Airlines are always a tough business. Many airlines (named after countries) are subsidized by the nation to which they guarantee service. When a lot of your competitors are subsidized, business is tough. Even in good times the old saying is “The easiest way to become a millionaire is to start with a billion dollars and buy an airline.”
Still there are 59 publicly-listed airlines in the world most of them are rebounding pretty well after the COVID crisis but American Airlines is in big trouble.
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It lost an estimated $1.6 billion in the last 12 months
(the last 12 months have been good months for the airline industry)
so every $13 share you buy entitles you to $3.67 in losses -
Bad debt, COVID hangover etc. cannot even explain what is happening at AA. AA’s Operating income and EBITA are also negative.
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The company reports NEGATIVE tangible assets of $13.5 billion.
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THE 12-MONTH CLOCK IS TICKING
It reports $19 billion in current liabilities (total of payments due in the next 12 months) and
has only $12.4 billion in current assets with which to pay them.
Again, the airline business is tough anytime. Right now, most of its competitors are making money. Some are so weak from the COVID years they might not make it anyway, but American Airlines stands out from the crowd. Unlike the rest of the industry it is in heap big trouble and in this economic climate help is NOT usually on the way.
