Airlines with a branded credit card are not exactly new, and American Airlines (AAL) is no exception. But the company is looking to make some changes in how its own card offering is operated. Reports suggest it is looking to Citigroup (C) to take over from Barclays (BCS), dissolving a partnership that goes back more than a decade. Shares of AAL were down fractionally in Friday afternoon’s trading.
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American Airlines has been working to build a new long-term deal, reports from CNBC noted, with plans to put all of its credit card business eggs in one basket. The consolidation is expected to make things work a little more smoothly, and ultimately improve revenue from the credit card side of things.
While the move is still ongoing, it may never actually come to pass. There is also some regulatory approval that would be involved, and most investors are likely aware of regulators intervening a lot recently. There are some concerns about the deal; reports suggest that if the deal fails to go Barclays’ way, current AAdvantage cardholders could lose their cards altogether, or potentially be moved to another product.
Route Shuffles
And while American tries to settle its card business, it is also making significant changes for routes. Several routes are being done away with, reports note, including four flights out of Austin. The flights to Nashville, Raleigh / Durham, and Boston will all be shuttered, and in January, flights to Orange County are discontinued as well.
But there may be two new flights kicking in, and this time, to an unexpected destination: China. American recently turned to the United States Transportation Department for approval to resume two flights daily to China, noting that there is a lagging demand in travel between the two places. There is only one daily flight now, and that is from Dallas to Shanghai. But American has still noted that passenger demand “…has not recovered to pre-pandemic levels.”
Is American Airlines Stock a Buy or Hold?
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 15.66% loss in its share price over the past year, the average AAL price target of $12.39 per share implies 12.48% upside potential.
