American Airlines Group Inc. (AAL) saw its stock edge higher in early premarket trading on Thursday, recovering from a decline the previous session as a drop in oil prices helped alleviate concerns over rising fuel costs. Shares were trading at $15.63 ahead of the opening bell, up 1.36% from Wednesday's close of $15.42, according to data from Public.com.
The move comes as traders prepare for a shortened trading week, with Nasdaq set to close on Friday for the Juneteenth holiday. This gives investors a limited window to reposition in airline stocks, which have been volatile amid fluctuating crude prices and broader market uncertainty.
Oil prices were a key driver of the positive sentiment. Both Brent crude and U.S. West Texas Intermediate (WTI) futures fell approximately 2%, dropping to levels not seen since the onset of the Iran conflict. The decline followed news of a preliminary U.S.-Iran agreement aimed at reopening the Strait of Hormuz and easing global supply concerns. However, the deal remains subject to a 60-day negotiation period, with several key details still unresolved, leaving room for potential volatility.
The impact of lower oil prices is particularly significant for American Airlines, which has been grappling with elevated jet fuel costs. In April, the carrier reported record first-quarter revenue of $13.9 billion but posted a net loss. The company warned that its 2026 outlook was under pressure from more than $4 billion in additional jet fuel expenses. American forecast full-year adjusted earnings per share (EPS) in a range between a loss of $0.40 and a profit of $1.10, excluding one-time items.
In a note to clients, Jefferies analyst Sheila Kahyaoglu raised her price target on American Airlines to $15 from $13, while maintaining a Hold rating. The analyst cited continued strong demand and fares running 20% higher than a year ago, noting only minor churn after recent management meetings. The Hold rating indicates the firm does not have a strong conviction to buy or sell the stock.
American Airlines executives have expressed confidence that revenue growth will help offset some of the higher fuel costs. CEO Robert Isom stated at the Bernstein investor conference in late May that the company is “not making any changes” to its outlook and still aims to “repeat the profitability we had last year.” However, Reuters has reported that American has lagged behind rivals Delta Air Lines and United Airlines on profitability for several years.
Management changes were also disclosed. In a June 16 filing, American Airlines announced that Vice Chair and Chief Strategy Officer Stephen L. Johnson will retire at the end of the year. CEO Isom praised Johnson as a “trusted counselor” in a note accompanying the filing.
Despite the uptick in American's stock, the broader airline sector faced headwinds on Wednesday. Delta Air Lines fell 1.07%, United Airlines dropped 2.26%, Southwest Airlines gave up 1.62%, and American Airlines ended the day down 1.85%, according to MarketWatch data. The losses were widespread, affecting multiple carriers.
Options market activity suggested some traders remain cautious. TheFly highlighted bearish options flow on American Airlines, with puts outnumbering calls. Puts are often used as a hedge against downside risk. Implied volatility indicated a potential daily swing of about $0.50 per share.
Looking ahead, risks persist. While cheaper oil provides near-term relief, sustained low prices are not guaranteed. Airline fares could also face downward pressure if cost-conscious travelers reduce spending. Additionally, a June 24 House hearing on airline competition following the collapse of Spirit Airlines may bring increased regulatory scrutiny to the industry.
