Out Fox The $treet

  American Airlines delivered a major Q1'26 guide-up, projecting revenue up 10% and a loss per share far better than consensus. AAL demonstrates resilience, absorbing $400M in higher fuel costs and outperforming expectations despite geopolitical and commodity headwinds. The airlines continues to drive the updated loyalty program towards $1.5B in additional pre-tax income by 2030, roughly double current levels. The stock trades at just 5x EPS targets that should reach $2, a valuation deeply discounted versus peers. In a major surprise,  American Airlines Group Inc.  ( AAL ) guided to far better than expected Q1'26 numbers. The airlines were expected to struggle this quarter due to the Iranian conflict and surging oil prices. My  investment thesis  remains ultra Bullish on the stock trading at the lows near $10 after dipping from $16. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please review the disclaimer page for more details. 

Update - Jan. 6, 2025 American Airlines gets a couple of big upgrades including TD Cowen with a $25 PT. As usually, the analysts waited until the stock was at multi-year highs.  -Shares of American Airlines (NASDAQ:AAL) are getting a lift early Monday as TD Cowen and Jefferies both upgraded the stock to Buy from Hold with Cowen raising its target price to a street high of $25. -American’s (AAL) strategy to focus on its short-haul network that is “ideally” served by its regional fleet offers connectivity to its carrier’s Sun Belt hubs and benefits its international network, a stark difference from other carriers that focus on their large, coastal hubs, Jefferies analyst Conor Walters writes in Monday’s research note. -“Ongoing corporate share recapture, lower capacity and [capital expenditures] and a new [credit card deal with Citigroup] means American (AAL) could see significant surprise to the upside in 2025 against a rationalizing industry backdrop,” Walters adds. Original articl...

Update - Sept. 12, 2023 United Airlines is back to testing the uptrend line. The case for the stock trading at $100 is simple, yet people refuse to hold airline stocks. United just has more gains ahead down at $47 with the upside potential far beyond $100.  Update - Sept. 5, 2023 The airlines are printing cash now, but the stocks fall on every slightly negative news... just crazy. -United Airlines Holdings (NASDAQ:UAL) dropped 4% on Tuesday after asking the Federal Aviation Administration to pause the airline’s departures nationwide. The request was lifted shortly thereafter. -"The ground stop is now lifted," UAL said on the platform formerly known as Twitter. -Earlier, the carrier said: "We are experiencing a systemwide technology issue and are holding all aircraft at their departure airports," UAL said in a message. "Flights that are already airborne are continuing to their destination as planned. We’re currently investigating and will share more information ...

  American Airlines' stock is near yearly lows despite the airline returning to producing massive profits. Higher fuel prices are a concern for the market, but they don't significantly impact the airline's ability to generate substantial profits. The stock is far too cheap trading at only 4.5x EPS targets while industrial transport peers trade at 3x the PE multiple. Despite the airlines returning to massive profits over the last year,  American Airlines Group  ( NASDAQ: AAL ) is back to near yearly lows. One prime reason for the weakness is higher fuel prices constantly feared by the market for  no rational reason pushing the valuation far below industrial transport peers. My  investment thesis  remains ultra Bullish on the airline due to the cheap valuation from the irrational dip in the stock back below $14. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please read the disclaimer page for more details. 

Updated - Apr. 11, 2023 Delta Air Lines (DAL) guides up for Q2 and '23, yet the market yawns. American Airlines again fell on the strong guidance from the airline.  -“Delta is building momentum, with the best people in the industry generating nearly $5B of operating profit over the last twelve months,” CEO Ed Bastian said. “For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25. With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2B.” -The consensus EPS forecast for the second quarter stood at $1.64 while full-year forecasts were pegged at $5.37. The 15% to 20% revenue growth guide is also well above the 10.56% consensus. Original article posted on April 7.  American Airlines won't be harmed by h...

This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   Update - March 13 Somehow United Airlines is down 5% to 6% in after hours after announcing '23 EPS is still on target to $10 to $12, yet the Q1 numbers will dip due to the pilot contract being signed in Q1, up from Q2.  United Airlines Holdings ( NASDAQ: UAL ) shares slumped after the bell on Monday after providing a pessimistic outlook for the first quarter of 2023. The company said that it now expects an adjusted loss per share between $0.60 and $1.00 in Q1  due to expenses related to “a potential new collective bargaining agreement with employees represented by the Air Line Pilots Association.” The airline had previously expected to accrue the expense in the second quarter. “The Company continues to see a strong demand environment and now expects first quarter 2023 total operating revenue to be up approximately 51% versus first quarte...

