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American Airlines: Integration Fears Provide Opportunity

American Airlines continues to trade near recent lows as it approaches the crucial reservation system switch over on October 17.

Goldman Sachs downgraded the stock despite suggesting an appealing valuation.

Investors may not want to book a flight on American for that weekend, but the risks of an impact to long-term prospects appears minimal.

With American Airlines Group (NASDAQ:AAL) on the verge of reporting another record quarterly profit, Goldman Sachs made the peculiar decision to downgrade the stock. Despite a $44 target that is now 15% above the current trading levels, the analyst believes that integration initiatives and Latin America weakness makes other airlines better investment options.

The key to the investment thesis is that American Airlines now trades at 52-week lows outside of the August crash. Is there any reason to avoid this stock at an attractive valuation near the lows?

Reservation Integration Concerns

The biggest concern of analyst Tim Kim is that American Airlines is in the process of the important integration of the reservation systems of American Airlines and U.S. Airways. The airline needs to finish this integration in order to see the revenue synergies and reduce the duplicate costs of two systems.

American Airlines began the...