American Airlines Group, Inc. (NASDAQOTH:AAMRQ.DL)

CAPS Rating: No stars


Player Avatar TSIF (99.96) Submitted: 11/30/2011 6:27:58 PM : Outperform Start Price: $3.75 AAMRQ.DL Score: +20.10

When a company goes bankrupt, what might be left is a crapshoot. AMR's American Airlines will survive. The foray into Bankruptcy, however, should have been no surprise. They held out as long as they could, but the massive debt load and lack of concessions by its work force that other airlines benefited from in 2002/2003 weigh on it's ability to compete. It is keeping things stable in the sort run and planes on order are being purchsed. This is not a PLAY on AMR's commond stock (Ticker AMR) that has been between $0.20 and $0.43 the last two days. Common is last in any BK heirarchy and while some company's rode through BK and stockholders were rewarded, it's a rare occurance.

AAR are bonds with an 8.75% coupon rate. The dividend has been nice, but even bonds are limited in their heirarchy if AMR Corp is able to write them down. Some past occurances have been 30% on the dollar, sometimes $5% on the dollar. The drop in AAR makes an interesting, but high risk arbitrage play. I'm not bothering for a CAPS play to research the total issue. The million shares traded yesterday and 356K today moves a considerable amount. They are currently tradiing at about 18% their high. If they survive, big IF, they could be considerably more valuable.

This is strictly a learning opportunity at this point, with CAPS skin in the game, but I may take time to read the prospectus and reserach how these ended up with other BK company's.

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