Holding onto shares of AMR Corp. could pay off handsomely for investors.
The value of the stock, which traded for less than a quarter in the low days of the airline’s bankruptcy, is now estimated to reach as much as $28 a share when American Airlines distributes the final shares of its new “AAL” stock to AMR shareholders Tuesday.
Even though the merger of American Airlines and US Airways closed in December, bringing the former AMR Corp. out of bankruptcy, shareholders of American’s old parent company had to wait 120 days before they could realize the full value of their shares under a complicated equity distribution formula approved by the bankruptcy court.
AMR shareholders were only guaranteed to own 3.5 percent of the newly merged airline and initially received just 0.067 shares of AAL for each share owned. Shareholders were confused on how their shares were worth $11.39 the day before the merger closed, but only worth $1.60 once the two airlines combined.
But the equity distribution formula included additional shares for creditors, labor unions and old AMR shareholders at 30, 60, 90 and then 120 days after the merger, based on the current value of the stock. Since AAL shares have continued to rise in price, more shares were distributed, and to date, AMR shareholders have received 0.54 shares of AAL stock for each share of AMR stock they owned.
During bankruptcy, American’s old stock dropped as low as 26 cents a share after the company filed for bankruptcy in November 2011. By the time the merger closed, in December 2013, the stock price had reached as high $13.50.