Shares in American Airlines’ parent company AMR nosedived by a third yesterday amid fears that the carrier may be forced into Chapter 11 bankruptcy protection.
The British Airways transatlantic partner saw its shares drop by as much as 41% at one point in New York yesterday, triggering automatic halts in trading, and ended the day 33% down.
Rumours about a possible restructuring appear to have sparked the sell-off, including reports that a large number of pilots were retiring early in case a filing affected their retirement plans.
Fears of a second recession in the US also contributed towards the share drop, which affected other airline shares.
Delta Air Lines shares dropped 11.3%, United Continental 11.7% and US Airways 15.8%.
AMR said there was “no company-driven news that caused the volatility” and described market about bankruptcy as “rumours and speculation.”
The Texas-based carrier maintains that it does not want to file for bankruptcy protection.
That “is certainly not our goal or our preference. We know we need to improve our results, and we are keenly focused as we work to achieve that,” AMR said.
The sell-off, which marked the first time AMR shares had slipped below $2 since it averted bankruptcy restructuring in 2003, slashed its market capitalisation to $670 million.
AMR’s total debt was $17.1 billion at the end of the second quarter, up from $16.1 billion in the same period last year.
The company was still able to raise money last month when it completed a $725.7 million 10-year bond offering.
The airline said last month that it would end the third quarter with $4.2 billion in cash. It is expected to post a loss of $110 million in the third quarter.