Wall Street just downgraded American Airlines due to capacity concerns

Wall Street just downgraded American Airlines due to capacity concerns. After American Airlines’ stock climbed 21% since May and 53% over the past year, Melius Research downgraded American on July 7, 2026, cutting the rating from Buy to Hold, according to Investing.com. The cited issue is capacity growth, with the airline adding seats faster than rivals, which could pressure ticket prices because fares tend to hold up only when supply remains tight. For the second and third quarters of 2026, American is expected to add about 5.4% more domestic seats and 4.0% more system-wide capacity. Melius said a fare thesis would require continued falling fuel prices, strong summer demand, and capacity discipline by competitors such as Delta and United. Even with margin support, the stock may not re-rate quickly due to leverage, with total debt cited at about $34.9 billion and another note pointing to negative shareholders’ equity of $4.1 billion.