Why David Tepper-Founded Appaloosa Is Betting Big on American Airlines Stock

With a market capitalization of $9.55 billion, American Airlines stock has had a bumpy ride and continues to lag the broader market. AAL has managed a modest 7.33% gain over the past year, but the stock is down 7.8% so far in 2026. By comparison, the S&P 500 Index ($SPX) has climbed an impressive 19.44% over the past year and gained another 12.5% in 2026. The recent pullback has been even sharper. American Airlines shares reached a 52-week high of $18.79 in early July but have since fallen 25.1% from that peak.

Inside American Airlines’ Q2 Earnings Report

American Airlines delivered a quarter that looked impressive on the surface but became much harder to digest once costs came into focus. In its fiscal 2026 second-quarter earnings report released on July 23, American Airlines posted a record $16.74 billion in revenue, up 16.3% year-over-year (YOY) and marking the highest quarterly revenue in the airline’s history. The strong top-line performance reflected solid demand across all four of American Airlines’ commercial pillars and came in slightly above Wall Street’s $16.71 billion consensus estimate.

A closer look at the numbers shows that strong demand remained. Premium travel continued to lead the way, with passenger unit revenue rising 13.4% YOY, while Main Cabin passenger unit revenue increased 8.8%. Domestic demand also rebounded strongly, with passenger unit revenue climbing 10.6%. International operations delivered another bright spot, with passenger unit revenue increasing 8.9% in the Atlantic, 15.1% in the Pacific and 6.6% in Latin America. 

Business travel was particularly resilient, with American Airlines’ managed corporate revenue jumping 26% from a year earlier. But there was a major catch. Higher revenue did not translate into stronger profits. American Airlines’ fuel expense surged by more than $2.2 billion, or 83%, YOY, creating a significant drag on earnings. The airline managed to offset nearly half of that fuel-cost headwind through higher fares and strong demand, but the remaining pressure still hit the bottom line hard. 

GAAP EPS plunged to $0.11 from $0.91 in the year-ago quarter, while adjusted EPS fell to $0.15 from $0.95. Still, the adjusted figure comfortably beat Wall Street’s $0.05 consensus estimate. American Airlines also ended the quarter with $11.3 billion in total available liquidity, giving the carrier a stronger financial cushion as it navigates elevated costs and a challenging operating environment.

However, investors were far less impressed by the headline revenue growth. American Airlines shares fell 8.35% following the earnings release, as attention quickly shifted toward the company’s cautious third-quarter outlook. American Airlines expects Q3 adjusted EPS to range from a loss of $0.70 to a loss of $0.10, significantly below Wall Street expectations, even as revenue is projected to rise 16% to 19% year over year.

How Do Analysts View American Airlines Stock?

Wall Street remains largely bullish on American Airlines, with AAL carrying a consensus “Moderate Buy” rating. Of the 24 analysts covering the stock, 12 recommend a “Strong Buy,” 11 favor a “Moderate Buy,” and just one rates it a “Strong Sell.” The optimism is reflected in the price targets, too. The $18.93 average target implies 34.5% upside, while the Street-high target of $25 points to a potential 77.7% gain from current levels.

On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com