American Airlines confirmed on Wednesday that 13,000 of its employees were at risk of furlough as the coronavirus pandemic continues to ravage the aviation industry, according to Reuters.
A U.S. aid package for airline workers expires on April 1, and American Airlines (AAL) finds itself “in a situation similar to much of 2020,” said CEO Doug Parker and President Robert Isom in a memo to employees, which was also included in a regulatory filing.
“The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand,” Parker and Isom added.
Reuters reports that American Airlines will offer their employees, including 1,850 pilots and 4,245 flight attendants, voluntary exit packages in the hope that it will ease the possibility of involuntary retrenchments.
American Airlines reported its financial results for 2020 last week, posting a full-year net loss of around $9 billion. In an attempt to boost liquidity, the airline company took advantage of the sharp rise in its share price due to the WallStreetBets inspired short squeeze and launched a $1 billion stock sale. (See American Airlines stock analysis on TipRanks)
Seaport Global analyst Daniel Mckenzie downgraded American Airlines three days ago from Buy to Hold and withdrew his price target.
“Our conviction in the recovery story doesn’t change, but given limited upside to our $19 target price, risk reward is balanced given COVID variants that slow the int’l revenue recovery and cause us to trim our pre-tax earnings outlook. Hence our move to the sidelines today; downgrading to Neutral (from Buy) and withdrawing our target price,” Mckenzie explained.
Consensus among analysts is a Moderate Sell based on 1 Buy, 5 Holds and 7 Sells. The average analyst price target of $14.14 suggests downside potential of 20% over the next 12 months.
Hedge Fund Activity for AAL decreased substantially over the last quarter, with a significant reduction in holdings and a Very Negative Confidence Signal.