American Airlines to Offer Up to $1.1 Billion of Stock

American Airlines is offering as much as $1.1 billion of stock and will use the funds for general purposes and to strengthen its liquidity position.
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American Airlines  (AAL) - Get Report said Friday that it planned to offer as much as $1.1 billion of stock, a program that terminates its earlier $500 million at-the-market offering.

The carrier, like its peers, continues to weather the coronavirus pandemic, which largely has kept travelers grounded.

Shares of the Fort Worth, Texas, company at last check were down 2% at $17.74. The stock has wavered on Friday, earlier trading up as much as 3.5%.

The airline said in a Securities and Exchange Commission filing that it would use the funds for general purposes and to strengthen its liquidity position. 

"However, our management will have broad discretion to apply the net proceeds, and investors will rely on our management’s judgment in spending" the funds, the filing said.

Management, the filing said, "may use the proceeds in ways that do not earn a profit or otherwise result in the creation of stockholder value."

"In addition, pending our use of the proceeds, we may invest the proceeds primarily in instruments that do not produce significant income or that may lose value," the filing said.

American Airlines said that as of last March 31, "we have suspended our capital deployment program, including the payment of future dividends, in part due to the impact of the pandemic on our financial condition."

Goldman Sachs, Barclays, Citigroup and BNP Paribas are managing the offering.

On Thursday shares of American Airlines soared after the carrier posted a narrower-than-expected fourth-quarter loss amid the ongoing interest in heavily shorted stocks on Wall Street.

The company said expected its first-quarter 2021 system capacity to be down 45% from the year-earlier period, with total revenue expected to be down 60% to 65%.

Airlines have suffered during the pandemic due as governments have restricted travel and called for social distancing.

The International Civil Aviation Organization said in a report earlier this month that the airline industry lost about $370 billion last year, as seating capacity fell by half.