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American Airlines and US Airways Merge

post #1 of 98
Thread Starter 

Hey everyone! I was wondering if I could get some insight on something I'm very confused about. I have been a shareholder of American Airlines (AAMRQ) for about 2 years now, and today American Airlines merged with US Airways to form American Airlines Group, with the ticker symbol AAL.

 

This entire merger has kinda been a learning experience for me, as I'm relatively new to investing. But here is what I'm confused about, with the merger AAAMRQ shareholders will receive a 2 for 1 deal for the new AAL stock. I've been checking my Scottrade account, trying to see when my AAMRQ stock will switch over to AAL, and it hasn't. My investment amount hasn't changed, but it now says that AAMRQ is invalid, it won't let me buy or sell the money that I had invested in AAMRQ, and it doesn't tell me the amount of shares I own.

 

So my question is for any experienced investors who have gone through this, when should my stock switch over to AAL? And when should I be able to buy and sell my shares again? Thanks for any help!

post #2 of 98
Quote:
 I've been checking my Scottrade account, trying to see when my AAMRQ stock will switch over to AAL, and it hasn't

 

 

Question: What happens to my US Airways stock now?

Answer: Today, every share of US Airways Group Inc. will convert to one share of American Airlines Group Inc. The LCC ticker will go away and the stock will trade under AAL. It will list on the Nasdaq rather than on the New York Stock Exchange.

 

Q: What will it be worth?

A: That depends on how the stock moves in its first day of trading Monday.

 

Q: What happens to my shares in American’s parent company, AMR Corp.?

A: That’s complicated. Those shares will also convert to the new company’s shares, but not on a one-to-one basis. The number of shares AMR stockholders will get depends on how the price of the new stock moves up or down. Using a complicated formula, the shares in the new company will be divided up to pay off the money American owes its creditors, with interest. Whatever is left after the creditors are paid in full, and the US Airways stockholders’ shares are converted, will go to AMR stockholders.

 

Q: What will the AMR stock be worth?

A: AMR stock, which traded under AAMRQ, will be canceled. Stockholders will get at least 3.5 percent of the shares in the new company on Thursday. Even if the share price falls, that’s more than nothing, which is what stockholders in bankrupt companies usually walk away with. But because US Airways stock closed at $22.55 Friday and should guide the price of AAL stock on opening day, the AMR shareholders are likely to get much more than the basement 3.5 percent set up in the U.S. Bankruptcy Court deal.

 

from www.azcentral.com

post #3 of 98
Thread Starter 

No, they didn't give a date, or at least I didn't see one. I did call my broker though and the transition will be complete on thursday! Thank's for the help!

post #4 of 98
Quote:
Originally Posted by aubrey64 View Post
 

No, they didn't give a date, or at least I didn't see one. I did call my broker though and the transition will be complete on thursday! Thank's for the help!

 

If telling you to call your broker was the help, you are welcome! :D

post #5 of 98

Hi Aubrey, I also am holding shares of AAMRQ which got de-listed today. I was told by my eTrade rep the conversion would be .06 shares of AAL stock per AAMRQ share I had for the merger, so essentially like 15 shares of AAMRQ converts to 1 and he basically said I lost most the money I had gained through the merger. Any ideas if this statement is true or false?

post #6 of 98
Thread Starter 
Quote:
Originally Posted by thewolfman View Post
 

Hi Aubrey, I also am holding shares of AAMRQ which got de-listed today. I was told by my eTrade rep the conversion would be .06 shares of AAL stock per AAMRQ share I had for the merger, so essentially like 15 shares of AAMRQ converts to 1 and he basically said I lost most the money I had gained through the merger. Any ideas if this statement is true or false?

 

I saw the same thing, and I just about had a heart attack. I spent a good 4 hours today researching what this meant, and it's pretty confusing, but I think I have an understanding of it (if anyone wants to chime in, please do!)

 

The .0665 per share is correct, but it is pretty misleading. This is my understanding on the subject:

 

American Airlines group will convert our AAMRQ stock to AAL in 5 different distribution periods, which will occur in 30 day increments for 120 days.

 

- The 1st distribution was the one issued today: In this distribution we are receiving .0665 shares of AAL for every one of AAMRQ stock.

