As previously reported, Morgan Stanley analyst Rajeev Lalwani upgraded United Continental (UAL) to Overweight from Equal Weight, downgraded Delta Air Lines (DAL) to Equal Weight from Overweight and downgraded American Airlines (AAL) to Underweight from Equal Weight as he believes diverging paths may emerge for legacy airlines heading into 2020. United has well executing its mid-continent strategy and he sees that continuing with its loyalty program and largely stable costs leading him to believe its 2020 EPS target has a higher probability of being met, Lalwani tells investors in his sector shake-up note. Meanwhile, the analyst thinks American faces the most labor risk within the group, further compounded by rising jet fuel prices. Delta shares have outperformed year-to-date with a 10% advance and his refreshed 2020 estimates are moderately below consensus, Lalwani stated in explanation of his downgrade of that stock. The analyst raised his price target on United shares to $110 from $101, lowered his target on American to $26 from $40 and trimmed his price target on Delta to $61 from $62.

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American CFO Devon May said on the company's Q1 call: "Aircraft delivery delays are impacting the entire industry, but they are not having the same impact on American as other carriers since we are not as dependent on new aircraft deliveries as most of our peers. We have modest aircraft CapEx requirements this decade due to our previous refleeting efforts. We now expect our 2024 aircraft CapEx to be approximately $2.2B, our total CapEx to be approximately $3.1B. We continue to expect aircraft CapEx to be approximately $3B to $3.5B per year from 2025 through 2030."

Strengthening the balance sheet remains a top priority for American. In the first quarter, the company reduced total debt by nearly $950 million and has now achieved more than $12 billion, or over 80%, of its goal of reducing total debt by $15 billion by the end of 2025.

The company said, :American is running the best operation in its history because of a steadfast commitment to operational excellence and strong collaboration across the entire airline. The company produced its best-ever first-quarter completion factor and improved its mishandled baggage rate year over year. American achieved these results despite air traffic control challenges and significant weather events across its network during the quarter."

Reports Q1 revenue $12.6B, consensus $12.6B. "The American Airlines team continues to build a reliable, efficient and resilient airline," said American's CEO Robert Isom. "While we aren't satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets. Our team is running a fantastic operation, driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet."

Notable companies reporting before tomorrow's open, with earnings consensus, include Merck (MRK), consensus $1.87... Caterpillar (CAT), consensus $5.14... Comcast (CMSCA), consensus 99c... Honeywell (HON), consensus $2.17... Bristol-Myers (BMY), consensus ($4.44)... Altria (MO), consensus $1.15... Keurig Dr. Pepper (KDP), consensus 35c... GE Vernova (GEV), consensus (37c)... Royal Caribbean (RCL), consensus $1.33... Tractor Supply (TSCO), consensus $1.72... Mobileye (MBLY), consensus (6c)... Textron (TXT), consensus $1.23... LabCorp (LH), consensus $3.48... Southwest Airlines (LUV), consensus (34c)... American Airlines (AAL), consensus (29c)... Harley-Davidson (HOG), consensus $1.51.