American Airlines Dropped From The Dow Transportation Average After Long-Term Decline

American Airlines earned just $111 million last yaer on $55 billion in revenue. Their stock is down 10% this year and 43% over 5 years. It’s less than half of what it was before the pandemic (and that doesn’t even account for significant inflation).

They’ve been a long-term poor financial performer, having alienated shareholders, employees and customers alike. Two years ago American Airlines was kicked out of the S&P 500.

So it should come as no surprise that this week they were removed from the Dow Jones Transportation Average (HT: JonNYC).

• Thier influence on the transportation average had become immaterial due to low share price, with Dow Jones saying it had less than 0.5% weight. Since the Dow Jones Transportation Average is price-weighted, low nominal price share price companies barely move the index.

• All U.S. transportation companies are eligible for the index, and which ones are included isn’t mechanistic – additions generally have ‘excellent reputation, sustained growth, and broad investor interest’.

• FedEx, already a transportation index component, spun off FedEx Freight. That was being added, so they needed to delete one company from the group that’s fixed at 20. American was the obvious choice.

Delta, United, Southwest and even Alaska Airlines remain in the index. JetBlue was removed in 2024 to make room for Uber.