Strengths
American Airlines is a growing company and can still venture further into the airline business and make vast profits. It is an excellent long-term project for individuals who have an active interest in investing in the airline business. The year 2020 was not favorable for AAL stock because the coronavirus pandemic shut down the airline industry. Society will return to normalcy soon, and companies like American Airlines will receive a significant boost.
However, statistics in the past indicate the revenues it generates have increased reasonably in the past two years. Its stock has dropped by 45percent, making it a good investment, majorly because of the availability at a better bargain. Since the store may not drop significantly again, it is a golden opportunity to invest. Compared to the previous years, AAL stock's value is lower. The industry had initially eliminated destructive price wars. The company anticipates that many passengers regularly move because of the impact of the Covid-19 vaccine.
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The American Airline provides desirable service, inclusive of reliable air transport with several services on board. Such services fancy many clients and will run the business daily. There will always be a demand for airlines regardless of the schedules for passengers or cargo. The number of people traveling has been boosted by administering the Covid-19 vaccine, after which most economies are recovering.
Despite the Covid-19 pandemic, many people are still traveling across the world. This is a source of hope that the American Airline will still have revenues even in this tough time. The company is currently the company with the youngest fleet in the U.S. It also has the best mile coverage, implying many people prefer the company. With the savings people make, there is a high chance that the numbers will soon increase when the safety of the Covid-19 pandemic is guaranteed.
American Airlines have more expansion opportunities as compared to many other airlines. Since announcing international services to Budapest and Prague, it has had opportunities to expand routes internationally. The Airline opened domestic gates and has had more options. There is also a rise in the U.S and worldwide tourism, which offers American Airline's chances to grow.
Weaknesses
Despite its good reputation and merits, American Airlines have in the past been accused of cases of discrimination and disrespectful behaviors. This could be a hindrance to the investment pattern, considering many people dislike the idea of investing in such stock, where they are not valued. In October 2017, NAACP warned African American s a warning about the behaviors following complaints from African American passengers (David, 2019) . This travel advisory could impact the stock investment vastly if not checked.
Opportunities for Growth and Expansion
American Airlines recover from the Covid19 pandemic by restoring the seating capacity by 55% in July. This is a unique recovery advantage considering the optimism that the economies will heal faster because of the administering Covid19 vaccine. The American Airline is advantaged by having two of the globe's biggest hubs leading American's recovery (Horton, 2020) . They are AAL's most profitable and constitute 67% of AAL's seats in July flights. Every additional flight at a hub increases the growth margins at affordable costs and generating more connecting opportunities. The American Airline should consider bringing capacities back to normal with effect, observing the Covid19 regulations in its core hubs. This move is risky but has an incredible reward. American Airlines' largest hubs are located in the Republican States, which are more likely to travel.
Threats
There is intense competition in the industry that poses a great risk to investors who wish to transact stock deals with American Airlines. In the event that they overplay American Airlines, reduced revenues could occur. The AALs have many debts, especially during the covid19 period, because of the high operation costs. The rise in crude oil prices, which has been a recent trend, could deter future plans, considering the airlines’ overdependence on low fuel prices. Its common cost carriers have captured the market share so fast that they challenge the legacy carriers (SCHMIDT, 2016) . This implies the revenue margins are not improving to the projected values.
The sharp decline in revenue scares many investors away from investing in American Airlines' stock. The economy has not yet recovered from the covid19 pandemic effects, and recently, the country had its elections completed. The political turmoil also contributed to the economic collapse deterring investment in AAL's stock.
Recommendations
The American Airline should use the 'poor economy state' and scale its operations appropriately. The Airline should consider increasing the capacity of legacy carriers and managing the fuel costs to improve the revenues. This risky move should also be in line with the Covid19 protocols and regulatory measures.
AAL should increase the hubs that are operating worldwide. With the reasons behind the closure of some hubs and flight operations, the company should scale down its operating costs and improve on flight experiences. As soon as the economy opens up, they will have acquired stability and focus on increasing the profit margins.
American Airlines should manage their debts appropriately since they can significantly lower their upgrade programs. The pandemic left the AAL with many obligations and also losses in billions. To pay off and avoid bad debts, the AAL should look at programs that increase profit margins and avoid debts.
References
David, J. (2019). SWOT analysis of American Airlines. How and what .
Horton, W. (2020). Why American Airlines Is Growing Twice As Fast As Delta And United. Forbes .
SCHMIDT, A. (2016). What Are American Airlines’ Key Strengths and Weaknesses? MARKETREALIST .
