1. A MERICAN A IRLINES (AAL) American Airlines (AAL)

2. A GENDA  Industry Analysis  Company Analysis  Company Fundamentals  Chart Analysis  Competitors  Competitive Analysis  Final Recommendation 2

3. I NDUSTRY A NALYSIS (A IRLINE I NDUSTRY ) http://www.nasdaq.com/article/airline-industry-stock-outlook-dec-2013-industry-outlook-cm310424 3 Overview Of Airline Industry in USA With a Zack’s industry rank of #16, and expected profit growths, the airline industry looks strong for the next few years. Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation  100 certified passenger airlines operating over 11 million flight departures per year  Accounts for about 1/3 rd of global air traffic  815.3 million scheduled passengers traveled on USA airlines in 2012.  Commercial aviation contributes more than 8% of USA’s GDP.  The number of passengers will grow to 1.2 billion in 2032, according to the FAA's annual forecast.  Carriers expected to make a profit of $6.3 billion in 2014  US Airline Industry to remain profitable for two more decades  Oil price volatility remains a significant challenge http://www.nasdaq.com/article/airline-industry- stock-outlook-dec-2013-industry-outlook- cm310424#ixzz2vEkdMZEL Industry Outlook

4. C OMPANY A NALYSIS (A MERICAN A IRLINES ) http://en.wikipedia.org/wiki/American_Airlines http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-december-traffic-results http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-fourth-quarter-and-full-year-2013-financial-results 4 Overview A recent merger has helped an otherwise bankrupt AAL re-emerge in the airline market, with a higher market share and more efficient trips and PRASM, RPM Values. eBay  PRASM (Passenger Revenue per Available Seat Mile) in Dec 2013 increased 9% YoY  RPM’s (Revenue Passenger Miles) increased by 11.9 billion (5%) YoY from Dec 2012. Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation Revenue & Market Share  Recent merger with US Airways has re-established AAL as a leader in airline industry in USA  New Parent Company (American Airlines Group)  Based out of Fort Worth, TX.  626 fleets with 273 destinations at the moment  Stock price up 58.2% since merger and relisting in December 2013 Improvements From 2012

5. C OMPANY F UNDAMENTALS 5 Essential Statistics Consistently Rising Revenues, but negative net profit margin.  Beta: 2.91  Current Ratio: 1.04  Quarterly Revenue YoY Growth: 24.1%  Forward P/E: 7.38  Market Cap: $18.4 billion (Large Company)  Average Volume: 8.7m/ 10 days Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation

6. C HART A NALYSIS 6 Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation Source: Google Finance

7. C OMPETITORS Source: Google FInance 7 Main Competitors Delta, Alaska, United and Southwest are AAL’s major competitors. Revenue YoY Change  Delta Airlines and United Continental hold largest market shares ahead of AAL.  ALK, DAL and HA experiencing consistent, fast- paced growth. Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation  AAL: 7.60% United: 3.03% Southwest: 3.58%

8. C OMPETITIVE A NALYSIS Source: Bloomberg, Wikipedia 8 Competitive Analysis The positive synergies from the merger are likely to fully surface by 2015. Catalysts  Positive synergies after merger  World’s largest airline with greatest US market share by revenue (28.7%)  Larger customer platform  Inducted 13 new Airbus A320 family aircraft, 2 Airbus A330-200 aircraft, 5 Boeing B737-800 and 1 Boeing B777-300 aircraft into its fleet in 2013  Began more international nonstop flights, whilst most domestic airlines provide short domestic flights  New seasonal summer services to key holiday destinations: Spain, England, Belgium, and Portugal from Charlotte, NC  Partnership with Oneworld Airlines  Key partners including British Airways, Malaysia Airlines, Qatar Airways  Delays in integration after merger have been or are in the process of being solved  Completed technology fixes to let fliers book trips on both its American and US Airways units  Adding seats on some jets  More revenue generation through addition of fee-based services such as early boarding and more legroom  CEO Doug Parker expecting $1 billion in new revenue and savings by 2015  Significantly speedier at reaping positives after transaction than industry comparables such as merger between Delta and Northwest (3 years to reach $1 billion milestone)  2014E annual profit at $3.5 billion (Bloomberg analysts) Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation

9. F INAL R ECOMMENDATION 9 Recommendation for AAL Considering the positive outlooks for the US airlines industry and AAL in particular, the final recommendation is BUY.  Positive synergies, in particular breaking the $1 billion milestone in revenue and costs synergies, are expected to fully surface by 2015  Hence, steady long term revenue growth to be expected during integration process  Although AAL’s forward P/E ratio is at 7.38 which is considerably lower than its competitors, investors are gaining more confidence in positive analysts’ estimates, and the stock’s P/E is expected to increase  Expectations for US airlines as a whole are high for 2014 as the economy improves  Final recommendation for AAL: BUY Industry Analysis|Company Analysis|Company Fundamentals|Charts|Competitors|Recommendation