American Airlines Group Inc.

Overview Key strengths Key risks The largest U.S. and global airline (based on air traffic) with an extensive route network. Operates in the cyclical, price-competitive, and capital-intensive airline industry. Moderate capital expenditures over the next couple of years should support positive free cash flow available for debt repayment. Heavy debt burden relative to U.S. peers, with significant 2025 maturities to address. Weaker-than-expected demand amid a U.S. recession and high jet fuel prices would pressure credit measures. We assume American will generate continued growth in its earnings and cash flow this year, led by strong airline industry fundamentals. U.S. domestic passenger traffic recently reached 2019 levels--the pre-pandemic benchmark--and we expect further expansion through 2023. In addition, international travel (namely the company?s

...We expect strong passenger travel demand to drive stronger operating results in 2023. We assume American will generate continued growth in its earnings and cash flow this year, led by strong airline industry fundamentals. U.S. domestic passenger traffic recently reached 2019 levels--the pre-pandemic benchmark--and we expect further expansion through 2023. In addition, international travel (namely the company's Atlantic and Latin American routes, which lagged the domestic U.S. market recovery), is expected to lead American's growth this year. In our view, there is material pent-up demand for passenger travel following the pandemic that has yet to be fully realized. Airline industry revenue in the U.S. increased sharply from 2020 lows but has not kept pace with economic growth. The shortfall (relative to nominal GDP) has narrowed, but we believe this presents material future revenue upside for the industry and American, one of the largest U.S. airlines. Moreover, S&P Global Economics forecasts...

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