AMR Shares Rebound From Monday Collapse | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

** Airborne 07.28.14/Oshkosh Day 1! ** HD iPad-Friendly Version--Airborne 07.28.14/Oshkosh Day 1 **
** Airborne 07.25.14--CLICK HERE! ** HD iPad-Friendly Version--Airborne 07.25.14 **

Wed, Oct 05, 2011

AMR Shares Rebound From Monday Collapse

Stock Finished Below $2 Amid Bankruptcy Speculation

Shares of stock in American Airlines suffered a perfect storm on Monday. On a trading day that saw most airline stocks fall sharply on predictions from a leading trade organization of an industry downturn, AMR Corp. led the race to the bottom. Shares in American Airline's parent company fell as much as 40 percent on the New York Stock Exchange during the day, triggered an emergency suspension of trading seven times, and closed down 33 percent at $1.98. That's the first time since 2003 the stock has finished a day below $2.

The IATA statement on Monday came from Director General and CEO Tony Tyler, who said, "The industry has shifted gears downward. The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon."

Many airline stocks responded by finishing the day down double digits. But AMR's problems were compounded by recent speculation that the company may be forced to declare bankruptcy. American's direct competitors have all used bankruptcy in recent years to emerge with cost structures lower than those of AMR, and while they were profitable in the second quarter, American lost $268 million.

AMR reports it has about $4 billion in cash available, so there is no indication the company would be forced into bankruptcy immediately. AMR recently spun off its American Eagle regional subsidiary, and announced a massive order for 460 new airliners, split between Boeing and Airbus, to replace its older planes and lower operating costs.

The Allied Pilots Association, the union representing pilots at American, felt the need to respond to rumors within the investment community that a surge in pilot retirements might be based in inside information of an imminent bankruptcy. In its statement, the union said many pilots delayed retirement in response to a change in the FAA's mandatory retirement age from 60 to 65, and are now looking at the effect of overall stock prices on their portfolios.

The statement explains, in part, "When pilots age 60 and older retire, a portion of their pension is based in part on a 60-day ‘look back.’ As an example, pilots who retired on September 30 secured the pension unit value that was in effect on July 31 before the bulk of the stock market’s decline...APA’s rank-and-file members are not privy to inside financial information. Our advisers have in fact indicated that the airline does not face any immediate liquidity crisis and possesses respectable cash reserves."

The company had no official comment on the stock's free fall Monday other than to say, "there is no company-driven news that has caused the volatility in AMR shares today."

The low prices on Monday triggered some buying by bargain hunters. Most airlines were up Tuesday, and AMR closed up about 20 percent at $2.37.

FMI: www.aa.com ; APA Statement

Advertisement

More News

EAA AirVenture 2014 Welcomes The Boldest Human Space Mission Yet

Events To Highlight Industry Collaboration For Reaching The Planet Mars Leaders from the aerospace community held a press conference at EAA AirVenture on Monday to get the word out>[...]

Aspen Avionics, True Innovators, Present Oshkosh 2014 Special Event Coverage!

OSH2014 Sponsor: Aspen Avionics Aspen Avionics specializes in bringing the most advanced technology and capability into general aviation cockpits. Our products increase situational>[...]

Futuristic OSH2014 Sponsor: 'Beyond The Blue' - The Inside Story Of The XPRIZE

Meet Jim Campbell, TODAY/07.28, At EAA Wearhouse, Author's Corner, At 1500 And Get Your Signed Copy of Beyond The Blue!!! To Aviation Journalist and experienced Test Pilot, Jim Cam>[...]

Ready For Service... ConciAir Helps Present OSH2014!

ConciAir Is Here To Return Our Industry To Service! The name ConciAir is a play on the word "concierge", and our goal is to be able to accomplish any task placed before us in a tim>[...]

OSH2014 Sponsor: Eclipse Aerospace -- In Full Production!

The Eclipse 550: Economical. Efficient. Incredible. The Eclipse 550 not only has the lowest acquisition cost of any twin-engine jet on the planet, it also has the lowest operating >[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2014 Web Development & Design by Pauli Systems, LC