American Airlines Upgrade by Bernstein Analysts

Investing.com — Bernstein analysts raised American Airlines (NASDAQ:AAL) from Market-Perform to Outperform on Tuesday. They noted an improved industry backdrop and a new co-branded credit card deal promising significant cash flow.

The firm increased its price target for the stock from $14 to $24, reflecting improved financial prospects for the airline.

Bernstein commented, "The pricing and revenue environment has continued to improve," as American Airlines raised its fourth-quarter 2024 earnings guidance by 73%, now expecting earnings per share in the range of $0.55-$0.75.

Key drivers for the updated outlook include lower fuel costs and stronger pricing.

Additionally, analysts highlighted a new exclusive co-branded credit card partnership with Citi, starting in January 2026.

This deal is expected to boost annual revenue from credit card partnerships by 10% from 2024 levels, nearing $10 billion in projected revenue.

Bernstein suggests this could lead to an extra $1.5 billion in pre-tax income compared to 2024.

This steady revenue stream is set to address major critiques about the airline's high leverage.

The estimated terminal value of the credit card deal is approximately $12 billion, which "changes the story for an airline critiqued for its high leverage."

Analysts believe this will help American Airlines pay down its debt more effectively, significantly improving its financial outlook.

While challenges in corporate and agency revenue recovery may continue through late 2025, Bernstein sees consistent cash flow from the credit card partnership as transformative.

This development suggests that American Airlines is "closer to a have than a have-not," strengthening its position as a robust competitor in the airline industry.