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American Airlines Halts Venezuelan Operations: Here's Why

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As a result of the unrest in Venezuela, American Airlines (AAL - Free Report) temporarily suspended operations to the strife-torn nation. Following American Airlines’ action, all major U.S.-based carriers have pulled out of the South American country.

Notably, Delta Air Lines (DAL - Free Report) and United Airlines — the wholly-owned subsidiary of United Continental Holdings (UAL - Free Report) — had halted their respective Venezuelan operations in 2017. Apart from U.S. carriers, international carriers like LATAM Airlines (LTM - Free Report) too have stopped operations to Venezuela due to unfavorable conditions prevailing there.  

The withdrawal of American Airlines’ operations has isolated Venezuela further. The country’s economy has already been in the doldrums for quite some time.

Markedly, American Airlines’ action was backed by advice from its pilots’ union — Allied Pilots Association (“APA”) — to suspend operations to Venezuela due to safety concerns. According to Associated Press, American Airlines operated daily flights to Caracas and Maracaibo from Miami.

In fact, APA, whose decision was supported by the carrier’s flight attendants’ union, told its pilots to turn down assignments to Venezuela. This move came after the U.S. State Department issued a warning to Americans against traveling to Venezuela due to crime, civil unrest and other factors. The U.S. administration recently suspended daily operations at the U.S. embassy in Caracas and even withdrew all its diplomats from the country.

The sanctions are aimed at isolating the Nicolas Maduro regime further. Notably, the United States and many other countries do not recognize Maduro as Venezuelan president. They recognize opposition leader Juan Guaidoas president of the South American nation instead.

In light of the political unrest engulfing the nation, we believe this Zacks Rank #3 (Hold) company’s latest decision is a well-timed one. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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