American Airlines (AMR)

Oil prices have fallen significantly from their July 2008 highs of over $145^[1] to under $45 in January 2009.^[2] If prices stay low, AMR will be able in 2009 to spend significantly less on fuel, which accounted for over $9 billion in expenses during 2008,^[3] and will beat expectations throughout the year.

AA has a maintenance base that is second to none, its location is ideal for domestic contract maintenance, the time saved on maintenance checks and not having to ferry aircraft to other less central locations makes AA very attractive for companies needing maintenance support. Great potential revenue generator.

AMR raised $2.9 billion in fresh funding. The money looks set to ease liquidity concerns and potentially pave the way to buy a stake in Japan Airlines. AMR's strategy includes selling $1 billion of flier miles to Citigroup, its credit card partner ^[1]. It looks like their their price has hit rock bottom andnow is a good time to invest.

1. ↑ "AMR Raises $2.9 Billion Financing " Article from Wall Street Journal

After years of sluggish improvement in customer service American Airlines is moving the dial by creating an ownership approach to treating customers. Improved maintenance practices are also paying off by driving down the overall cost for conducting aircraft maintenance.

In preparation for a possible purchase of a stake in Japan Airlines Corporation, AMR has issued $450 million of senior secured notes in a private offering in addition to plan to sell 30 million shares.^[1] Overall, the company has been able to raise $2.9 billion and is in competition with Delta Air Lines for JAL.^[2] The potential deal could strengthen AMR's position in the Pacific region, which was the company's weakest segment in terms of Revenue per Available Seat Mile in 2Q09, at $8.43.^[3]