AMR Shares to Be Removed From NYSE: What Investors Need to Know

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What's happening in the headlines can affect you as an investor. Here's what's going on, what you need to know, and what you can expect next.

The headline
Financial Times is reporting that AMR (NYSE: AMR  ) , the bankrupt parent company of American Airlines, will lose its listing on the New York Stock Exchange.

The details
The shares will come down the first week in January, after trading for more than 70 years on the exchange. NYSE said AMR was "no longer suitable for listing" because the company's shares had fallen below the exchange's minimum requirements. Its average closing price has fallen below $1 for more than 30 days. The decision comes after AMR filed for Chapter 11 bankruptcy protection at the end of November.

Now what?
Regularly scheduled bankruptcy seems to be the new norm for American carriers. Many of AMR's peers went through it already and were consequently able to reduce burdensome labor costs such as union contracts and pensions. AMR narrowly avoided it in 2003, but maybe should have just gotten it over with along with everyone else. Carriers who filed previously include:

  • US Airways (NYSE: LCC  ) in 2002 and 2004.
  • United (NYSE: UAL  ) in 2002.
  • Delta Air Lines (NYSE: DAL  ) in 2005.

But even if AMR successfully emerges from bankruptcy, equity investors will likely be wiped out during the restructuring, as bondholders typically have the first call on assets. In its bankruptcy filing, AMR said it had assets of about $25 billion and liabilities of about $30 billion.

AMR said investors would likely be able to continue to trade its securities using the OTC Bulletin Board and Pink Sheets electronic quotation service. Trading securities in bankrupt companies is highly speculative, however, and is not something we at The Motley Fool recommend.

Fool contributor John Grgurich loves his Twitter news feed so much he wants to marry it, but he owns no shares of Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a scintillating disclosure policy.

Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On December 30, 2011, at 1:44 PM, rustylasell wrote:

    I know AMR will recover from this. Is there anyway to ride this out with the common shares I have or should I sell out and wait until later?

  • Report this Comment On December 30, 2011, at 5:36 PM, toneill69 wrote:

    AMR directors and executives do not represent the interest of the shareholders. Shareholder stake has now shrunk to less than 1% and is heading to zero. This is part of the plan to rejuvenate the company. Why have shareholders allowed management and the board of directors to wipe out their interests? The responsibility of a board of directors is to act as the shareholders' representative in all matter, as this is clearly not the case are there any shareholder lawsuits pending. Unfortunately, with 13,000 shares, I am too small a shareholder to matter, as are perhaps most common stock shareholders but this company has been hijacked for other reasons- to protect other interests – perhaps the individual board members and their other stakes, management (e.g. $6 million), fees to Rothschild and other experts. Hardly the unions although they started the chicken play. The bankruptcy laws are also being abused, a way of shifting responsibilities to taxpayers. Who are the winners? If we know that, we likely know who the culprits are. Can shareholders sue the fat cats? Many corporations act with integrity but this one has an agenda not in keeping with shareholder interests. They have never given shareholders any reason to stay on board, because they want to wipe them out. Could shareholders seek liquidation as a better way to protect their interests? PS I have flown over 1 million miles on AA, but now AA has become the last airline I will want to board.

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