Sunday, 548 Saturday and 343 Friday, according to media reports. The Sunday total represented about 20% of American Airlines' original schedule.
Despite the widespread cancellations, American Airlines stock lifted higher on Monday, closing at $19.77, up 3%. The stock has slumped 12% over the past six months as the airline industry has continued to struggle to recover from the pandemic. The S&P 500 has gained 10% during that period.
“American reported a solid third quarter, as its domestic- and Latin America-focused network recovered faster than peer network carriers,” Morningstar analyst Burkett Huey wrote in a research note last month.
“We are maintaining our $19 fair value estimate, as we reduce our mid-cycle operating margin by about 30 basis points to reflect the significant increase in landing fees and other rents, though the effect of the reduced mid-cycle operating margin is partially offset by the time value of money and faster recovery assumptions.
“We are also reducing our uncertainty rating to very high from extreme, as balance sheet risk has decreased materially for the firm since we originally increased the uncertainty rating,” Huey said.
In October, Goldman Sachs analyst Catherine O'Brien downgraded American to sell from neutral and cut her price target to $18 from $19. American Airlines' "...higher operating leverage weighs on its profitability recovery in the weaker industry pricing environment we are expecting,” she said.