Mainland
Topic Author
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FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 2:09 pm

It seems FL Group has lowered the stake it owns in AMR significantly, from 9.1% as of just two months ago to only 1.1% now. This is an interesting development given some speculated on here that selling off Eagle may have been, in part, due to pressure from FL Group. Reuters is out with the news:

Quote:

FL, which had pressured AMR to take steps to increase shareholder value, said in a statement that despite improved operations, AMR remains burdened by high fuel costs and a "tightening of the U.S. economic environment."

http://www.reuters.com/article/marketsNews/idUKWEN274520071130?rpc=44
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miaami
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 2:20 pm

I wonder how low our stock will drop today?!
 
hiflyer
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 2:57 pm

Very interesting...for months FL groups badgers AMR to sell assets to increase value.....AMR announces sale at 2pm Weds....stock climbs...and by 7-8 am Friday the FL group announces a pullout and a poor forecast for the carrier.

Methinks AMR has been well played by the FL group to get their investment out intact.

Oil dropped overnight so the whole industry came out of the gate up.
 
Asturias
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 3:14 pm

If I were controlling FL Group I'd fire the person immediately responisible for investing in AMR.

Buy a stake in an American legacy carrier?!! That's a great way to lose millions. Aviation industry is unstable enough and growth potential sometimes murky, but surely the people at FL Group don't know heads from tails in aviation since they thought AMR would yield growth, profit and growth in share values the next decade.

Nothing against AA, but it is a stable entity, not growing. It is a legacy with a huge fleet, but an old fleet. It is a fine airline, but a lousy investment. Short term, obviously and long term... who knows. AA may not even exist in 10 years.

saludos

Asturias
Tonight we fly
 
gsosbee
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 3:40 pm



Quoting Hiflyer (Reply 2):
Methinks AMR has been well played by the FL group to get their investment out intact.

Bingo!!!  Wink
 
Mainland
Topic Author
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 3:51 pm

It seems FL Group was asking for a lot, and was not impressed by recent events at AMR. Updated from Reuters:

Quote:

"The proposed spinoff (of) American Eagle is a move in the right direction, but the lack of clarity over timing, terms and valuation has done little to enhance value," FL Group said on Friday.

http://www.reuters.com/article/tnBas...ndustries-SP/idUSN3028718120071130

FL Group had probably started its sell off before the Eagle announcement anyway, so it's no shock they are unimpressed.

Quoting Hiflyer (Reply 2):
Methinks AMR has been well played by the FL group to get their investment out intact.

FL Group will take a $32.5 million loss on the investment. It could've been a lot worse for them though, given the one time size of their holding. Nonetheless, somebody will have a lot of explainin' to do for why they got involved with AMR.

[Edited 2007-11-30 07:59:50]
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commavia
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 3:58 pm

Since my duplicate thread will probably get deleted, as this is the one getting replies, I'll repost here:

>>>

Well, this is an interesting response (at least that's what it looks like) to the announcement earlier in the week that AMR was actively seeking to spin-off its wholly-owned American Eagle subsidiary.

FL Group, the Icelandic aviation investment management group that amassed a big stock hold in AMR last winter (peaking at 9.1%), is now getting out of AMR. They've dropped their holding down to an essentially meaningless 1.1% stake, essentially conceding defeat and resigning to the fact that AMR wasn't moving fast enough for them.

FL is a perfect example of stupid investing: when they saw the run down in fuel prices last winter, they bought up AMR thinking there wasn't much upside for fuel to go back up, and that AMR's fundamentals could sustain them if there was. They didn't anticipate just how high fuel would spike this year. Sucks for them, as the value of their AMR investment has basically been cut in half in less than 12 months, which can't look good to their shareholders. But, alas, that is - after all - their shareholders' problem, not AMR's.

This is fantastic news for AMR, and a vindication for Arpey, as he's now got the annoying monkey off his back of FL in open revolt over AMR's plummeting stock price. They now can get back to running the company rather than trying to satisfy the demands of an activist institutional investor pissed off because it made a stupid investment and wants to save face.

Hopefully AMR can now back away from the pressure to start selling things off left and right, most importantly AAdvantage, which should never be sold off as it is just too valuable.

An interesting week in the house of AMR.
 
EMB170
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 4:13 pm



Quoting Commavia (Reply 6):
This is fantastic news for AMR, and a vindication for Arpey, as he's now got the annoying monkey off his back of FL in open revolt over AMR's plummeting stock price. They now can get back to running the company rather than trying to satisfy the demands of an activist institutional investor pissed off because it made a stupid investment and wants to save face.

Hopefully AMR can now back away from the pressure to start selling things off left and right, most importantly AAdvantage, which should never be sold off as it is just too valuable.

Now if only Pardus Capital Management will take the hint...  duck 

EMB170, who understands that mergers aren't always necessary...
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eaa3
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 7:43 pm



Quoting Commavia (Reply 6):


This is fantastic news for AMR, and a vindication for Arpey, as he's now got the annoying monkey off his back of FL in open revolt over AMR's plummeting stock price. They now can get back to running the company rather than trying to satisfy the demands of an activist institutional investor pissed off because it made a stupid investment and wants to save face.

Since when is it bad for investors to demand that a company try to perform better. So if i'm reading this right this is a good thing because the CEO now has less pressure on him to perform well.

