Why American Airlines Stock Jumped 6% Today

MarketsMotley Fool

What happened

Shares of American Airlines Group (NASDAQ: AAL) stock closed up 5.8% on Tuesday after an article in the Dallas Business Journal reported on the company's CEO making some uber-bullish comments about American Airlines' prospects.

Continue Reading Below

Reporting on an investor presentation that American Airlines CEO Doug Parker gave last week, the Journal related the story of an email exchange between Parker and an analyst at investment bank UBS, in which Parker supposedly bet the analyst "a bottle of wine" that American Airlines stock would hit $60 a share before Nov. 25, 2018.

So what

American Airlines stock closed today at $50.51 and with more than a year till its deadline -- so, to date, the bet has still neither been won nor lost.

Then why are investors getting excited right now? Perhaps because of the other thing Parker let slip at that investor meeting: that American Airlines isn't "ever going to lose money again" and that the airline industry as a whole is "going to be profitable in good times and bad."

Now what

Forget about the share price prediction. Those are some pretty bold claims American Airlines' CEO is making. After all, this is a company that filed for bankruptcy just six years ago and has lost money in two out of the past five years. Yet Parker is now promising investors that American Airlines will never lose money again -- let alone go bankrupt.

I don't know if time will prove the CEO right or wrong in his prediction. But just the fact that he feels confident in the near term to make the prediction is apparently enough to give confidence to investors as well.

10 stocks we like better than American Airlines GroupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

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.