American Airlines (NASDAQ:AAL) was lifted to Buy from Hold by Jefferies with a new price target of $18 per share in a note Thursday.
Analysts said in a note to clients that the company's cost levers preserve its bottom line.
Jefferies noted various tailwinds it sees for the company, including two to five points of improving aircraft utilization, as well as its modern fleet, with an emphasis on Sun Belt hubs connectivity and prudence to 75% short-haul and 25% long-haul.
"In mid-2023, mgmt noted 2-5pts of mainline utilization oppty in 2024 as efficiencies of its pre-pandemic $25BB fleet & system modernization materialize," explained the analysts. "There are also ~150 RJs that slowly return to service as pilot hiring solves. RJ flight hrs are CASM-ex dilutive but P&L accretive."
Furthermore, the firm pointed to the company's $10.9 billion of $15 billion total debt reduction plan executed, with the remainder by the end of 2025, given limited capex. The analysts also said AAL's March 4th Investor Day will highlight the airline's premium/AAdvantage.