American Airlines Vs. Alaska Air: Which Is The Better Buy Heading Into Q4 Earnings?

American Airlines Group Inc (NASDAQ:AAL) and Alaska Air Group Inc (NYSE:ALK) are among the popular airlines in the U.S.

Both airline companies are reporting their fourth-quarter (Q4) earnings on Jan. 25 before market hours.

American Airlines shares are down about 12% over the past year. Wall Street expects the company to report 10 cent in EPS and $13.02 billion in revenues. The stock commands a $9.19 billion in market cap on the U.S. stock market.

Commanding market cap of $4.64 billion currently, Alaska Air stock is down about 28% over the past year. The stock is down over 8.5% YTD, post the incident on Jan. 5, where a panel on the aircraft blew out in mid-air, led to the grounding of over 170 Boeing 737 Max 9s. The passengers were on board an Alaska Airlines flight, causing reputational damage to both Alaska Air and Boeing Co (NYSE:BA).

Related: ‘I am Angry,’ Says Alaska Airlines CEO On Boeing 737 Max 9 Mid-Air Blowout, Reveals Many Loose Bolts Found On Inspections

Consensus estimates for Alaska Air’s Q4 financial results stand at an $18 cents in EPS and $2.55 billion in revenues.

In terms of stock performance, Alaska Air has largely lagged American Airlines stock over the past year. While, the former is down 28%, the latter is down 12%.

Investors would be keen to know which is the better buy? Let’s take a quick look at how these companies compare. While both being airline operators, they have distinct strategies and strengths.

Market Presence and Network

American Airlines is a global aviation giant, renowned for its extensive route network connecting passengers to international destinations. American Airlines flies to more than 350 destinations in more than 60 countries.

In contrast, Alaska Airlines, together with its regional partners Horizon Air and SkyWest Airlines (NASDAQ:SKYW), strategically dominates the West Coast market, excelling in regional connectivity.

Financial Resilience and Debt Levels

American Airlines grapples with a substantial debt load, impacting its financial flexibility. For the past four years, the company’s total debt has been reported at over $40 billion and net debt over $30 billion, both highest among peers. It’s long-term debt/total capital ratio stands at a whopping 99.95%.

Conversely, Alaska Air maintains a healthier balance sheet,…