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Back of Napkin

American Airlines Group Inc. AAL

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The bet you're really making is that Americans keep flying in record numbers and keep paying American Airlines enough to cover both its costs and its enormous debt. You're betting the airline pays down the $35 billion it owes before the next downturn empties its planes. Right now it is mixed: the biggest revenue quarter in the company's history, up 16%, but costs rose faster, so profit on each flight more than halved. You pay about 13 times the airline's yearly cash earnings once that debt is counted, near the most it has cost in the twelve years of records, and more than rival carriers.

Key data

Price$13.13
52-week range$10.09 – $18.79
P/E (trailing / FY2028)n/m / 4.0x
EV/EBITDA13.4x

AAL · price with moving averages

Daily · 6MWeekly · 3Y
$9$11$14$17$19 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

American sells seats. It flew enough of them last quarter to book the largest revenue in its history, carrying travelers through hubs at Dallas, Charlotte, Miami and Phoenix on a fleet of roughly 1,500 aircraft, including regional jets flown by contractors. The quiet engine underneath is AAdvantage, the loyalty program: banks like Citi and Barclays buy miles in bulk to hand out on co-branded cards, and those mileage sales throw off high-margin cash that does not rise and fall with jet fuel. That loyalty cash is so valuable the company pledged it as collateral to borrow against during the pandemic, which is why it now sits at the center of both the moat and the debt. The moat is the hub network and the loyalty base that a new entrant cannot cheaply copy. The weakness is the balance sheet that funded it.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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