What happened

Shares of American Airlines Group (NASDAQ:AAL) lost 10.7% in 2019, according to data from S&P Global Market Intelligence, a year in which the overall market and airline stocks on average gained more than 20%.

American is widely seen as the weakest of the major U.S. carriers at present, and even though the industry is much healthier than it has been in years past, the airline's balance sheet and other issues, including its exposure to Boeing's ongoing troubles, were front of mind for investors through most of the year.

AAL Chart

Airline 2019 stock performance data by YCharts

So what

American Airlines, the last of the major airlines to file for bankruptcy protection earlier in the decade and the last to participate in an industrywide round of consolidation that followed, has been playing catch-up for a number of years. And it faced a number of significant headwinds in 2019. 

The airline during the year faced labor unrest and was among the carriers most affected by the grounding of Boeing's 737 MAX.

An American 737 sits on the runway.

American Airlines hopes to get off the ground in 2020. Image source: American Airlines.

It also has the weakest balance sheets among major airlines, with more than $25 billion in long-term debt. That debt burden came into focus midyear 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, because of its debt and other issues, seemed particularly poorly suited for a slowdown.

Now what

American clearly trails rivals including Delta Air Lines and United Airlines Holdings in terms of profitability and strength of balance sheet, and investors were likely correct to focus their attention away from the airline. But the fears about a recession have subsided, and even if they emerge again the days of a major airline collapsing during an economic downturn appear to be over. American might be the weakest link for now, but it is far from troubled.

The company and its management team are taking much-needed steps to catch up. American is in the early days of revamping its route network and pricing strategies to improve profitability. And the company after a period of fleet renewal expects capital expenditures to come down in the years to come, freeing up cash to attack the debt load.

It won't happen overnight, but American in time can fly through the turbulence it is facing.

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.