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American Airlines Provides an Update on PSA Airlines

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Update on PSA’s operations

On June 20, PSA Airlines, a wholly owned subsidiary of American Airlines (AAL), provided an update about resuming operations. PSA said that its computer systems were stabilized as of Junes 19. Team members have been working continuously to reposition crews and aircraft to restore normalcy. By June 20, 70%–80% of the crews and aircraft were on schedule.

American Airlines has canceled ~2,500 flights since June 14 due to a computer glitch that disrupted crew scheduling. The issue surfaced in Dayton, Ohio. American Airlines operates ~12% of the 6,700 daily flights in the United States.

American Airlines’ stock price

American Airline declined 3.3% and closed at $41.35 for the week ending June 22. The decline caused the stock to trade 13.8% below the 100-day moving average price of $47.96, which indicates prevailing weakness in the stock. On a year-to-date basis, American Airlines has declined 20.4%. Delta Air Lines (DAL), Southwest Airlines (LUV), and JetBlue Airways (JBLU) have declined 5.9%, 20.7%, and 15.0%, respectively. The 14-day relative strength index of 38 indicates that the stock isn’t overbought or oversold.

Analysts are bullish on the stock and recommend a target price of $57.4. The target price implies a return potential of 38% over the closing price on June 22. American Airlines underperformed the SPDR S&P Transportation ETF (XTN), which declined 1.1%. The fund has invested 2.5% of its portfolio in American Airlines as of June 22.

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