- The 2nd distribution will be on January 8th

- The 3rd distribution will be on February 7th

- The 4th distribution will be on March 9th

- The 5th distribution will be on April 8th

 

For the 2nd, 3rd, 4th, and 5th distribution periods, the amount of money in the form of AAL shares that we receive will depend on the performance and the average stock price of AAL for that month. .0665 is what we are guaranteed, everything else is based on performance, and as far as I know, the next 4 distributions should be larger than this first one, and the last distribution should be the largest, that is of course if the stock doesn't tank. 

 

From what I have read, it is impossible to predict exactly how much money we will end up with at the end of this 120 day period, but if AAL performs well, we could end up making a good amount of money at the end of this 120 days.  

 

 

Here is a Q & A about the equity distribution, this helped clear some things up for me:

 

http://www.azcentral.com/business/articles/20131208us-airways-investor-qa.html

 

 

Hope this helps! Again, if anyone has something to add, please chime in!

post #7 of 98
Wow hindsight is better than forsight , i had 1500 shares and was under impression it would of been 2 to 1 so i decided to keep and now it seems I shold have sold on friday or hold out for 120 days and yes it was a rude awakeing to see it vanish on portfolio and hope it looks better come thursdsy and till then hope the best for all
post #8 of 98
At least u end up with something. In most bk cases u end up with nothing when they emerge from bk. Merger musta changed it up a lil in tjis case
post #9 of 98

I just had the same heart attack and I'm in for a lot less than your 1500 shares. Just took a look at American's Investor Relations page and it does not say anything about scheduled future distributions, just that there MAY be some depending on performance.

To add insult to injury, US Air stockholders' shares are being reissued at 1 for 1 (but then again, they weren't in bankruptcy).

Let's hope we all recover and actually do well with this in the not-too-distant future.

Here's a question: can we use this loss when filing taxes for 2013?

post #10 of 98

According to the link below if we apply this formula AAMRQ price = 1.582*LCC price – 22.56 we should be ok, as LCC closing price was about 22.45 we should get about 13 per share.

 

Here is the link: http://hiepsfinance.com/2013/05/14/the-impact-of-the-american-airlines-us-airways-merger-on-american-airlines-stock-a-curious-case-of-stock-piggy-backing/

post #11 of 98

I wish that was the case, Domenico, but I spoke with etrade today and she clarified (per my urging that I wanted to be clear on what's happening) that, for now, we're screwed. 1 share now = .0665 of a share. I just got in a month or so ago with a small buy: 250 shares at 11.40. My $2850 is now $400 and change.

post #12 of 98

By most of the readings I have done my understanding is that the 3.5% (.0665) is the minimum guaranteed but the actual price is related to the LCC closing price or in some other readings the price of AAL for the next 120 days. I have 200 shares my  average cost is about 6 dollars a share.

post #13 of 98

The confusion is with US Air (LCC). Their shares are being reissued 1 for 1. Not us. We're being wiped out. Our one share is now worth .0665 of a share.

post #14 of 98

Terry Maxon published this article because there are too many AAMRQ shareholders panicking.

 

 

"But the actual number of shares that AAMRQ shareholders will get per AAMRQ share depends on the weighted average of the stock price over 120 days. As Wolfe Research analyst Hunter Keay described it in a report last week, the 3.5 percent “is the minimum amount they’ve been guaranteed (This is the 0.0665 initial distribution, or what you get right away). Additional AAL stock will be awarded during the 30, 60, 90, 120 day distribution dates. As AAL goes up/down AAMRQ holders receive more/less AAL stock.”

Now I don't know what is the exact formula for the distribution price, but this is the one that's been floating around.

(AAL * 1.314) - 17.18

http://aviationblog.dallasnews.com/files/2013/12/Homer-Parkhill-Rothschild-Nov.-22-2013.pdf

post #15 of 98
Thread Starter 
Quote:
Originally Posted by Gil Oren View Post
 

Terry Maxon published this article because there are too many AAMRQ shareholders panicking.

 

 

"But the actual number of shares that AAMRQ shareholders will get per AAMRQ share depends on the weighted average of the stock price over 120 days. As Wolfe Research analyst Hunter Keay described it in a report last week, the 3.5 percent “is the minimum amount they’ve been guaranteed (This is the 0.0665 initial distribution, or what you get right away). Additional AAL stock will be awarded during the 30, 60, 90, 120 day distribution dates. As AAL goes up/down AAMRQ holders receive more/less AAL stock.”

