Is Airline Stock Halal?
“Airlines stock is halal or haram?” is another common question frequently asked by Muslim Investors. Of course, the answer can be different depending on which airline stock you are referring to. That is, it is impossible to place all airline stocks into the Shariah-Compliant category or non-Compliant category. However, many big players in the airline sector are found to be non-compliant during the screening. So, in this article, we will introduce one of the famous airlines in our article and screen its Shariah-compliance status.
American Airlines Business Activities
American Airlines Group Inc. is the parent company of American Airlines. It was founded in 1930 and is headquartered in Texas. According to its fleet size, passengers carried, and also passenger kilometers have flown, American Airlines is the world’s largest airline. Moreover, it operates an extensive international and domestic network with over 6,700 flights per day to 350 destinations in 50 countries. Besides, the airlines offer air transportation services for individuals and cargo services through its hubs in different cities of the USA and partner gateways in other countries. Currently, the company employs thousands of people. For instance, in 2019, the company was reported to have over 130,000 employees.
Is American Airlines Stock Halal?
Business Activity Screening
Firstly, American airlines stock does not pass from business activity screening. Even though its revenue derived from non-Islamic business activities accounts for 0.09% of total income, 99.91% of its revenue comes from Shariah-compliant segments. So, it passes the first screening criteria since not halal and questionable business activities comprise only marginal part of its revenue.
Financial Screening
Secondly, it also does not pass financial screening like interest-bearing debt and interest-bearing securities. Debt that generates interest constitutes 320.49% of its market cap, which is far above the allowed 30% of the market cap.
| Total Debt | $37.84B |
| Market Cap | $11.81B |
Lastly, deposits and investments that generate interest, account for 113.79% of its market cap. Consequently, American Airlines stock does not pass the third criteria, proving that its interest-bearing securities exceed 30% of its market cap.
| Cash & Equivalents | $13.44B |
| Market Cap | $11.81B |
Based on the data we found, we believe American Airlines stock is not halal ( not shariah-compliant) because it does not pass two financial screenings for the stock to be halal.
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