American Airlines (AAL) Stock Falling, Worst Trading Day Since 2013 Bankruptcy

NEW YORK (TheStreet) -- Shares of American Airlines Group Inc  (AAL) were falling, down 7.52% to $44.25 on very heavy volume in afternoon trading Wednesday, along with other U.S. carriers amid heightened competition.

Lower fuel costs are forcing the airlines to cut fares and increase routes to keep up with the competition, Bloomberg reports.

Yesterday, TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio sat down with company chairman and CEO Doug Parker on CNBC's Mad Money show.

Parker defended his decision to take his salary in American Airlines stock, and said the company's stock is once again a real currency to be proud of.

Although business is improving, Parker also admitted to increased competition in the space. Parker also said that the stronger dollar hurts overseas earnings.

In addition, American Airlines' cautious tone at an investment dinner last night is another reason for concern.

Real Money Pro contributor Ed Ponsie wrote, "Issues raised by company officials included industry capacity and margin compression."

About 35.28 million shares have changed hands as of 2:37 p.m. ET today, compared to its average volume of about 9.86 million shares a day.

American Airlines provides scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia.

The company is based in Fort Worth, Texas.

Insight from TheStreet's Research Team

Ed Ponsi commented on American Airlines in a recent post on Real Money Pro. Here's a snippet of what Ponsi had to say:

Southwest's situation isn't company-specific. The entire airline sector, represented here by the Dow Jones U.S. Airline Index ($DJUSAR) is trading beneath its 200-day MA for the first time in six months. Other names in this sector that are breaking beneath their 200-day MAs include American Airlines (AAL) and United Continental (UAL). It's interesting to note that Delta Airlines (DAL) is currently hovering just above its 200-day MA. Meanwhile, both JetBlue Airways (JBLU) and Alaska Air Group (ALK) remain well above that key indicator.

The airline sector has formed a rounded top pattern over the past six months (curved line), sometimes referred to as a "domed city" pattern. When I see an entire sector getting slammed as the market flirts with all-time highs, there is no hesitation on my part. Sell now and ask questions later, because this sector is likely to go into rapid descent mode from here.

- Ed Ponsi, 'Airline Stocks Are in Descent Mode' originally published 5/20/2015 on Real Money Pro

Want more information like this from Ed Ponsi BEFORE your stock moves? Learn more about Real Money Pro now!

Separately, TheStreet Ratings team rates AMERICAN AIRLINES GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERICAN AIRLINES GROUP INC (AAL) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

You can view the full analysis from the report here: AAL Ratings Report

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