Yesterday's MarketScreener dispatch - American Airlines cuts its adjusted earnings forecast for the third quarter - invites us to take a step back and revisit the group's performance over the long term.

About a decade ago, there was a belief in financial circles that American airlines would thrive due to industry consolidation after the 2008-2012 crisis. However, this idea has been debunked. The air transport sector, represented by United, Delta, Southwest, and American, has disappointed investors. American Airlines' stock price dropped by half in the past decade and tripled in the last five years.
 
This serves as a reminder to be cautious about investment narratives, even when promoted by renowned investors like Warren Buffett, who was once a shareholder in all four airlines before divesting.
 
Even excluding the pandemic-affected years of 2020 and 2021, American Airlines struggled to generate substantial cash profits over the last decade due to heavy investments. Meanwhile, its net debt skyrocketed, partly due to perplexing share buybacks totaling $11 billion between 2014 and 2019, at higher valuations than today. Currently, American's market capitalization is only $8.7 billion.
 
With the falling share price and the potential need for share buybacks, there's a lack of liquidity. Shareholders, including members of the management team, are selling their shares as a result.