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American Ripe for Takeover: Is US Airways Looking?

DALLAS TheStreet) -- Could AMR's (AMR) problems become US Airways' (LCC) salvation?

It is well known that US Airways CEO Doug Parker would like nothing more than a merger with one of the Big Three carriers. He has publicly pursued Delta (DAL - Get Report) and his pursuit of United (UAL - Get Report) eventually became public. No doubt he has eyed AMR, the parent company of American Airlines.

AMR's current plight would seem to lend itself to a renewed effort at a merger on either of two fronts.

The first would be a takeover effort, given the recent steep decline in AMR's share price, which is down 69% this year. The decline means that one of the world's biggest and most important airlines now has a market capitalization well below $1 billion.

The stock fell 32% on Monday, amidst bankruptcy chatter , but rebounded Tuesday. In mid-afternoon trading, American shares were up 40 cents or 20% at $2.38. The carrier's market cap was around $800 million, rebounding from a low around $600 million on Monday.

Although far smaller than American, US Airways also had a market cap around $800 million around mid-afternoon on Tuesday.

The second potential path to a merger with American Airlines could occur in bankruptcy court, if one assumes that the bankruptcy chatter is to be believed, which is a big step.

"At this point, American's market capitalization is clearly a small enough number for a takeover bid," said Avondale Partners airline analyst Bob McAdoo, in an interview. "

"In terms of investments in other industries, American is so inexpensive now that financial players would look at something like this.

"There is no question, in this kind of world, that there are people sniffing around trying to figure out Do we buy the place? Do we buy a chunk of it and propose alternative directors and try to shake up management a bit?," McAdoo said.

"Doug Parker has said repeatedly that there is one big merger left," Mike Flores, president of the US Airways chapter of the Association of Flight Attendants, told TheStreet.
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