Economy
With Concerns Of A GM (GM) Bankruptcy, Can AMR Be Far Behind?
Published:
The distance from Detroit to Dallas is about 1,200 miles, but the two towns might as well be twin cities.
Yesterday, a prediction that GM (GM) could go bankrupt set off panic among the company’s shareholders and helped drop the Dow once again. GM traded below $10 for the first time since 1954.
AMR, once of the largest companies in Dallas, is plagued by the same thing that has put GM in the critical care ward. Gas prices have killed the company’s margins and caused it to eat through cash like a boll weevil does cotton.
Management at AMR recently presented its case for being OK to Wall St. It showed that it had multiple sources for more capital, if it is needed. It will be needed. But, the AMR calculations are unlikely to be based on oil sitting at $160 for several quarters. Putting that in the spreadsheet is too depressing.
The stock market says, based on one-year share price, that AMR and UAL (UAUA) are in the worst shape among the airlines. AMR shares may be off so much because of its out-sized debt load.
Since this time last year, AMR’s stock is down more than GM’s. Maybe that does not mean anything, but it does not mean anything good.
Some slick analyst is going to hit the market with a call that AMR could move to Chapter 11. It is just a question of how many days from now that will be.
Douglas A. McIntyre
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
