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Reuters
AMR shares could rise 50 pct: Barron's
Sunday September 30, 3:54 pm ET
NEW YORK (Reuters) - American Airlines' (NYSE:AMR - News) shares could rise 50 percent or more in the next year according to a Barron's report that cited factors such as a potential unit spin-off and an improving balance sheet.
The October 1 edition cited a call last week from Iceland's FL Group, a 9-percent owner of AMR, for the airline to spin off its frequent-flier business.
It said FL valued the AAdvantage program at $6 billion and estimated that a spin-off could raise value by $4 billion for shareholders of AMR, which has a market value of $6.6 billion.
The report said Wall Street appeared to be betting that AMR would reject FL's suggestion, but cited a $2.1 billion reduction in debt at AMR in the last year to $17.3 billion at the end of the second quarter and said AMR, which closed up 27 cents at $22.29 on Friday, was well below its January peak of $41.
Even if it decides against a spin-off, AMR is "an attractive stock" Barron's said. "Hostage now to fuel and economic concerns, AMR could see its shares rise 50 percent or more in the next year," according to Barron's report.