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American Airlines removed from S&P 500 due to market valuation

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American Airlines removed from S&P 500 due to market valuation
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American Airlines will be removed from the S&P 500 index before market open on Monday, September 23rd. The airline will be reassigned to the S&P MidCap 400.

This change reflects the market's valuation of the company rather than an assessment by S&P. American Airlines currently has a market capitalization of approximately $7 billion.

In comparison, United Airlines, which faced similar bankruptcy risks during the pandemic and has made significant new aircraft commitments, holds a market cap of $15 billion. Delta Air Lines stands at $27 billion, while Alaska Airlines is valued at nearly $5 billion.

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The previous CEO had publicly predicted that shares would reach $60; however, shares now hover around $10, close to their lows from the start of the pandemic. This is despite receiving substantial government subsidies and a recovery in travel demand.

American Airlines attributes its underperformance to its decision to move away from managed travel and penalize travel agencies, estimating this strategy costs them about $1.5 billion in annual revenue. However, with nearly $53 billion in revenue last year, this explanation does not fully account for their challenges in absolute or relative terms. The architect of this strategy was dismissed but appears to have been used as a scapegoat.

Critics argue that American Airlines suffers from a lack of leadership and insufficient focus on product improvement. The company's board has tolerated these issues without implementing significant changes.

Organizations Included in this History
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