American Airlines' Stock Sales: Good News, Just Not for Shareholders

Airline stocks rallied on Monday, as promising news about the efficacy of a COVID-19 vaccine candidate made investors more confident that the pandemic can be brought under control in 2021. American Airlines (NASDAQ: AAL) quickly filed for a secondary stock offering, seeking to capitalize on a 15% jump in its stock price on Monday.

This is a sensible move, given how weak the company's balance sheet is. However, shareholders are suffering so much dilution that it will severely limit the long-term upside of owning American Airlines stock.

At the end of 2019, there were approximately 428 million shares of American Airlines stock outstanding, down from 756 million in late 2013, immediately following the US Airways merger. Indeed, American Airlines spent more than $12 billion on stock buybacks between 2014 and 2019 in a misguided attempt to prop up the stock price despite deteriorating business fundamentals.

Source Fool.com