AAL
American Airlines Group Inc
Price:  
12.19 
USD
Volume:  
64,316,520.00
United States | Airlines
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AAL WACC - Weighted Average Cost of Capital

The WACC of American Airlines Group Inc (AAL) is 7.8%.

The Cost of Equity of American Airlines Group Inc (AAL) is 17.75%.
The Cost of Debt of American Airlines Group Inc (AAL) is 7.25%.

Range Selected
Cost of equity 14.70% - 20.80% 17.75%
Tax rate 25.00% - 26.70% 25.85%
Cost of debt 5.40% - 9.10% 7.25%
WACC 6.2% - 9.5% 7.8%
WACC

AAL WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.36 2.84
Additional risk adjustments 0.0% 0.5%
Cost of equity 14.70% 20.80%
Tax rate 25.00% 26.70%
Debt/Equity ratio 4.01 4.01
Cost of debt 5.40% 9.10%
After-tax WACC 6.2% 9.5%
Selected WACC 7.8%

AAL's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for AAL:

cost_of_equity (17.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.36) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.