FL Group proposes spin-off of the AAdvantage FFP

FL Group, one of American Airlines' largest shareholders, has urged the airline to consider strategic alternatives including the separation of its frequent flyer loyalty programme, AAdvantage, from the main business to "significantly increase shareholder value".

The international investment company pointed out that AMR's share price has fallen almost 50 percent since January 2007, costing AMR shareholders close to $5 billion.

"While the industry environment remains challenging for all airline companies, FL Group believes that opportunities remain to unlock shareholder value and that the AMR management team and board of directors should actively pursue all such opportunities. Simply blaming high fuel costs and investor sentiment is not a sufficient response," stated the company.

"AMR's structure as a fully integrated legacy carrier and the lack of detailed financial information provided by the company on its various business units mean that the profitability of each individual business unit is not clearly understood by investors. Based on publicly available information, FL Group has performed a conservative analysis of AMR's business units and believes there is significant hidden shareholder value to be unlocked. In particular, FL Group believes that unbundling AMR's AAdvantage Frequent Flyer programme could increase shareholder value by more than $4 billion."

FL Group CEO Hannes Smarason said the group has significant experience in the airline sector and strongly believes that there are strategic alternatives, which should be considered to increase shareholder value.

"After taking a close look at the company over an extended period of time, our suggestions include monetising assets, such as AAdvantage, that can be used to reduce debt or return capital to shareholders. We believe that there is no time to lose given the recent developments in the market place," said Smarason.

FL Group is one of the largest shareholders of AMR Corporation, currently holding 8.25 percent of the company's outstanding common shares.