AMR Profitable in Bankruptcy (AAMRQ, JBLU, LCC, DAL)

Something strange has managed to occur here in this bankruptcy… AMR showed operating income for the month of July of $240 million and it somehow managed to turn in positive net income of $135 million. Total revenue was $2.33 billion with only $259 million being cargo and ‘other’ revenue, while total expenses were $2.09 billion in the month.

The filing shows a total current assets of $7.83 billion and total current liabilities of $9.787 billion. We would note that the current liabilities does include current maturities of long-term debt being just over $1.6 billion.

Owning an airline is no easy task, and the biggest question that remains is who will buy AMR out of bankruptcy.  There had been speculation that JetBlue Airways Corporation (NASDAQ: JBLU) was interested in a deal, but that airline has publicly said that it has no real interest in merging with AMR. The most feasible airlines just due to the size of the carriers is a merger of some sort with one of either US Airways Group, Inc. (NYSE: LCC) or Delta Air Lines Inc. (NYSE: DAL).

Someone still sees some potential value for AMR’s common shareholders here despite the notion that most common shareholders suffer a total loss in a Chapter 11 bankruptcy reorganization.  Shares are at $0.475 against a 52-week range of $0.20 to $3.73.Stay tuned.

JON C. OGG