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AMR Corp Bankruptcy May Still Be
an Option
By: staff reporter, Tom
Bustamante
Last Updated: October 18, 2011 - 10:45am
EST
(NEW YORK) --For US air carrier AMR
Corp (NYSE:AMR)
the prospects for a Chapter 11 pre-package bankruptcy may not
just be a rumor swirling around the trading desks, but such a
move may be their best bet in trying to lower their operating
costs, and turning the airline around.
First off, you have to tip your hat to the airline for trying to
be as worker friendly as possible. Many other air carriers filed
Bankruptcy years ago to re-negotiate costly labor contracts, but
American Airlines is one of the few that hasn't. But how long
can that continue?
The Company was hoping to have a labor contract agreement with
the pilots union by this weekend, or at least by third quarter
earnings, which is expected tomorrow morning before the bell.
But talks broke off early Monday with no progress after talking
for more then 5 years, and both parties were expected to
start-up again later in the week. So plans from the market for
AMR to have an agreement with the pilots union by earnings are now
off the table.
But AMR would still need to negotiate agreements with their
baggage handlers, and transit workers union (TWU), and a deal
with the pilots doesn't automatically mean a deal with these
other labor groups. Even if AMR were to get large cost cutting
give backs from all union members, the costs to AMR may still be
too much to continue, and risk the wrath of credit holders after
continued and growing net losses to the bottom line.
After five years of talks, and prospects that an agreement with
the unions may not help with their legacy costs, filing a
pre-package Chapter 11 bankruptcy may be one of the smartest
things to do to reorganize the company, renegotiate costly labor
contracts, and put the company back on track with the rest of
their peers in the industry. This may not be a positive for
holders of AMR's common shares, but if the long-term health of
the Company is the focus, then a bankruptcy filing may not be
something to take off the table right away.
For tomorrows earnings report, analysts are projecting
a net loss, excluding special items, of ($0.37) cents per
share, on revenue of $6.35 billion for the third quarter, and a
net loss of ($1.00) for the fourth quarter 2011.
AMR was last traded at $2.77 per share in early morning trading.
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Contact:
Wall Street Newscast
Email: info@wallstreetnewscast.com
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Safe
Harbor Statements:
This
research report includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Although the Company believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions, such statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected.
Disclaimer:
This is NOT a solicitation to Buy or Sell any security, but rather
is for informational purposes only. Content contained herein
includes facts, views, opinions and recommendations of individuals
and organizations deemed of interest. Wall Street Newscast ("WSNC")
does not guarantee the accuracy, completeness or timeliness of, or
otherwise endorse these views, opinions or recommendations, or
give investment advice. WSNC, its affiliates, or directors, may or
may not hold a position in the above security from time to time,
and investors are encourage to consider this as a possible
conflict of interest when reviewing this information. In
Compliance with SEC Rule 17B Wall Street Newscast was not compensated for
this media alert. WSNC may hold both long and/or short positions
in above securities from time to time, and
thus should be considered a possible conflict of interest when
reviewing this report and information. These investments may
involve a high degree of risk, thus investors are highly
encouraged to consult with a financial advisor before any and all
investments.
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