What happened

Shares of American Airlines Group (NASDAQ:AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. It could have been worse: Shares of American were down nearly 20% for the month before rallying in the final days of August.

So what

American Airlines has lagged its peers in terms of profitability and has suffered disruptions due to labor issues and troubles with the Boeing 737 MAX airplane. Airline investors are growing nervous about capacity expansion and the threat of an economic slowdown, and given Boeing's highest-in-its-sector debt load, American's shares are taking the brunt of negative news about the industry.

An American Airlines airplane in flight above the clouds.

Image source: American Airlines Group.

American's weakness coincided with a market panic as the yield on a 10-year Treasury bond fell below the two-year rate, creating a so-called inverted yield curve that many investors believe is a signal that a recession is imminent. Airlines historically have struggled during a downturn, and American, due to its debt and other issues, appears particularly poorly suited for a slowdown at this time.

There were other headwinds in the month as well. In mid-August American won a court injunction against mechanics who the company had accused of illegal slowdowns it claimed harmed operations during the key summer travel season. In court that's a win, but the headlines only served to emphasize how difficult relations between management and that important work group have become.

Days later the Department of Justice announced that American has agreed to pay $22 million to resolve allegations that it falsely reported transfer times for U.S. mail it was transporting.

Now what

American has its share of problems and is unlikely to be on a list of top stocks any time soon, but it is far from a lost cause. The airline is arguably better positioned than its rivals to weather the U.S.-China trade spat and a broader slowdown in Asia, thanks to cutbacks announced last year. It's also in the early days of revamping its route network and pricing strategies to increase profitability. American expects capital expenditures (capex) spending to come down dramatically over the next few years, which will free up cash to attack its debt load.

Airlines in general, and American in particular, are likely to trade in the quarters to come on recession fears and based on the price of oil. That could lead to continued volatility, but for investors with a multiyear horizon, there is an opportunity to buy low. Just don't be surprised if the captain fails to turn off the "fasten seat belt" sign for quite a long time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.