The combination of the Boeing crash added to the ongoing pandemic has massively affected all aircraft companies, including AAL. The stock price showed a downward trend from its all-time high in 2018, and by 2020, it had reduced a lot due to the grounding of the Boeing Max aircraft.
The Factors That Determine Growth
The fall in AAL stock price at https://www.webull.com/quote/nasdaq-aal had a huge impact on its growth and expansion. The travel ban led to the cut down of flights like never seen before, even around the time of the 9/11 attack. According to an estimate prepared by the international air transport association, the flight’s shutdown has caused the company’s total of 252 billion dollars. The airline business and industry, in general, is highly unpredictable. Stock prices rise and fall according to the small changes in the market. There is no guarantee of profit in this business. The nature of the industry is such that companies take massive debts as the situation changes. Assurances of repayment of the loan taken from the bank depend on the lifetime of the aircraft bought. But when unexpected grounding of flights happens, there is no way to return the amount.
Debts and Bankruptcy
The airlines suffer from losses that can land them in debts or bankruptcy. As they are susceptible to these ups and downs, situations like this are to be expected. Airline companies make money from the tickets of the passengers. So, profits and losses depend on the availability of money in people’s hands as they tend to travel more when they have a lot of money and avoid it when they don’t. Low occupancy of seats results in less money for the Airlines.
Based on the AAL stock price, the company has a high potential risk of going under. But if by some method they make it out, it has a high upside to it. Other companies that do not have such debts run a low chance of going bankrupt, but they do not have a high upside like American Airlines. To buy stocks in the company, determine where you want to fall on the risk-reward profile.
If you are confident and dare to take risks, there is a possibility of coming out with success in the end. The current price of the stock is $12.4. This is an improvement from the all-time low of $10. It shows that the business is gradually picking up after the onslaught of the pandemic. The introduction of the vaccine to prevent pandemic has also led to an increase in the stock price. You can check other information like balance sheet at https://www.webull.com/balance-sheet/nasdaq-aal.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.