Analyst Note
| Burkett Huey, CFA |No-moat-rated American Airlines reported a solid third quarter, as its domestic- and Latin America-focused network recovered faster than peer network carriers. Sales of $9 billion and adjusted loss per share of $0.99 beat FactSet consensus by 0.5% and 4.7%, respectively. We are maintaining our $19 fair value estimate, as we reduce our midcycle operating margin by about 30 basis points to reflect the significant increase in landing fees and other rents, though the effect of the reduced midcycle operating margin is partially offset by the time value of money and faster recovery assumptions. We are also reducing our uncertainty rating to very high from extreme, as balance sheet risk has decreased materially for the firm since we originally increased the uncertainty rating.