Barclays: post-bankruptcy airlines underperform historically, American initiated at Equalweight

Barclays initiated American Airlines (AAL -2.1%) shares at Equalweight with a PT of $30 earlier today.

Analysts David Fintzen and Isaac Husseini read the company's tea leaves from an empiricist perspective, noting that airlines emerging from bankruptcy are "historically volatile and prone to relative underperformance. Even the best performing emergence (LCC as old US air emerged from bankruptcy and closed the America West merger) saw 40% relative out-performance in the first months quickly wiped out," while Delta, NWA, UAUA "all saw reasonably large post emergence sell-offs" ranging from ~10% to 60%.

The analysts also point to the fact that post-bankruptcy margins tend to drop. A caveat: American "can sustain a cost advantage to both [United Continental] and [Delta] over the coming years. All that assumes [American Airlines] can contain cost pressures that come with the challenges of integration," they note.

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