Magnetar decreases stakes in American Airlines


Nov. 20 2020, Updated 3:31 p.m. ET

Magnetar Capital and American Airlines

Magnetar Capital added new positions in Alibaba Group (BABA), TransCanada Corp. (TRP), and Encana Corp. (ECA). The fund’s top exits were Covidien Plc (COV), Lamar Advertising (LAMR), and Yahoo (YHOO). The fund added to its stakes in Shire Plc (SHPG), Exterran Holdings (EXH), and Teekay Corp. (TK). Its top stake decreases were in Williams Companies (WMB), Mallinckrodt Plc (MNK), and American Airlines (AAL).

Magnetar reduced its position in AAL in the third quarter. The position accounts for 1.17% of the fund’s total portfolio in the third quarter.

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About American Airlines

AAL’s parent companies—AMR Corporation and US Airways Group (LCC)—officially announced their $17 billion merger on December 9, 2013. Under the merger, LCC became a subsidiary of AMR Corporation. AMR Corporation changed its name to American Airlines Group Inc. (AAG).

AAL emerged from bankruptcy and combined with LCC under a new stock ticker—AAL. According to the press release on the merger, the transaction is expected to generate more than $1 billion in annual net synergies by 2015.

AAL is the largest airline company in the US

As discussed in American Airlines regains its leading position in the industry, American Airlines passed Delta to become the largest US airline in terms of domestic revenue passenger miles, or RPMs, as well as capacity. AAL passed Delta after it merged with LCC in December 2013.

AAL’s domestic market share by RPM is ~20%—compared to Delta’s (DAL) 17%. AAL’s share in domestic capacity is ~26%—the highest among its legacy peers. The top six airlines in the US include AAL, Delta Air Lines (DAL), United Airlines (UAL), Southwest Airlines (LUV), and JetBlue Airways (JBLU).

AAL’s earnings increase

The Market Realist article Must-know: An update on Ebola’s impact on the airline industry noted that the share prices for major airline companies in the US dropped substantially in October due to the Ebola scare. The average decrease in share prices for the six major US airlines during this period was ~17%.

AAL’s GAAP (generally accepted accounting principles) net profit was $942 million in 3Q14—compared to a GAAP net profit of $289 million in 3Q13 for AMR Corporation before the merger. Total revenues in the third quarter were a record $11.1 billion—an increase of 4.4%. During the quarter, AAL benefited from falling jet fuel prices and a favorable revenue environment.

Visit the Market Realist Airlines page to learn more about the industry.


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