TO: Doug Parker, Chairman and Chief Executive Officer

FROM: Erika M. Dalisera, Junior Analyst

DATE: December 11, 2014
SUBJECT: Comparative Financial Analysis
The purpose is to compare the financial performance of American Airlines Group Inc. (AAL)
with Delta Air Lines Inc. (DAL). American Airlines is in a worse financial position than Delta
Air Lines because it has significantly lower sales, is in debt, and is not showing a return on
shares. Delta Air Lines is a direct competitor of American Airlines, in the major airlines industry,
and is proven to excel in the industry. The analysis was conducted by comparing stock price,
sales, net income, earnings per share, and P/E ratio.
American Airlines and Delta Air Lines stock prices sky skyrocket
American Airlines and Delta Air Lines are financially in a similar stock price position. Fuel
prices have continued to drop in 2014, raising stock prices for all airlines (Kilgore, 2014).
American Airlines had a stock price increase of 107.8% compared to Delta Air Lines 57.3%
increase in the last year (Yahoo! Finance, 2014). According to Figure 1, both companies stock
prices began sky rocketing in December 2013, but slowed down after June 2014.
$60.00
$47.88

$50.00
$41.22
$40.00

Stock Price

$46.08

$40.77

$29.00

$30.00

$23.04

$20.00
$10.00
$1 Year

6 Months

12/1/2014

Date
American Airlines Group Inc.

Column1

Figure 1 Stock Price Trends

(Yahoo! Finance, 2014)
American Airlines has significantly lower revenue and minimally faster growth

American Airlines has significantly lower revenue and minimally faster growth than Delta Air
Lines over three years. Figure 2 shows the increase in the companies revenue. Delta Air Lines
surpasses American Airlines by 41.24% over three years, indicating it is selling substantially
more flights to consumers (Yahoo! Finance, 2014). American Airlines increased its revenue by
11.49% over three years, but is not increasing fast enough to compete with Delta Airlines7.57%
increase (Yahoo! Finance, 2014).
$40.000
$35.115
$35.000

$36.670

$30.000
$23.979
$25.000

$24.855

$37.773

$26.743

$20.000

Revenue ($bilions)

$15.000
$10.000
$5.000
$2011

2012

2013

Year
American Airlines Group Inc. (AAL)

Column1

Figure 2 Revenue Trends

(Yahoo! Finance, 2014)
American Airlines is suffering from substantial debt resulting in a negative net income
American Airlines has been in debt the last three years with little hope that it will bounce back
any time soon. American Airlines is incurring too many expenses that are putting it in a
financially unstable position. Figure 3 shows that Delta Airlines has increased its net income by
1,134.2% over three years compared to American Airlines miniscule 7.33%. Delta Airlines has a
net income that is exponentially increasing and incurring fewer expenses.

$12.000

$10.540

$10.000
$8.000
$6.000

Net Income ($billions)

$4.000

$2.000
$1.009

$1.000
$2.000
$0.854
$$(1.979)
$(2.000)

$(1.876)

$3.000

$(1.834)

$(4.000)

Year
American Airlines Group Inc. (AAL)

Column1

Figure 3 Net Income Trends

(Yahoo! Finance, 2014)
American Airlines is not profitable and investors do not see growth occurring
American Airlines is not profitable at this time and investors do not believe that growth is
occurring. Delta Air Lines make $11.57 per share, while American Airlines make $.51 per share
(Yahoo! Finance, 2014). Investors would think American Airlines is expecting more growth
because of its high P/E ratio of 94.36 compared to Delta Air Lines P/E ratio of 3.97, but
American Air Lines P/E ratio is very inflated. This is because of the high stock price and low
EPS (Yahoo! Finance, 2014). Delta Air Lines growth was much more stable.
EPS (2013)
American Airlines
$.51
Delta Air Lines
$11.57
Figure 4 EPS (2013) and Trailing P/E Ratio (2014)
(Yahoo! Finance, 2014)

P/E Ratio (2014)

94.36
3.97

References
American Airlines Group Inc. (AAL). (2014). Retrieved from Yahoo! Finance:
http://finance.yahoo.com/q;_ylt=AwrBEiFMzodUjCkAeCaTmYlQ?s=AAL
Delta Air Lines, Inc (DAL). (2014). Retrieved from Yahoo! Finance:
http://finance.yahoo.com/q;_ylt=Al0g3fw9pBR0SE3wjC6vaYZA87cF?
uhb=uhb2&fr=uh3_finance_vert_gs&type=2button&s=dal
Income Statement. (2014). Retrieved from Yahoo! Finance:
http://finance.yahoo.com/q/is?s=AAL+Income+Statement&annual
Income Statement. (2014). Retrieved from Yahoo! Finance:
http://finance.yahoo.com/q/is?s=DAL+Income+Statement&annual
Kilgore, T. (2014). Airline Stocks Flying High As Cruide-Oil Prices Sink. Retrieved
from Market Watch: http://www.marketwatch.com/story/airline-stocks-flyinghigh-as-crude-oil-prices-sink-2014-11-28