AMR shareholders saw their stocks drop 84 percent on Tuesday, and can expect the stock to drop to zero, but experts are saying the state of the airline industry today suggests profits are on the way.
Airlines are no place for conservative investors, as the dramatic rise and fall of AMR Corp. shares in recent years illustrates.
Oil prices, economic trends, and fare wars are among the issues that have taken the stock of American Airlines' parent company, and other carriers, on a wild ride.
For AMR shareholders, the journey is almost certain to end at zero now that the company has filed for federal bankruptcy protection. The shares lost 84 percent of their value with Tuesday's announcement. They fell to a mere 26 cents each and are expected to be worthless when the company emerges from Chapter 11.
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American Airlines owned the title of world's largest airline for much of the past decade, yet overall, it was a bad time to own shares. That was true even before this final descent into bankruptcy.
Priced at $21 a decade ago, AMR shares plummeted to $1.25 in the wake of 9/11. Momentum shifted in 2003, and shares climbed all the way to $41 by January 2007. The economy was booming, demand was soaring, oil was comparatively cheap and the industry had stabilized after a series of bankruptcies from 2001-05.
Then crude oil rocketed from $55 a barrel to $145 by mid-July 2008, sending AMR shares from $41 to $4 in just 18 months. Most other airline stocks crumbled too: Delta Air Lines Inc. fell from $22 to $4, United Airlines' then-parent UAL Corp. sank from $51 to under $3, US Airways Group Inc. from $62 to under $2.