AMR's dropping stock price (consolidated bankruptcy discussion & speculation thread)
 

With the price AMR stock hitting 52 week lows of 5.16 this week, can we expect some sort of shareholder revolt demanding a change of management?

Analysts are predicting loses throughout 2011, and possibly into early 2012. How long will shareholders put up with the poor performance of AMR's currenct management?

So far the stock holders and Board of directors have put up with since they put the current management in place and have rewarded the execs with stock options almost every year.

The stockholders and board seem Ok with the team in place and the current performance.

Am I missing something? The stock is approaching its 2009 lows of below $5, and the airline is projected to lose close to a billion for 2011. In the meantime, AMR's competitors are now posting profits, and the shareholders are happy with this? :confused:

I think they have trust in the current upper management's long term ability in turning AA around cash flow wise. I would imagine that Aprey is aware of how fast he could end up on the side of the road though.

One can only hope and pray that's sooner rather than later...

Also, I doubt any true investment firm has their $ on AA so barring that, the stockholders are actually pretty powerless to incite a board shakeup and management change.

70% of AMR stock is held by institutions (http://www.google.com/finance?q=NYSE:AMR) so I'd imagine they have a say.

As for which institutions, and whether any of my retirement funds are invested with them, I'm not sure, but I certainly hope not.

I wasn't clear enough when I said "true investment firm". I'm meaning the classic activist funds (Icahn, Loeb, even Buffett) that like to shake up management and put pressure on corporate boards for underperformance. As you point out, institutional ownership also includes mutual fund ownership. Institutional ownership can also include the category of "pension funds"... are any of the employee group retirement plans being paid in stock?

Perhaps many of them are long-term shareholders and remember all those competitor bankruptcies... ;)

AMR shareholders are generally smart enough to know why most of AA's competitors have become profitable: prior Chapter 11 bankruptcy proceedings. As I'm certain you understand, an AA Ch 11 filing would likely wipe out the equity (meager as it is) of AMR common stockholders.

AMR stockholders were very pleased when AMR hit $41/sh in early 2007 before oil spiked to $147/bbl, especially after touching $1.25/sh in early 2003.

Right now, shareholders have two choices: Hope for a turnaround, trusting the current management and its plans for turning things around (including cheaper oil, which is not within management's control) or a Ch 11 filing. Well, there is a third option: replace current management with other expensive management who would promise the world to get the job and would then spend months/years learning how to run an airline. There's no rational basis for believing that different management would be able to magically turn AA around better than the currrent management, but that doesn't stop speculation about it.

I'm sorry, I wasn't aware that people invest in airline companies (AMR or any other) because they expect a "return" on their principal; I thought it was because they like airplanes.

Seriously, if someone "invests" in the airline industry and expects to make money, quite frankly I think their a perfect match for the current AA management.

The fact that I choose AA to be my preferred carrier because of their frequent flier program, has absolutely no bearing, whatsoever, on my assessment of them as an "investment."

I'd also say, be careful what you wish for, were I made king of AA and had to run it for "shareholders" (rather than just being a customer) I'd likely make many changes, to said FFP, that many here would not like at all.

Regards

I second that. Airlines are not an investment that makes you a return.

You buy airline stocks because you like airplanes or fancy owning part of an airline. If you´ve got way more money than sense then you become a big enough shareholder to actually sit on the board and make policies...

JMHO, but those that have neither sense or money Monday morning quarterback those policies on Internet BBs and/or bemoan the lack of flat seats, PTVs, caviar, lobster, over-priced NV champagnes, etc, etc, etc.......

I'd invest in AMR if they gave me a stockholder benefit of a 10% discount off of flights everytime! :D

But seriously, from an investor's POV, AMR would do much better if they spun off Eagle as a separate entity (but still keep it part of OW!) so that mainline AA could focus itself on mainline and int'l routes while Eagle focuses their strategy on short haul RJ routes.

An you would be out the door not too soon after Arpey when defections to UA or DL skyrocket. AAdvantage is an "institution" best not tampered with.