American Airlines Earnings on Tap, Option Traders See Moderate Bearishness

Option traders are moderately bearish on American Airlines, with shares down 0.99%. Options volume is above average, with puts leading calls for a put/call ratio of 1.33. Implied volatility dropped 3.19, and put-call skew steepened, indicating increased demand for downside protection. American Airlines will report earnings after the close, with option markets pricing in a 50% probability of a move greater than 0.0% or $0.00.

American Airlines (AAL) is experiencing significant headwinds, impacting its financial performance and making it an unattractive choice for investors. The company is grappling with economic uncertainty, weak liquidity, and escalated operating expenses, all of which are putting a strain on its prospects [1].

AAL's stock has seen a 33% year-to-date decline compared to the Transportation - Airline industry's 2.8% fall, and the Zacks Consensus Estimate for current-year earnings has been revised downward by 9.4% over the past 60 days [1]. The company's Zacks Rank is currently at #5 (Strong Sell), indicating a strong sell signal from analysts.

Options traders are moderately bearish on AAL, with shares down 0.99% as of July 2, 2025. Options volume is above average, with puts leading calls for a put/call ratio of 1.33. Implied volatility dropped 3.19, and the put-call skew steepened, indicating increased demand for downside protection [2]. The option markets are pricing in a 50% probability of a move greater than 0.0% or $0.00 following AAL's earnings report after the close.

Adding to the challenges, American Airlines' revenue declined by 0.2% year-over-year, while operating expenses rose to $12.82 billion from $12.56 billion in the same quarter last year. The company's liquidity position is also concerning, with a current ratio of just 0.52, indicating potential difficulties in meeting short-term obligations [1].

Investors interested in the Transportation sector may consider Wabtec (WAB) and Kirby Corporation (KEX) as alternatives. Both companies carry a Zacks Rank of #2 (Buy) and have shown strong earnings growth and surprise history [1].

References:
[1] https://www.nasdaq.com/articles/heres-why-investors-should-give-american-airlines-stock-miss-now-0
[2] Writing Topic