AMR Corp. (NYSE: AMR), parent of American Airlines, was urged by one of its top shareholders to consider "all options to enhance shareholder value" such as spinning-off American's frequent flier program, according the ' DealBook blog.
In a letter to the Fort Worth-based company, FL Group of Iceland said "a conservative analysis" of AMR
shows "there is significant hidden shareholder value to be unlocked." In particular, FL Group believes that unbundling AMR's AAdvantage ("AAD") Frequent Flier program could increase shareholder value "by more than $4 billion."
The idea isn't without precedent. As DealBook notes UAL Corp (NYSE: UAUA), the parent of United Airlines, are expected to consider spin-offs at its annual meeting this week and that Air Canada has already spun off its frequent flier plan. Shares of AMR, which have plunged 50% since January, are trading slightly higher today. But investors who have watched airlines destroy billions of dollars in shareholder value over the years shouldn't get their hopes up.
Ceylon Securities analyst Ray Neidl told Bloomberg News that AMR sees "greater value in keeping all of the parts together."
Maybe AMR will change its tune if other shareholders join forces with FL Group.











Reader Comments (Page 1 of 1)
9-27-2007 @ 9:16PM
Tom said...
AMR should do what it decides is best for AMR; not for a specific shareholder.
9-27-2007 @ 9:15PM
PAUL said...
AMR needs to sell American Eagle and just have them be a marketing parner. They have subsidized this division since 1987 and its still a loser. Take the proceeds and hedge fuel to 100% of its needs and then smile as oil goes to $100. Then pay the shareholders a fat dividend from the profits.
10-03-2007 @ 7:34PM
Les Gonzalez said...
I'm a retired AA DFW gate agent with 30 years of service. While I dont have factual proof, I can honestly say that given the time and resources, I can prove that the AA frequent flyer program costs a lot more to keep and does nothing to promote so called "customer loyalty". Mid and upper level management have spent years "feather bedding" this program and you can rest assured they will fight any spin off attempt.
10-04-2007 @ 8:16AM
Rick said...
I am a platinum member of the AAdvantage program and it is one of the reasons I fly AA, instead of continental which is my main other choice. Maybe AA should buy new planes instead of those S80's they got from TWA.
If not for the perks of my status...I will fly strictly on price.
10-04-2007 @ 9:03AM
Mike said...
I absolutely agree with Rick. Without the benefits of AA FF status I would most definately travel on other airlines. This is especially true of International flights
10-04-2007 @ 10:12AM
Ann said...
As an AA Employee since 1991, I can tell you the Advantage Program has had MANY changes, good and not so good. When Robert Crandall designed this idea of a Frequent Flyer Program, Wow..what a fantastic idea...and then the other airlines followed. Then the idea of a Gold Member, they were the elite travelers, our top 2% flyers, which is now our Executive Platinum members. Why? Because the other airlines decided to bonus flyers who traveled a little for business every year, now they are the Gold Members and the most demanding. Ironic isn't it? Executive Platinum and Platinum members know how things work and they don't get in a huff. Status does matter, it helps for standby, upgrades and more. We can't give the store away and as a business person I think one could understand that. It's been interesting working in Reservations on the Int'l Plt/Gld Desk for nine years and now seven at the airport. I hope they keep things the way they are, I remember seven years ago they were talking about contracting out Advantage. We'll see. Maybe there will just be Kiosk's to do everything. LOL .................(not really laughing)...
11-03-2007 @ 11:45AM
TxPup said...
Regarding Paul and selling American Eagle. American Eagle is not subsidized by AMR. American Eagle serves more cities than American Airlines and generates a huge portion of revenue for AMR. American Eagle dominates the cash cow market of Northwest Arkansas. Not to mention that American Eagle also has the rights for the lucrative Cuba charter market. Those two markets alone make American Eagle extremely profitable for AMR. American Eagle has always been more profitable than American Airlines. If anything, AMR should sell the labor problem ridden American Airlines!
11-03-2007 @ 9:55PM
Cristian said...
Let's go AA, although I don't fly with you in the US, I mainly fly your associates, and as a member of your FFp, I get benefits, like VIp room, when fliying coach outside chile.
You do need to improve IFe on 767-300ER in coach class for long haul service.
12-07-2007 @ 8:27AM
thomas p said...
Sell it. Eagle, I mean. AMR is too big for an airline with a only a US dominance. It should pay down it's debt and buy Northwest or United. Then shrink it's domestic capacity while profitting on international flying across all continents. KLM who? Zis neverr appens on Aer France!