With increasing competitive pressure forcing airliners to adopt a ruthless, bottom-line mentality, most names should be enjoying the good life. But try telling that to American Airlines Group (NASDAQ:AAL). Unlike key rivals like United Continental (NASDAQ:UAL) or Delta Air Lines (NYSE:DAL), AAL stock has gone backwards over the last five years.

Things aren’t looking good this year, either. After an encouraging start to 2019 that saw American Airlines stock rise nearly 5% by late February, shares unceremoniously slipped.

At the beginning of this month, Deutsche Bank analyst Michael Linenberg downgraded both AAL and DAL to “hold.” Citing unpersuasive global economic metrics, Linenberg advised a cautious approach.

Fallout and AAL Stock

It’s important to note that this wasn’t an outright bearish warning. Nevertheless, AAL stock dropped on the announcement, and unfortunately continued its decline. Since the analyst downgrade, shares have lost more than 9% of market value.

But on first glance, this negativity appears overcooked. For the last several years, airliners have eschewed customer service for the almighty dollar. I didn’t quite understand this because I haven’t traveled much. That changed recently. In the past three months, I’ve flown over 13,000 miles.

Those were a very uncomfortable 13,000 miles, I might add.

Today, airliners have perfected the art of filling every seat with butts. I don’t think I’ve ever flown in a semi-empty airplane, except for one red-eye flight to Rome. Otherwise, you’re crammed in like sardines in truly inhumane conditions. And God help you if you’re sitting on an economy-class window seat and you have diarrhea.

What I’m trying to say is that airliners, even embattled ones like AAL, have no excuses. Yet despite this favorable business environment, American Airlines stock appears sickly.

Complicated Environment Clouds AAL Stock

Based on consistently-poor sentiment for American Airlines stock, the markets gave Linenberg’s downgrade considerable weight. Really, who can blame them?

Over the trailing year, AAL stock has hemorrhaged over 40%. In contrast, Delta is down 7%, while sector leader United Continental is up 18%. During this time, American has suffered from the cloud of the U.S.-China trade war, and the government shutdown. The difference, of course, is that its competitors have weathered the same storms, but without incurring devastating losses.

That said, airline revenues have ticked up consecutively in recent years. Moreover, industry experts predict that worldwide commercial airliner revenues will hit $885 billion this year. If so, this figure potentially represents nearly an 8% lift from projected sales in 2018.

Comparatively, AAL stock is a great deal. While United is desperately trying to hold on to its market gains, American already swims in the doldrums. In other words, the pessimism is probably priced into AAL, whereas UAL is an open question mark.

Furthermore, in terms of three-year revenue growth, American Airlines stock holds the higher hand at 17% versus United’s 14%. Again, this supports the thesis that American is down looking up, whereas its key rival is doing the opposite.

Given its undervalued status, and positive forecasts regarding the airline industry, is AAL a viable contrarian opportunity? It’s definitely contrarian, but viability is a different matter.

Despite some optimistic reads for airliners, recent economic data have thrown a monkey wrench. Uncertainty in Europe, particularly over the Brexit controversy, weigh heavily. Furthermore, China shows stuttering growth despite a thawing in U.S.-China relations.

Closer to home, consumer sentiment has fallen worryingly against last year’s averages. Combined, you have extremely turbulent skies for an embattled airliner to negotiate.

Avoid American Airlines Stock

Still, speculators might look at American’s undervalued price point and feel it’s worth a shot. I’d agree if the industry itself appeared stable.

Unfortunately, that’s not the case. Since the end of November last year, Delta shares have melted down nearly 18%. Recent trades appear very weak, providing no confidence for a broader recovery.

And what about heavyweight United? UAL peaked near $97 in November-end. This move was flanked by two smaller peaks at $90, one occurring mid-September, and the other in late February of this year. Translation: we might have a bearish head-and-shoulders pattern developing.

When you take UAL’s technical posture with disappointing domestic and international economic data, you really have no choice here: AAL stock is too risky. If you’re dead-set on buying, I’d wait until the industry proves itself.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.