American Airlines: Every Breath You Take We’ll Be Watching You


Looks like American Airlines has a new suitor. Just what this suitor wants is not clear. What is clear is who they are and what they have been involved with in the past.

This week it as disclosed that the FL Group now holds more than a 6% stake in the U.S. carrier.

For those not familiar with this group, this is the same entity that began to buy up shares in European low-cost carrier easyJet in 2005.

In February 2006 FL Group announced plans to list its subsidiary Icelandair Group on the Iceland Stock Exchange.

FL sold its 16.9% stake in easyJet in April 2006 for $427 million, returning a profit of $184 million on its investment. FL had first invested in easyJet in October 2004, taking an 8.4% share. The company continued to increase increase this stake over the course of 2005.

In October 2006 FL Group secured the sale of Icelandair Group.

Today, following the AMR news that was made public earlier this week, the group announced that it had sold off its Danish airline Sterling Airlines for 20 billion kronor ($293 million dollars).

The investment company had acquired Sterling in October 2005 after it merged with Maersk Air, and has operated the group during the past year.

FL also previously held a 23% stake in Finnair.

With FL’s acquisition in AMR shares, it is now AMR’s third largest shareholder with 12.8 million shares.

Who are number one and number two? Tontine Management, which owns 16.8m shares, and Primecap Management, with 16.5m shares.

Looking at the FL Group’s track record with its previous airline-related investments, it would seem to me that FL is looking for a quick profit-taking opportunity here. I don’t see any takeover attempt here. Besides, FL would be limited in the number of shares they could control in any such scenario because of foreign investment limits.

Then again, when any entity starts putting together large chunks of stock in a company — it can be unsettling to management. Now the third largest shareholder of AMR shares, FL has bought itself a “seat at the table” as we say, giving them more say in any future moves by the airline.

It also goes without saying that this move also signals that FL feels American is not going to be left out of the merger mania dance.