American Airlines Gets Single Operating Certificate, Stock Up - Analyst Blog

Shares of American Airlines Group Inc. AAL climbed 2.62% on Apr 8 to $48.74 following the Federal Aviation Administration's (FAA) decision to grant a single operating certificate to American Airlines. The FAA's decision marks a huge positive step toward the completion of the merger integration process of American Airlines and US Airways. We remind investors that American Airlines Group was formed following the Dec 2013 merger between AMR (American Airlines' parent group, founded in 1934) and US Airways.

Following the approval, the two airlines will be able to operate under a solitary certificate. The single airline approval implies that most flight operations, maintenance and dispatch procedures will be the same for all flights operated by American Airlines and US Airways. The decision comes close on the heels of the clubbing of US Airways' Dividend Miles frequent flyer plan with American Airlines' AAdvantage loyalty program.

Fliers will, however, not notice the impact of the FAA decision immediately. For the time being, they will continue to check in for their flights at the ticket counters of American Airlines and US Airways or on their respective websites. This will be discontinued later in the year when the reservation systems are merged. Eventually, planes operated by US Airways will be repainted to sport American Airlines' colors and logo.

We remind investors that another major step toward the completion of the integration process was taken early in the year when American Airlines Group inked a 5-year contract with its pilots. The approval of the contract by the members of the Allied Pilots Association makes the pilots eligible for a 23% pay raise with immediate effect followed by a 3% pay hike in each of the 5 following years. A five-year agreement with the flight attendants of American Airlines and U.S. Airways is also in place.

Zacks Rank

American Airlines Group carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space are Southwest Airlines LUV , JetBlue Airways JBLU and Hawaiian Holdings HA . All the three stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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