10 Worst Airline Stocks To Buy According to Short Sellers

2. American Airlines Group Inc. (NASDAQ:AAL)

Short Interest as % of Shares Outstanding: 14.78%

Number of Hedge Fund Holders: 38

American Airlines Group Inc. (NASDAQ:AAL), formed from the merger of American Airlines and US Airways in December 2013, is a major player in the airline industry. With a fleet of around 1,000 aircraft, the airline operates approximately 6,700 flights daily to nearly 350 destinations across more than 50 countries.

It has a strong network with hubs in key cities including Charlotte, Dallas/Fort Worth, and Miami, which positions it well to cater to both domestic and international travelers. It is among the worst airline stocks according to short sellers.

In the second quarter, the airline reported record revenues of $14 billion, a modest year-over-year increase of 2%. However, the achievement was tempered by a significant 46% drop in net income, which amounted to $717 million, or $1.01 per share. The difference between the two is a sign of the challenges the company faces in maintaining profitability amid rising operational costs, even as demand continues to grow.

To enhance its revenue outlook, American Airlines (NASDAQ:AAL) has implemented a series of measures, yet the continuing effects of its past sales and distribution strategies are expected to keep influencing its performance negatively throughout the year.

As a result, the airline forecasts its adjusted earnings per diluted share for the third quarter of 2024 to be around breakeven. For the entire year, the expected adjusted earnings range from $0.70 to $1.30 per share, which is an indication of a cautious but hopeful approach to navigating the current economic landscape.

Additionally, American Airlines (NASDAQ:AAL) is actively working to strengthen its balance sheet. During the second quarter, the company successfully reduced its total debt by approximately $680 million, progressing towards its ambitious goal of cutting total debt by $15 billion by the end of 2025.

Currently, it has managed to achieve over $13 billion, or about 87%, of that target. The company also reported a strong liquidity position, ending the quarter with roughly $11.7 billion in total available liquidity, which includes cash, short-term investments, and undrawn credit facilities.