Key Stats for AAL Stock
- 6-Month Price Change for AAL stock: 37%
- $AAL Share Price as of Dec. 12: $14.96
- 52-Week High: $19.10
- $AAL Stock Price Target: $15.55
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
What Happened?
Last week, UBS upgraded American Airlines (AAL) stock to “Buy” from “Neutral”, setting a $20 price target that implies nearly 34% upside from current levels. The upgrade comes as UBS initiated coverage of the U.S. airline sector with a broadly positive outlook for 2026.
UBS analyst Atul Maheswari said the market is missing something important about American Airlines.
He believes investors aren’t fully recognizing the airline’s opportunity to expand profits meaningfully over the next few years.
The key drivers? Recovering corporate travel revenues, expanding loyalty income from the new Citi partnership, and structural tailwinds benefiting network carriers like American.
The broader industry setup also looks favorable. UBS expects revenue per available seat mile (RASM) to improve after two tough years, with easier comparisons ahead and supply discipline holding across the sector.
The firm calculates that airlines faced a 350 basis-point deviation from normal performance in 2025 due to disruptions, including slowed government travel, demand freezes around tariff uncertainty, and the government shutdown that hit American particularly hard, given its Washington, D.C. hub exposure.
If the industry recovers even a portion of that lost ground and adds typical yearly gains, UBS thinks RASM could rise 4% or more in 2026. The firm is forecasting 3.8% growth across its airline coverage universe.
See analysts’ growth forecasts and price targets for AAL stock (It’s free!) >>>
What the Market Is Telling Us About AAL Stock
The upgrade reflects growing confidence that American Airlines is positioned to close its margin gap with competitors.
During recent investor conferences, CFO Devon May detailed how the airline has been quietly building momentum.
The sales and distribution missteps from 2024 are now in the rearview mirror, with the company back to its historical fair share of corporate bookings.
The new Citi co-brand agreement, which launches in January 2026, is expected to drive loyalty remuneration from $5.5 billion to $10 billion by decade’s end, adding roughly $1.5 billion to earnings.
AAL also has labor peace locked in through 2027-2028 across all major work groups, something CEO Robert Isom called a first in his career. That certainty stands in contrast to some competitors still negotiating contracts.
The airline’s fleet is one of the youngest among U.S. carriers, requiring only $3 billion to $3.5 billion in annual aircraft capital expenditure while supporting roughly 5% capacity growth.
UBS expects cost per available seat mile excluding fuel (CASM-ex) inflation to moderate by 200 to 400 basis points year over year for several carriers. Industry pre-tax margins are projected to expand 200 basis points to 6.5%.
For AAL specifically, premium cabins are expanding rapidly.
- Lie-flat seats will grow by 50% by 2030, while total premium seats will increase by 30%.
- Management has been clear that premium cabins generate higher profitability per square foot than the main cabin, and these reconfigurations are designed to drive positive NPV returns.
- The flagship suite product on the new 787-9s and A321XLRs puts American’s hard product on par with or ahead of competitors.
The domestic network, which faced headwinds in 2025, should turn into a tailwind. AAL stock is more exposed to domestic flying than United, but roughly similar to Delta.
Supply and demand dynamics are improving, and American has the most comprehensive U.S. network among the legacy carriers.
Growth is coming back to key hubs like Chicago, Philadelphia, Miami, and Phoenix, all markets where American either didn’t fully recover from pandemic capacity cuts or has infrastructure ready to deploy.
AAL carries higher gross debt than peers due to pandemic-era borrowing, though management has made steady progress paying it down from a peak of $54 billion to below $39 billion today.
The target is $35 billion by the end of 2027, which would put net debt to EBITDAR around 3x and potentially earn the airline a BB credit rating.
UBS estimates AAL stock could deliver 30% to 35% returns on earnings growth alone over the coming years.
That’s a bold call, but it’s grounded in the idea that AAL’s commercial recovery, loyalty expansion, and premium product investments are all coming together at the right time.
For investors willing to look past balance sheet concerns and focus on operational improvements, the setup heading into 2026 looks increasingly attractive.
Estimate a company’s fair value instantly (Free with TIKR) >>>
How Much Upside Does AAL Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
