• MJ

Why is $AAL the Only Airline We Hold in the Portfolio?

Updated: Feb 7


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American Airlines Group Inc. is a holding company. The Company's primary business activity is the operation of a network air carrier, providing scheduled air transportation for passengers and cargo. The Company operates through the American segment, which provides air transportation for passengers and cargo. The Company's cargo division provides a range of freight and mail services with facilities and interline connections available across the globe. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle, its airline operated an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. (Source: Refinitiv)


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Long story short, the Market Cap of American Airlines is 10B. This is very low for one of the best brands in the world. Let's have a look at the below numbers to put the 10B valuation into perspective for all of us:


🔹️Revenue of 24B

🔹️Brand Value at 8.8B

🔹️Short Interest at 25.23%

🔹️Credit Combined score at 4.2%


Now let us think about valuation and American Airlines also vs $TSLA


Revenue of American Airlines as per eToro is 24B and Teslas is 28B. Consequently, we can say that they are almost equal. What is more, these 2 companies transport people as their main area of activity.


Now, do you really think that the dream of EV is more important than the reality and necessity of Air Travel? Ok, let us even agree that it is and that the New President - Biden - will make it even more so.

Well, American Airlines used to carry c.200B passengers a year. I wonder if Tesla ever reaches this number. But let us look at two massive numbers that will explain a lot about my view on Investments.

✈️ AAL Market Cap = 10B

🚗 TSLA Market Cap = 820B ⚠️⚠️⚠️

🎤 Mike drop here


Now, this is a factor of 82!! That basically says that even at similar revenue, Tesla is 82 times more expensive than American Airlines. This simply cannot last and therefore we keep our long of AAL (which is growing nicely today to cross 100% profit) and we opened a new short on Tesla.


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To be sure, let us not forget that AAL reported earnings and lost 8.9B already in 2020. That is a high rate of cash burn and Tesla lost only 0.8B in comparison (not counting credits as revenue).


Airlines are still a risky bet due to Covid-19, but I have to tell you that 2 of my team members flew from the US to Luxembourg this Saturday. My parents flew to Luxembourg this morning. I did not have any problems traveling. So we will soon be back.


The reason I kept AAL and closed $LHA.DE and $EZJ.L is the BRAND VALUE. Similarly to $AML.L - I made very good calls here, and these actually turn to some of the best and most frequently traded instruments for me.


PS. All my investments and portfolio are public. To join eToro please follow the link: https://bit.ly/3i7Yo3C

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