AAL is down more than 40% this year, while LUV is off by 22%
Airline stocks are in focus today, after sector stalwarts American Airlines Group Inc (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) stepped into the earnings confessional. Both airliners reported a smaller-than-expected first-quarter loss and withdrew their full-year guidance, mirroring Delta Air Lines (DAL) and United Airlines (UAL) amid an increasingly murky U.S. economic outlook.
AAL was last seen up 2.5% to trade at $9.56, consolidating around its April 4, nearly five-year low of $8.50. The shares are 45% lower in 2025 and down 31% year over year, with the descending 20-day moving average keeping a lid on rallies since a late January post-earnings bear gap. LUV, meanwhile, is 2.7% higher today to trade at $26.21, but is down 22% in 2025 and almost 11% year-over-year.
The chart above shows similar technical profiles, but the stocks differ in two areas. First, AAL is more of a downgrade risk going forward. Of the 20 brokerages covering AAL, 11 maintain a "buy" or better rating, with only one "sell" on the books. Plus, the consensus 12-month price target of $56.30 is a 54% premium from its current perch. Analysts are more in tune with struggling Southwest, with the majority carrying a "hold" rating.
Options traders' strategy should also differ, depending on the stock. AAL tended to outperformed options traders' volatility expectations in the last year, per its Schaeffer's Volatility Scorecard (SVS) of 96 out of 100. LUV, meanwhile, sports a SVS of 1 out of 100, making a premium-selling strategy the prudent move.