An Icelandic investment group is to request a meeting with American Airlines’ management after disclosing on Tuesday that it had built a stake of almost 6 per cent in the parent of the world’s largest carrier by revenues.
FL Group, which is best known for its investment in UK-based EasyJet, amassed the holding in AMR Corp over the past few weeks after identifying the Dallas-based group as its first big investment outside Europe.
The listed Icelandic group has a strong track record as an opportunistic investor in the airline industry, and it is not planning any takeover bid for AMR, with federal law limiting overseas interest to 25 per cent of the voting rights in US carriers.
“There are a number of macro things that we found positive [about the US industry],” said Hannes Smarason, FL Group’s chief executive, in an interview with the FT.
The company has emerged as the third-largest shareholder in AMR at a time of unprecedented flux in the US airline industry, triggered by the hostile $8.3bn offer for Delta Air Lines by US Airways, its smaller rival.
The bid has forced other carriers to review their strategic options and hold talks with rivals in case regulators allow consolidation among the six US network carriers. This has also pushed up share prices as the industry nears the end of its first profitable year since 2000. AMR’s share price has climbed 36 per cent this year while Continental’s stock has almost doubled and US Airways is up 49 per cent. AMR shares rose 1.5 per cent on Tuesday to close at $30.70, below the 52-week peak of $34.40.
Mr Smarason said he believed consolidation would take place, though this was not the primary motivation for its investment, and AMR is its only US airline investment.
“We think [American] have good revenue momentum, and they have one of the best brands,” said Mr Smarason.
American’s management team has steered the carrier clear of the bankruptcy protection sought by almost all of its major rivals over the past five years.
Mr Smarason said there were some strategic issues he would like to discuss with American’s management team, though declined to detail them ahead of a formal meeting. However, he viewed building on its revenue momentum as a key factor. AMR declined to comment.
The listed Icelandic group’s 5.98 per cent stake in AMR – valued at $400m-plus – takes the share of airlines in its $3.4bn portfolio to 25 per cent.
FL Group made a profit of $590m from the sale this year of its stakes in EasyJet and Icelandair, the country’s flag carrier. It also holds a 23 per cent stake in Finnair – a partner of American in the oneworld global alliance – and owns Denmark’s Sterling Airways.
