We all know by now the trouble that aerospace firm Boeing (BA) has had keeping up with demand for aircraft. The particular problem with this is that, as Boeing’s ability to meet demand slips, the supply of spare parts also becomes an issue. And, as airline American Airlines (AAL) is finding, there is brisk demand for repairing those engines. While there are companies offering aircraft engine repair services—particularly GE Aerospace (GE)—American Airlines is simply doing more of that work in-house.
Don't Miss Our New Year's Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
The firm currently holds the largest aircraft maintenance facility on Earth, a 3.3 million square foot operation at the Tulsa International Airport. It has been stepping up its capability as well; in 2022, it repaired five engines a month. Now, it is ready to see levels as high as 16 a month.
Indeed, American Airlines is taking engine maintenance very seriously and is currently suing Kuehne + Nagel, one of the biggest providers of shipping and logistics services worldwide, for damage caused to an aircraft engine. American wants the shipping firm to cover the cost of repairing a damaged engine, which works out to $520,246, and has been trying to get that money out of Kuehne + Nagel for the last three years, noted Paddle Your Own Kanoo.
What Is the Deal with Airline Food?
In a separate development, airline food has been a cliché in the stand-up comedy market for decades, but apparently, there is reason for this. A study from One Mile at a Time asked the question: Why is the buy-on-board fare in economy class on American Airlines flights so bad? In fact, American offers just three options: packaged nuts, packaged chips, and a “fruit and cheese plate,” which will set you back a staggering $11.
Worse yet, the rather limited snack option is only available on a flight going 1,300 miles or more, or roughly a three-hour flight. That not only represents a source of revenue lost outright, but, for some fliers, it is a reason to eschew American Airlines altogether. It is also a good opportunity to get some fresh customers—and thus revenue—into the fold.
Is American Airlines a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAL stock based on four Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 25.45% loss in its share price over the past year, the average AAL price target of $12.39 per share implies 16.78% upside potential.