Update - March 6 No surprise the government is looking to block the acquisition by JetBlue. The question is whether the DoJ actually has the right to block the merger. Besides, Spirit shareholders are likely better off without a deal. Regardless, the stock has fallen to the yearly and covid lows as the market apparently doesn't understand Spirit is better off without JetBlue.  Regulators are reportedly looking to block the prospective merger between JetBlue Airways ( NASDAQ: JBLU ) and Spirit Airlines ( NYSE: SAVE ), sending shares of the latter sliding. Both the Department of Transportation and Department of Justice are looking to  halt the deal on the grounds that the merger would be anti-competitive, according to Bloomberg. Per prior media reports, executives from the carriers met with the DOJ in late February  in a "last-rites" meeting  to assuage regulatory concerns on the planned merger. That meeting followed  reports earlier in February  that the dep...

This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   Update - Jan. 13 Comical that $ AAL  is down on this guidance from $ DAL . Delta lost a lot of money last Q1 and the airline is still guiding to a $7+ EPS in 2024. The stock should hit $100 next year, yet investors aren't sure whether to pay $40 fro Delta... pure insanity.  -Delta Air Lines (NYSE:DAL) stock slipped in premarket trading on Friday after the carrier offered lighter than expected Q1 EPS guide. -For the fourth quarter reported on Friday, the Atlanta-based airline posted $1.48 in adjusted earnings per share and $13.44, both of which cruised past the analyst consensus. The carrier also noted an adjusted operating operating margin of 11.6% for the quarter and $10.89B in passenger revenue, above the $10.6B consensus expectation. -“As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to d...

Update - Dec. 28 Southwest has faced a brutal week over the Christmas holiday. The airline had a promising dividend return and a cheap stock heading into this disaster.  - According to FlightAware, Southwest has canceled over 2500 flights on Wednesday, adding to nearly 2700 cancellations on  Tuesday and thousands more on Monday.  The data provider has accounted for over 2300 cancellations planned for   Thursday as well. The levels of cancellations represent between 58% and 64% of scheduled flights per day in the three day span. Original article posted on Dec. 9 Southwest Airlines reinstated the dividend and the stock actually fell $2. The airline now offers a 2% dividend yield, far in excess of yields prior to COVID, despite paying the same dividend. The stock remains too cheap at 11x '23 EPS estimates that appear very conservative. The stock market is so negative on the airline sector that  Southwest Airlines  ( NYSE: LUV ) reinstating the d...

Update - Dec. 19  The market is so off on airline stocks that Citi increased the PT on a stock already providing 67% upside. Most of the other legacy airlines are even cheaper. The market is so focused on recession fears, investors are missing the massive opportunity.  Citi analyst Stephen Trent raised the firm's price target on Delta Air Lines to $59 from $55 and keeps a Buy rating on the shares. Delta's combination of international route exposure, seat mile cost dilution and relatively stable fuel prices should support the shares over the next year, Trent tells investors in a research note. The analyst continues to view Delta as his favorite U.S. carrier. As the recovery on several international corridors seems to be six- to nine months behind the U.S. domestic recovery, Delta's passenger volumes could benefit "from this momentum," writes Trent. Read more at:  https://thefly.com/n.php?id=3634887 Update - Dec. 15 The  airline stocks remain absurdly cheap. One can...

  After solid traffic demand during the Thanksgiving holiday, Delta Air Lines appears on pace to generate strong profits in Q4'22. The airline continues to trade like the future is cloudy and not represented by ~$4.50 in per share profits over the last 3 quarters. The stock is a gift here trading below 5x 2024 EPS targets. After a strong Thanksgiving holiday, investors should have no doubt about the rebound in airlines and specifically  Delta Air Lines  ( NYSE: DAL ). The company has produced a remarkable rebound in profits, yet the stock is still valued  as if a profitable rebound remains in doubt. My  investment thesis  remains ultra-Bullish on the airline stock with an expectation for a full profit rebound for a stock that was once considered cheap at $60 and now trades below $35. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

  Spirit Airlines has at least 44% upside on closing the JetBlue deal. The airline deal still has a lot of questions on whether regulators will approve the merger. The stock is cheap whether the deal closes at $33.50 per share in cash or the airline and shareholders get a large breakup fee and Spirit remains a standalone airline. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   While long term investors should've wanted the  Frontier Group Holdings'  ( ULCC ) buyout of  Spirit Airlines  ( NYSE: SAVE ), those investors must now analyze the  JetBlue Airways  ( JBLU ) deal. The agreed  upon purchase price provides substantial upside to the stock while holding Spirit Airlines offers downside protection on a deal failure. My  investment thesis  remains ultra Bullish on the stock, though disappointed shareholders didn't approve the merger with Frontier. Read the...