AMR Fights to Quell Bankruptcy Fears03/31/08 - 03:00 PM EDT
by Ted Reed
CHARLOTTE, N.C. -- American Airlines, the largest U.S. carrier, holds nearly $5 billion in cash, recently posted impressive quarterly unit revenue growth and in 2007 paid down $2.3 billion in debt. Even so, Wall Street seems to think that American Airlines parent AMR(AMR - Cramer's Take - Stockpickr) is a company in trouble, with a potential bankruptcy looming.
And shares, which traded Monday around $8.50, are scraping along near a three-year low. Market capitalization is just 10 cents to the revenue dollar, says FTN Midwest Securities analyst Mike Derchin, who adds: "A lot of investors see serious liquidity issues because they are skeptical about the revenue outlook in a recession." Standard & Poor's last week downgraded AMR's outlook to negative from positive, cutting short-term ratings to B-3 from B-2.
AMR's treasurer, Beverly Goulet, addressed the bankruptcy talk two weeks ago at the JPMorgan Aviation and Transportation conference and more recently in an interview with TheStreet.com.
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by Ted Reed
CHARLOTTE, N.C. -- American Airlines, the largest U.S. carrier, holds nearly $5 billion in cash, recently posted impressive quarterly unit revenue growth and in 2007 paid down $2.3 billion in debt. Even so, Wall Street seems to think that American Airlines parent AMR(AMR - Cramer's Take - Stockpickr) is a company in trouble, with a potential bankruptcy looming.
And shares, which traded Monday around $8.50, are scraping along near a three-year low. Market capitalization is just 10 cents to the revenue dollar, says FTN Midwest Securities analyst Mike Derchin, who adds: "A lot of investors see serious liquidity issues because they are skeptical about the revenue outlook in a recession." Standard & Poor's last week downgraded AMR's outlook to negative from positive, cutting short-term ratings to B-3 from B-2.
AMR's treasurer, Beverly Goulet, addressed the bankruptcy talk two weeks ago at the JPMorgan Aviation and Transportation conference and more recently in an interview with TheStreet.com.
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