AA Re-Sizing Initiative: Analysts and Aviation Experts

14th Aug 2002

“Two commercial aviation consultants today called on U.S. carriers to quickly follow American`s lead and take aggressive action to accelerate the recovery of the nation`s air transportation industry. `The airline industry was severely wounded on Sept. 11, but its restructuring is long overdue,` said Michael Miller, President of Miller Air Group. `Airlines are facing the same predicament that the U.S. auto industry encountered in the 1970s. Then, fuel-efficiency Japanese cars forced U.S. manufacturers to restructure. Today, lower-cost airlines are forcing major airlines to abandon their high-cost, Lamborghini-style approach to running an airline.`”

—- Miller Air Group and Jim Brown Public Relations, Inc.


The moves are “a step in the right direction for them.” “The bottom line is you`re a much more efficient airline, and when the economy does rebound, you won`t have to spend for additional capacity as much as you would have under this type of structure.”

—- Jeff Grass, Victory Capital who holds 560,000 AMR shares as of March 31 and who personally owns the stock


On AMR’s move in stock price today “The announcement is good news that is ‘well-aimed’ at returning the company to profitability.” He rates the stock a buy.

—- Michael Linenberg, analyst Merrill Lynch

“The aviation industry has not done enough to batten down the hatches. We’re only three weeks away from the end of the U.S. summer season. Many carriers make most of their money during that period. You can write off the rest of this year and next for the major U.S. airlines from an earnings standpoint.”

—- Daniel Solon, analyst at Avmark International

“...I think what they’re doing now is they’re just making a move that is going to allow them to adjust their costs to match the revenues. And they’re doing it in kind of a humane way, I think. I believe they have a new retirement program in place, and they’ve announced it well in advance. I think most of those people will probably be caught up by attrition rather than actually getting laid off.”

—- C. Thomas Nulty, president and CEO of Navigant International

“They need an industry recovery of revenues, which is going to happen someday. But (American is) not waiting for that; they’re being proactive, taking actions to reduce their cost structure.”

—- Ray Neidl, analyst with Blaylock & Partners

“American is the biggest carrier, and they need to set an example. If there is too much capacity, they need to cut supply.”

—- Glenn Engel, analyst with Goldman Sachs

“We think capacity reductions and other company restructurings could be catalysts for the stocks to move higher in the near-term.”—- Michael Linenberg, airline analyst at Merrill Lynch & Co. “Several Wall Street analysts praised the moves, and AMR shares rose 38 cents, or 4.6 percent, to $8.74 on the New York Stock Exchange today.”—- Kathy Fieweger, Reuters




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