American Airlines Group Inc (AAL) on Tuesday announced a proposed underwritten public offering of 38.5 million shares of its common stock in an attempt to improve its liquidity amid weak air travel demand due to the COVID-19 crisis.
The net proceeds from the offering are to be used for general corporate purposes, the air carrier said.
American Airlines shares closed lower for the fifth time in the past ten trading sessions on NASDAQ on Tuesday. It has also been the steepest single-session loss since October 26th. The stock went down 6.21% ($0.82) to $12.38, after touching an intraday low at $12.34, or a price level not seen since November 6th ($11.27).
Shares of American Airlines Group have retreated 56.83% so far in 2020 compared with a 9.74% gain for the benchmark index, S&P 500 (SPX).
In 2019, American Airlines’ stock went down 10.68%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.
According to a report by Reuters, citing sources, the offering has been priced at $13 per share by Bank of America.
American Airlines said in a filing that it would probably end the fourth quarter with over $14.5 billion in total available liquidity. That compares with $13.6 billion in liquidity at the end of the third quarter.
Analyst stock price forecast and recommendation
According to CNN Money, the 16 analysts, offering 12-month forecasts regarding American Airlines Group’s stock price, have a median target of $10.00, with a high estimate of $27.00 and a low estimate of $1.00. The median estimate represents a 19.22% downside compared to the closing price of $12.38 on November 10th.
The same media also reported that at least 9 out of 20 surveyed investment analysts had rated American Airlines Group’s stock as “Sell”, while 6 – as “Hold”. On the other hand, 3 analysts had recommended buying the stock.