Air carrier American Airlines (NASDAQ:AAL) is changing how it rewards fliers with miles and points in an effort to convert new fliers into long-time customers. The company is slated to report its first-quarter results tomorrow.
AAL’s New Rewards Structure
Starting in July, AAL will only award rewards to passengers who book trips directly through AAL or its preferred channels. This significant change means that travelers risk forfeiting loyalty points and AAdvantage miles if they book AAL flights through any other means.
This move is part of AAL’s overarching strategy to keep trip planning within its booking ecosystem and foster customer loyalty. The strategy also aims to increase customer engagement by integrating rewards systems into customers’ spending patterns.
American Airlines’ Loyalty Strategy
Over the years, the airline has nudged its customers towards this strategy by pegging loyalty points to customer spending on American-branded credit cards and its sponsored online shopping portal instead of only looking at the number of air miles customers racked up.
Interestingly, AAL’s approach could also provide an incentive for travel agencies to achieve its preferred status. The airline has also extended the deadline for agencies to reach the preferred status to July 11.
AAL’s Upcoming Q1 Results
The impact of AAL’s moves is also visible in its share price, which is up by nearly 26% over the past six months. Moreover, tomorrow’s first-quarter result is a key event to keep an eye on for the company.
Analysts expect AAL to report an EPS of -$0.27 on $12.6 billion in revenue for the quarter. In the comparable year-ago period, its EPS of $0.05 had outpaced estimates by $0.01.
Is American Airlines Stock a Buy, Sell, or a Hold?
Overall, the Street has a Moderate Buy consensus rating on American Airlines. Furthermore, the average AAL price target of $18.62 points to a substantial 30.8% potential upside in the stock.
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