American Airlines parent AMR Corp. tumbled the most since April 2009 on growing concern the U.S. is nearing a return to recession and that the carrier may be forced to seek bankruptcy protection.
Today’s slide pointed toward a fifth straight drop for Fort Worth, Texas-based AMR, the longest streak in more than two months, and marked its biggest intraday plunge since April 27, 2009. The shares fell 53 cents, or 18 percent, to $2.42 at 11:47 a.m. in New York Stock Exchange composite trading.
AMR has led declines this year among the largest U.S. airlines. It is headed toward a fourth consecutive annual loss, spurring bankruptcy speculation, as a slowing economy fuels investors’ belief that air travel will slump, said Ray Neidl, a Maxim Group LLC analyst in New York.
“The odds are better than 50-50 that we’re going into a recession,” Neidl said today in an interview. “If that’s the case, you’re going to start seeing some softness in demand come October, in the fourth quarter and next year.”
Investors are concerned that American, the third-biggest U.S. airline, will burn through its cash reserves without deeper cuts in costs and seating capacity, said Neidl, who doesn’t rate AMR. The shares touched the lowest price since March 6, 2009, and had fallen 62 percent this year before today.
A Chapter 11 filing “is certainly not our goal or our preference,” said Andy Backover, an American spokesman. “We know we need to improve our results, and we have a sense of urgency as we work to achieve that.”
The company doesn’t comment on its share price, he said.
AMR expected to end the third quarter with a cash and short-term investment balance of about $4.7 billion, including $475 million in restricted cash, according to a Sept. 21 regulatory filing
Financial Post
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