As a merger between American Airlines and US Airways appears more likely, Wolfe Trahan analyst Hunter Keay told investors on Friday that if you own stock in AMR, you probably aren't going to get your money back.
In most bankruptcies, shareholders often see little or no value for their shares when the company restructures under court protection as the equity in the new company goes to creditors and bondholders. Recent reports suggested that AMR stockholders might get a something if a merger with US Airways occurs, but Keay dismissed that idea.
"We believe the final split will fall at about 72/28 [AMR/US Airways] with no recovery for AMR equity holders," Keay wrote in a research note on Friday. "AMR's creditors are likely to advocate for a merger before the expiration of the [non-disclosure agreements], as most other issues seem to be largely settling out."
Keay also likes the idea of AMR chief executive Tom Horton as chairman and US Airways chief executive Doug Parker in the chief executive role at the merged carrier.
"We think separate CEO and chairman positions is good governance and we've also found that the stocks of airlines that have split CEO/Chairman roles tend to outperform the stocks of airlines that don't have split roles," Keay wrote.
Separately, Sky Talk readers may want to check out the Wall Street Journal's feature story on Jack Butler (subscription required), the Unsecured Creditors Committee lead counsel, and how the attorney brought American to the negotiating table with US Airways even as Horton was reluctant to make a deal.