Small-Cap Stock Spotlight: AMR Corp. (AMR)
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    Trade Alert for AMR Corp. (AMR)

    AMR Corp. (AMR) operates in the airline industry. The Company’s principal subsidiary is American Airlines Inc. (American). As of December 31, 2010, American provided scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR Eagle Holding Corp. (AMR Eagle), a wholly owned subsidiary of AMR, owns two regional airlines, which do business as American Eagle – American Eagle Airlines Inc. and Executive Airlines Inc. (collectively, the American Eagle carriers). American also contracts with an independently owned regional airline, which does business as AmericanConnection (the AmericanConnection carrier). As of December 31, 2010, AMR Eagle operated approximately 1,500 daily departures, offering scheduled passenger service to over 175 destinations in North America, Mexico and the Caribbean.

    Share Statistics (30-Nov-11)   FY

    2009

    FY

    2010

    %

    Chg

    Q3

    2010

    Q3

    2011

    %

    Chg

    Symbol AMR Revenue, $ 19.92B 22.17B 11.3% 5.84B 6.38B 9.2%
    Current price $0.32 Gross marg. 4.0% 7.8% 95.0% 11.5% 6.3% -45.2%
    52wk Range: $0.20-$8.89 Oper. margin 1.4% 0.6%
    Avg Vol (3m): 14,274,900 Net margin -7.4% -2.1% -71.6% 2.4% -2.5% -204.2%
    Market Cap. 107.27M              
    Shares Outstanding 335.23M EPS, $ -4.62 -1.41 -69.5% 0.39 -0.48 -223.1%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of AMR jumped as much as 65% in Wednesday’s trade, recovering from the prior day’s drop on news the Company has filed for bankruptcy protection. The Company said it took this action in order to achieve a cost and debt structure that is competitive in the airline industry so that it can continue delivering a world-class travel experience for its customers.

    Shares of the American Airlines parent have lost 79.5% in the last five days; 87.8% in the last month; and 96.1% year-to-date.

    In a release on Tuesday, American Airlines said it expects to continue normal business operations throughout the reorganization process, and the business will continue to be operated by the Company’s management.

    “American Airlines is operating normal flight schedules, honoring tickets and reservations as usual, and making normal refunds and exchanges. American’s AAdvantage® frequent flyer program is not affected. American remains part of the oneworld® alliance, of which it is a founding member, and all of its codeshare partnerships continue, enabling customers to earn and redeem miles on convenient flight options worldwide.”

    The Company yesterday announced that U.S. Bankruptcy Judge Sean H. Lane granted approval of a series of first day motions filed by the Company to help facilitate American’s and American Eagle’s continued normal business operations throughout the reorganization process.

    In other news, American Airlines yesterday announced details of the interior selections for its fleet of Boeing 777-300ER aircraft, including fully lie-flat First and Business Class seats, seating plans that will give the airline the opportunity to offer a premium product in the main cabin, and Wi-Fi capability to keep customers connected while traveling internationally.

    During its time of restructuring, the Company said the announcement demonstrates a continuation of the airline’s efforts to enhance its fleet and become more fuel efficient.

    Source: http://www.aa.com/i18n/amrcorp/newsroom/main.jsp?anchorEvent=false&from=Nav

    Financial Summary

    AMR reported a net loss of $162 million, or $0.48 per diluted share, for the third quarter of 2011, compared to a net profit of $143 million, or $0.39 per diluted share, for the same period of 2010.

    In the third quarter, the Company said its overall performance was negatively impacted by fuel prices, which increased 41% compared to the prior year period. Taking into account the impact of fuel hedging, AMR paid on average $3.15 per gallon for jet fuel in the quarter versus $2.24 per gallon in the third quarter of 2010. As a result, the Company paid $653 million more for fuel in the third quarter of 2011 than it would have paid at prevailing prices from the corresponding prior-year period.

    AMR reported third quarter consolidated revenues of approximately $6.4 billion, an increase of 9.1% year-over-year. American, its regional affiliates, AA Cargo, as well as the ‘other revenue’ category, experienced year-over-year increases, as total operating revenue was approximately $534 million higher in the third quarter 2011 than in the third quarter of 2010.

    As of September 30, AMR had approximately $4.8 billion in cash and short-term investments, including a restricted balance of $474 million, compared to a balance of $5.0 billion in cash and short-term investments, including a restricted balance of $447 million, at the end of the third quarter 2010.

    Source: http://aa.mediaroom.com/index.php?s=43&item=3362

    Financial Strength (30-Nov-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 0.70 1.08 1.33 0.78
    Current Ratio (MRQ) 0.77 1.16 1.68 1.15
    LT Debt to Equity (MRQ) 154.79 52.99 108.14
    Total Debt to Equity (MRQ) 192.00 77.27 145.02
    Interest Coverage (TTM) -0.20 0.07 0.37 27.17

    Source: Reuters.com, SEC Filings.

    Technical Analysis

    Source: http://stockcharts.com

    AMR is below the lower Bollinger Band, implying that it is currently extended to the downside from its recent trend.

    The MACD for AMR currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Nov30-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Delta Air Lines Inc. DAL 8.12 6.88B 6.66 3.58 0.20 0.19
    United Continental Holdings Inc. UAL 17.96 5.94B 4.84 3.42 0.16 0.15
    Major Airlines Median       11.07 n/a 0.23 n/a
    AMR Corp. AMR 0.33 110.62M n/a n/a 0.005 0.004

    Source: Thomson Financial

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