Analyst action and valuation context
TD Cowen has reiterated a Buy rating on American Airlines, keeping its $19.00 price target after the airline released fourth-quarter 2025 results. That target represents approximately a 30% premium to the share price of $14.57, and sits toward the upper end of the broader analyst band of $11 to $21. Separately, data from InvestingPro points to a PEG ratio for American Airlines of 0.14, a figure the data provider characterizes as notably low and potentially indicative of undervaluation relative to forecast growth.
Quarterly performance and one-off impacts
American Airlines reported fourth-quarter results that missed estimates. Management attributed part of the shortfall to a government shutdown that they said reduced revenues by $325 million. The company said the shutdown predominantly affected its domestic franchise, where passenger revenue per available seat mile - PRASM - fell 2.5% year-over-year. American noted that domestic PRASM would have risen in the quarter absent the shutdown-related disruption.
Despite the miss, American has sustained modest revenue expansion over the trailing twelve months, with total revenue reaching $54.29 billion and year-over-year revenue growth of 1.27%.
Quarterly and full-year guidance
For the first quarter of 2026, the airline issued guidance that calls for available seat mile - ASM - growth of 3-5% year-over-year, total revenue growth of 7-10%, and cost per available seat mile excluding fuel - CASMex - growth of 3-5%. The company also expects an adjusted loss per share in the range of ($0.10) to ($0.50) for the quarter.
American said that its Q1 guidance includes quantified impacts from Winter Storm Fern: a 1.5 percentage point reduction to ASMs, a $150-200 million reduction to revenue, and a 1.5 percentage point increase in CASMex.
Looking to the full year, the airline gave a 2026 adjusted earnings-per-share range of $1.70 to $2.70, which sits above the current consensus estimate of $2.01. Management also projected free cash flow in excess of $2 billion for the year.
Balance sheet and liquidity
Management restated its intention to reduce total debt below $35 billion in 2026, which would accomplish that target a year ahead of the previously stated timetable. InvestingPro analysis reports American's current total debt at $36.06 billion. The same data set highlights a current ratio of 0.54, a metric that indicates short-term liabilities exceed available liquid assets.
Strategy and competitive position
American set out four strategic priorities for 2026: delivering a consistent, elevated customer experience; maximizing the network and fleet; building partnerships to deepen loyalty and lifetime customer value; and advancing commercial efforts. The company is a major participant in the Passenger Airlines industry and carries a market capitalization of $9.62 billion. InvestingPro rates American's financial health score as "Fair."
Other corporate developments
In response to the Federal Aviation Administration's airspace closure in the Eastern Caribbean, American added nearly 2,000 seats as part of a broader relief effort that expanded to 7,000 seats across 43 extra flights. Separately, S&P Global Ratings upgraded the credit ratings on four of American's enhanced equipment trust certificates from 'BBB' to 'BBB+', citing improved loan-to-value ratios after the latest collateral appraisals showed lower-than-expected LTVs.
Wells Fargo recently initiated coverage on American Airlines with an Equal Weight rating and a $17.00 price target. Its initiation highlighted American's new co-branded card agreement and signs of improving main cabin economics, while also calling out elevated debt levels and the need to enhance premium service as ongoing concerns.
Operational disruptions and travel conditions
Major winter storms across the United States created severe travel disruptions in the post-holiday period. Over 1,300 flight cancellations were recorded, and flight-tracking data showed 4,485 flight delays affecting U.S. travel linked to the storms. Transportation Secretary Sean Duffy said air travel was expected to return to normal by midweek following the disruptions.
Takeaway
The reaffirmation of a Buy rating with a $19 price target by TD Cowen comes against a backdrop of mixed operational results, quantified weather-related impacts and a government shutdown-driven revenue drag. American's guidance for 2026 projects a rebound in profitability compared with its quarterly results, and management is targeting material debt reduction and sizeable free cash flow. However, short-term liquidity metrics and recent operational shocks remain points of focus for investors evaluating the stock.