American Airlines back in ‘Big 3’ carriers, brokerages predict strong 2025

American Airlines' stock is poised for a strong 2025 as the carrier emerges from a challenging year, according to brokerages Jefferies and TD Cowen, who upgraded the stock to a "buy" rating on Monday.

Shares of the carrier were up nearly 5% at $17.76 in premarket trading.

The carrier spent much of 2024 rebuilding its sales strategy and mending relationships with corporate clients after a sales and distribution approach backfired.

American had implemented a strategy aimed at renegotiating contracts with corporate travel agencies and clients, reducing perks and discounts, which it pushed aggressively since April 2023.

The approach had resulted in an exodus of corporate clients last year, negatively impacting the airline's revenue. American fell significantly behind its network competitors United Airlines and Delta Air Lines, the other members of the "Big 3" network carriers.

"In hindsight, we were too early with our upgrade a year ago and then failed to appreciate the transitory nature of their headwinds when we downgraded the shares in July," TD Cowen's Tom Fitzgerald wrote in a note.

The brokerage raised its price target on the stock to $25 from $17 and said the legacy carrier is expected to benefit from an improvement in domestic pricing and the return of its corporate customers.

American has since been regaining its market share and has also enjoyed the perks of an improved price environment.

Last month, the Fort Worth, Texas-based airline raised its fourth-quarter profit forecast, signaling a strong start to the holiday travel season.

With ongoing corporate share recapture, reduced capacity and capital expenditures, American Airlines could experience a substantial upside in 2025, Jefferies analysts wrote in a note.

The brokerage raised the stock's price target to $20 from $12 as it welcomed the carrier back into the "Big 3".

The airline's stock has 10 brokerages rating it "buy" or higher, with 12 "hold" and one "sell".