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Sun, Dec 02, 2007

AMR Investor Slashes Its Stake In Airline

Too Little, Too Late

The planned divestiture of American Airlines regional operator American Eagle wasn't enough to satisfy an investment company pushing the airline to increase shareholder value.

Iceland's FL Group sent an open letter this week to the board at American parent company AMR Corp, announcing it cut its stake in the world's largest airline from 9.1 percent, to just 1.1 percent.

The investor cited a lack of progress on American's part in raising the value of the airline as the reason for the move, according to The Wall Street Journal.

As ANN reported, American announced Wednesday it planned to sell -- or otherwise divest itself of -- regional carrier American Eagle. That was one option suggested by FL Group in September, as a means to increase AMR's share price... which has dropped nearly 32 percent since the start of 2007.

Though it welcomes the move to dump American Eagle, FL Group spokesman Halldor Kristmannsson said the investment group believes there are better places for its money than American Airlines.

"With AMR's focus now on divesting American Eagle, we don't expect them to move on any other strategic initiatives to create shareholder value over the mid-term. As such, we believe there are more interesting investment opportunities for our portfolio at the current time," Kristmannsson said.

The reduction comprised approximately 20 million shares in AMR. Kristmannsson declined to say whether the shares were sold on the open market, or traded to other investors.

FL Group has taken a big financial hit with its investment in AMR, and the stock selloff won't help matters. The sale will hit the group's fourth-quarter earnings to the tune of $32.5 million, reports the WSJ.

The investment group took advantage of a 7% rise in American's stock price Wednesday -- on the heels of the American Eagle announcement -- to dump its shares, before the price fell about six percent the next day.

"We generally don't comment on the actions of or our communications with shareholders," an AMR statement read Friday.

FMI: www.aa.com, www.flgroup.is

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