Please ensure Javascript is enabled for purposes of website accessibility

Why American Airlines Stock Popped 4% Friday

By Rich Smith – Updated Apr 22, 2019 at 10:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The shutdown will ruin everything! Check that: The shutdown is ended!

What happened

Shares of American Airlines (AAL -0.07%), which popped 6% on Thursday in response to upbeat earnings news, flew a little higher today as well, closing the day up 3.9%.

That seemed a strange course for AA stock to take, seeing as the headline dominating news for much of the day was that air traffic controllers, calling in sick during the government shutdown, forced LaGuardia Airport in New York to interrupt flights into one of the nation's busiest airports.

The reason this bad news turned into good news -- for both travelers and American Airlines investors -- is that the situation apparently got serious enough to finally force President Trump to change his mind about keeping the federal government shut down. In a statement, the president announced, "We have reached a deal to end the shutdown and reopen the federal government."

Capitol Hill

A truce is declared, potentially saving American Airlines from becoming collateral damage in the shutdown. Image source: Getty Images.

So what

Nothing is official yet, and according to news reports, even if an agreement has been reached, it will probably only reopen the government and pay workers through Feb. 15. It's possible, therefore, that we could be right back where we started from in three weeks.

Now what

The more optimistic take, however, is this:

American Airlines just reported translating a 3% sales increase into a big 8% increase in net profits. It beat analyst estimates in the process, and predicted it would grow revenue faster than its rivals in 2019, and grow profits roughly 40% year over year. And American did all this in the face of a shutdown that's been weighing on results for more than a month.

Now that the shutdown is over, and perhaps for good, American Airlines may be able to do even better than that.

Check out the latest American Airlines earnings call transcript.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.