Yes it's quite annoying when people try to encourage people to do a better job. Wouldn't you rather just do nothing and hope things fix themselves. I mean that is so much easier.

What a strange concept: Expecting people to try to do their best.
 
gsosbee
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 7:51 pm



Quoting Eaa3 (Reply 8):
Since when is it bad for investors to demand that a company try to perform better.

Never; but in this instance, the investor tried a pure stock play; lost; and expected the company to break itself up just to rescue the investor from his own stupidity.
 
MaverickM11
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 8:59 pm



Quoting Eaa3 (Reply 8):
Since when is it bad for investors to demand that a company try to perform better.

...when the investors ideas are terrible, it's probably bad. Silly
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aajfksjubklyn
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 9:01 pm

Wong way to make a company perform better...........
 
eaa3
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 10:33 pm



Quoting Gsosbee (Reply 9):

Never; but in this instance, the investor tried a pure stock play; lost; and expected the company to break itself up just to rescue the investor from his own stupidity.

OK but the thing is I don't it's such a bad idea to sell AAdvantage. The fact that AMR has a highly profitable (non-airline) entity such as AAdvantage within it allows the company and it's CEO to not focus as much on the bottom line. The bottom line being the airline business, flying planes and such. It means that one part of the business has to subsidize another part of the business. It doesn't seem like good policy in the long term even though it will help keep the company solvent in the short term.

BTW. AAdavantage has nothing to do with flying. It belongs as a entity within a bank. All it does is make money of credit card commissions and buy airline tickets for a portion of the commission. If AMR were to sell AAdvantage it would still buy seats from American but essentially AMR would be selling of the apparatus that behaves more like a bank than anything else. And on top of that they would receive a hefty sum for it.

AMR is after all an airline. Not a bank.
 
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TVNWZ
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 10:41 pm



Quoting Asturias (Reply 3):
Buy a stake in an American legacy carrier?!! That's a great way to lose millions. Aviation industry is unstable enough and growth potential sometimes murky, but surely the people at FL Group don't know heads from tails in aviation since they thought AMR would yield growth, profit and growth in share values the next decade.



Quoting Mainland (Reply 5):
FL Group will take a $32.5 million loss on the investment.

Probably calculated. AMR isn't moving the way they want and they are taking the short term cap gains loss by years end. Probably helps offset other gains. In their scheme of things--a good move to minimize taxes.

There will be lots of plays like this before year's end.
 
EXAAUADL
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 10:50 pm



Quoting Mainland (Reply 5):
It seems FL Group was asking for a lot, and was not impressed by recent events at AMR. Updated from Reuters:

I hope FL lost their @ss. They were the ones pushing AMR to sell AAdvantage as well, which would have been insane
 
EXAAUADL
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 10:53 pm



Quoting Commavia (Reply 6):
They now can get back to running the company rather than trying to satisfy the demands of an activist institutional investor pissed off because it made a stupid investment and wants to save face.

I hope Pardus does the same.



and your quote sums up sp well both Pardus and FL CAPMGMT
 
gsosbee
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RE: FL Group Sells Significant Stake In AMR

Fri Nov 30, 2007 10:59 pm



Quoting Eaa3 (Reply 12):
AAdavantage has nothing to do with flying.

Cash flow from AAdavantage advertising and partner deals pays for a lot of jet fuel
 
commavia
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RE: FL Group Sells Significant Stake In AMR

Sat Dec 01, 2007 1:23 am



Quoting Eaa3 (Reply 8):
Since when is it bad for investors to demand that a company try to perform better.

Since these particular investors had absolutely no interest whatsoever in the company performing better, and were only interested in their own balance sheet performing better so they look good to their investors. They were not looking for what was in the best financial interests of AMR long-term, and were looking for a short-term return because they were so stupid a few months back.

Quoting Eaa3 (Reply 12):
The fact that AMR has a highly profitable (non-airline) entity such as AAdvantage within it allows the company and it's CEO to not focus as much on the bottom line. The bottom line being the airline business, flying planes and such.

Well, if you have something that is consistently highly profitable, while your "bottom line" business isn't, why get rid of it?

And secondly, this whole idea of not "distracting" management is pretty much ridiculous. Some things are worth "distracting" management, since they don't really do anything of the sort, but they do add enormous value to the company. AAdvantage is one of these. It doesn't distract anybody, but rather enriches AMR. It's not like Arpey spends his mornings sitting in his office contemplating over coffee whether to spend his day going through AAdvantage statements or paying off loans. He is capable of doing both, seeing as AAdvantage has its own management team.

You can keep peeling away pieces of any business that - in somebody's eyes - seem to be "non-core" or a "distraction," or not the "bottom line," but at some point you'll have just stripped everything away. At what point does AMR strip away the flight attendants? After all, you can wet lease the airplanes.

Quoting Eaa3 (Reply 12):
All it does is make money of credit card commissions and buy airline tickets for a portion of the commission.

AAdvantage has numerous, massive, sources of revenue, and none of them include credit card commissions. AAdvantage makes millions, upon millions, upon millions from selling all of those miles that everybody earns off their Citi card, their Starwood hotel stay, their AVIS car rental, etc.

Again - why jettison something that is extremely profitable?