Shares of American Airlines ended yesterday’s session up 2.5% after the company announced its strategic alliance with JetBlue that will offer travelers more route options when flying to and from New York and Boston.
American Airlines’ (AAL) Chief Revenue Officer said in a statement that the collaboration will enable the companies to operate the biggest network in the Northeast and will accelerate each airlines’ recovery from the pandemic.
Senate Majority Leader, Chuck Schumer, was pleased by the deal, saying, “I am glad to see JetBlue and American Airlines collaborating on innovative solutions to save thousands more jobs in a way that also expands New Yorkers’ travel options.”
The alliance will allow customers flying in and out of New York and Boston to enjoy a smoother experience across both airlines. Travelers will benefit from an expanded network of flights, convenient connections and access to loyalty benefits.
JetBlue will increase its presence significantly at LaGuardia and will offer up to 70 daily flights in and out of Newark airport. American Airlines will add two more international flights to Tel Aviv and Athens.
The Department of Transportation (DOT) has approved the alliance on the condition that the two airline companies make certain commitments to delivering consumer benefits and not hurting competition. (See AAL stock analysis on TipRanks)
Cowen & Co. analyst Helane Becker downgraded her rating on AAL two days ago from a Buy to a Hold and revised her price target down from $16 to $15. This implies that AAL shares are fully priced at current levels.
Commenting on the economic recovery of the airlines and other in-person industries, Becker told NBC news that “Air travel gives people hope… but you can’t travel if nothing is open.”
Consensus among analysts is a Moderate Sell based on 1 Buy, 3 Holds and 5 Sells. The average price target of $13.60 suggests downside potential of around 12% over the next 12 months.
Hedge Fund confidence is currently Very Negative based on 6 Hedge Funds that cumulatively sold 3.7 million AAL shares in the last quarter.