TLDR
- AAL is up 11% since Barron’s February pick and 27% over the past month as Iran War fears ease
- TD Cowen analyst Tom Fitzgerald has a Buy rating and $20 price target on AAL, implying 35%+ upside
- Corporate, premium, and international travel demand remain strong; weakness is limited to the coach cabin
- American Airlines plans to install SpaceX Starlink Wi-Fi on 500+ Airbus narrowbody aircraft from early 2027
- Spirit Airlines’ market exit is seen as a competitive tailwind for American
American Airlines has had a rough few months, but the stock is proving resilient.
AAL was picked as a buy on February 26. Two days later, U.S. and Israeli military operations launched what became known as the Iran War. The Strait of Hormuz closed, oil spiked, and airline stocks took a hit.
American Airlines Group Inc., AAL
But the story didn’t end there. As markets began pricing in a potential end to the conflict, AAL bounced hard — up 27% over the past month. That comfortably outpaced the U.S. Global Jets ETF (JETS), which gained around 15% over the same period.
The stock currently trades near $14.94, which analysts at Simply Wall St have flagged as close to their fair value estimate.
Oil prices remain elevated, and jet fuel costs are a real concern for all carriers. Higher fuel costs typically get passed on to passengers through higher airfares, which can weigh on demand. But so far, the damage looks contained.
TD Cowen analyst Tom Fitzgerald said this week that demand checks paint a fairly healthy picture. “Corporate, premium, and international demand continue to exhibit strength with elasticity only showing up in the coach cabin,” he wrote. Fitzgerald carries a Buy rating on AAL with a $20 price target — more than 35% above current levels.
He added that the big three airlines appear to be tracking near the high end of second-quarter guidance, with potential for positive second-half 2026 revisions.
Starlink Deal Adds a New Layer
American announced plans to install SpaceX’s Starlink satellite internet across more than 500 Airbus narrowbody aircraft starting in early 2027. The move is seen as a step toward repositioning AAL as a higher-quality carrier, with better in-flight experience potentially driving stronger loyalty and premium revenue.
The Starlink rollout ties directly into American’s push to improve margins through premium cabin performance and its AAdvantage credit card partnerships — both of which analysts already view as central to the investment case.
That said, the retrofit program involves real capex and execution risk. American still carries a heavy debt load, and any demand shock or cost surprise could amplify pressure on the balance sheet.
Competitive Field Getting Smaller
Spirit Airlines’ exit from the market is seen as a meaningful tailwind. American could pick up price-sensitive travelers who previously flew Spirit, adding volume without needing to cut fares.
Ryan Kelley, portfolio manager at Hennessy Cornerstone Mid Cap 30, counts AAL as one of the fund’s largest positions. He says the stock still looks attractive, particularly if fuel costs continue to ease. “The company has been doing the right things in dealing with rising fuel costs, becoming more efficient by consolidating flights, rescheduling when needed, and raising prices,” Kelley said.
He acknowledged investor concern that schedule cuts and price hikes could hurt demand, but said he doesn’t see that playing out given the continued appetite for travel and a shrinking number of competitors.
American is also working to expand its international network and has improved on-time arrival rates over the past year.
Analyst projections place AAL revenue at $66.8 billion with earnings of $2.1 billion by 2029, implying roughly 6.9% annual revenue growth from current levels.
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