AMR (AAMRQ), American Airlines, Merger Possibilities on Hold

America’s favorite penny stock, AMR Corp. (PINK: AAMRQ), is starting to feel pressure from the unsecured creditors who think the swing trade choice of winners should get in bed with U.S. Airways or another tin pusher after both Delta Air Lines popped on rumor of a merger with the 3rd largest U.S. Carrier and American Airlines parent claims that it wanted to stay independent.

Delta hired advisors to explore a merger with AMR which would create an airline industry giant by bringing the No. 2 and No. 3 U.S. carriers together.

American Airlines stock, AAMRQ.PK, has risen 168.54% since January 4th.

Disgruntled and unsecured, the committee, whose members stem from banks representing bondholders, labor, vendors and the U.S. pension protection agency, do not feel secure of making any money on the prospect of staying competitive as a stand-alone airline. Wanting AMR management to explore all options, including a merger with another carrier, would better the committee’s chances to recover their claims. Lucky for them, US Airways has been rumored to be considering an eventual bid for the Pinksheet trading rival.

American has shown no interest in a merger with US Airways or anyone else as it has substantial cash, a strong nationwide route network and service to Europe and Asia as well coupled with the company’s related oneworld alliance partners in London and Tokyo.

Stock Snap Shot:

Data provided by Capital IQ

AAMRQ traded as high as $0.65 in Yesterday’s trading session.
AAMRQ closing price for Wednesday, February 8, 2012 was $0.645, down -0.85% (-0.005).
AAMRQ traded volume of 3,298,468, less than 10% of the 3 month Average Volume.

Float: 324.87 Million
52 Week High: $7.60
52 Week Low: $0.20
Book Value: -14.42
% Held by Insiders: less than 1%. (Data provided by Thomson Reuters)

AAMRQ is trading:

  • 0.085 above its 20 day moving average,
  • -0.005 below its 10 day moving average and
  • 0.005 above its 5 day moving average.


AMR filed for Chapter 11 on November 29, mainly due to uncompetitive labor costs telling employees just last week that it is targeting to terminate 13,000 jobs and pensions which would eliminate $2 billion a year in expenses. These actions, coupled with AMR’s intention to generate $1 billion per year in new revenue would add $3 billion to the current cash flow of the company.

AMR has the right to submit a reorganization plan without outside interference for 120 days after its bankruptcy filing. The judge can extend that right for up to 18 months. The exclusive period makes it difficult for an unwanted suitor to attempt a merger unless the creditors back such a move.

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