American Airlines Group Inc (NASDAQ:AAL), along with all the other airline stocks, dived south yesterday and ended the session with a loss of over 4%. The volume at 15 million was less than the daily average of 19 million but the impact was not insignificant. Just two weeks back the stock had enjoyed an excellent rally, marked by the strongest and largest weekly candle in the last few months but the last few sessions ate up almost all the gains made. The 52-week high around $56 is turning out to be a tough resistance for the stock as it creates a Double Top pattern, to be confirmed on a break below $46.
The entire airline sector is suffering from the availability of too many seats from the carriers, resulting in a decline of the first quarter revenue from each seat flown a mile and this trend may not reverse in the coming quarter too. Obviously, what is good for the consumers is bad for the airline companies and the shareholders. That is why a cutback in flights and capacity discipline are being demanded by the shareholders and the analysts of this sector.
Deutsche Bank downgraded the whole sector and voiced concerns not only about greater than expected capacity increases but the strength in the US Dollar and the decelerating global GDP growth too. T American Airlines Group Inc (NASDAQ:AAL) was downgraded to “hold” from the earlier “buy” rating.