Citigroup Research has cast a shadow over American Airlines (NASDAQ:AAL) following the company's recent decision to reverse course on its revenue management strategy.

This shift has led to a significant downward revision of earnings expectations, signaling a potentially delayed recovery for the carrier.

Lower-than-anticipated revenue per available seat mile (RASM) and higher-than-predicted cost per available seat mile (CASM-ex-fuel) has made Citigroup recalibrate its financial model.

As a result, the brokerage has slashed its target price for AAL to $13.50 from $16.50, reflecting a more cautious outlook.

While American Airlines has made strides in reducing its substantial debt load accumulated during the pandemic, its leverage remains elevated compared to industry peers. However, the company's strong cash position and manageable short-term debt offer some financial stability.

Despite this, Citigroup rates the stock as "Buy" underpinned by the broader industry's improving demand trends, the airline's ongoing debt reduction efforts, and the prospect of lower capital expenditures in the near future.

Fluctuating fuel prices, economic downturns, labor unrest, and supply chain disruptions could derail American Airlines' progress. While successful labor negotiations and accelerated cost-cutting measures could propel the stock upward.