Now I don't know what is the exact formula for the distribution price, but this is the one that's been floating around.

(AAL * 1.314) - 17.18

http://aviationblog.dallasnews.com/files/2013/12/Homer-Parkhill-Rothschild-Nov.-22-2013.pdf

Yes, this is what I read as well, and I've read this from multiple sources. The .0665 is GUARANTEED,what we may/may not receive over the next 120 days is not guaranteed. The reason everyone keeps using the word "may" when saying whether or not AAMRQ shareholders will receive more later on, is because it isn't guaranteed, and if the AAL stock dramatically falls, than AAMRQ holders will be left only with their .0065, but this is very unlikely. If AAL performs well, AAMRQ shareholders will reap the benefits.

 

Now, i know what all the AAMRQ shareholders are thinking, I pretty much had a heart attack when I initially heard about the equity distribution. I called 3 different scottrade reps, all of them gave me different answers, and none of them really knew the answer to my question, they where all just guessing. Then, I started researching it myself, and after a while I started to understand it. It seems as though ALOT of people (including myself) are confused about how this equity distribution will work, leading to false information getting spread.

 

Another thing, AAMRQ was still being bought up until Friday, multiple huge companies have hundreds of millions of dollars invested in AAMRQ and are now awaiting their equity distritbution just like us. This information about how American Airlines Group would deal with AAMRQ shareholders was released at the end of November, so it was no secret. The reason I say this, is that if this distribution plan was laid out to where it would completely screw over AAMRQ shareholders, the stock price would have immediately tanked because everyone (especially the big time investors) would have sold their shares before the merger went into effect. But they didn't. I could be wrong, but I think that that means that we should be safe. If the majority of investors felt that they would have lost money in the merger, they would have sold a while ago, I think the fact that they held on and are now awaiting this 120 days to take it's course is a very good sign. 

 

Again, I could be wrong, but this is my thought process on it.

post #16 of 98

American Airlines survived on the shoulder of its shareholders. With our support and investment they were able to pay their debts and survive for past couple of month before merger. It is totally stealing our money when they ended up distributing 0.0665 for new stocks. Then you hear that CEO of the company ' Departing CEO Gets a $17 Million Bon Voyage!!! As a an investor I really wanted to help the company to come out of their hardship and I bought $150,000 of their stocks. In the morning of Dec 9th I heard from my agent that you will get 3% out of this money. I ended up going to hospital while I had anxiety attack by hearing that news. It is totally unfair when they steal our money and rewarding each other with millions of dollard and coming with big smiles claiming that they launched biggest airline. I was wondering if there is any class action lawsuit is going to be filled against this company.

post #17 of 98

Matt,

Just talked to the North Carolina Secretary of State office and they directed me to an article in the Dallas News (see url link below) that somewhat explains that this conversion of .0665 shares is the minimum requirement based on the original merger agreement. That number will most likely be adjusted based on the performance of the new AAL stock. It is noted in the article that the AAMRQ stock price passed the threshold long ago that was set for the .0665 conversion rate so it sounds like we will be getting more shares at the next gates of 30, 60, 90, and 120 days? Keeping my fingers, legs, toes, arms and eyes crossed!

 

http://aviationblog.dallasnews.com/2013/12/we-have-a-lot-of-upset-owners-of-aamrq-stock.html/ 

post #18 of 98
Thread Starter 
Quote:
Originally Posted by craymond64 View Post

Matt,
Just talked to the North Carolina Secretary of State office and they directed me to an article in the Dallas News (see url link below) that somewhat explains that this conversion of .0665 shares is the minimum requirement based on the original merger agreement. That number will most likely be adjusted based on the performance of the new AAL stock. It is noted in the article that the AAMRQ stock price passed the threshold long ago that was set for the .0665 conversion rate so it sounds like we will be getting more shares at the next gates of 30, 60, 90, and 120 days? Keeping my fingers, legs, toes, arms and eyes crossed!

http://aviationblog.dallasnews.com/2013/12/we-have-a-lot-of-upset-owners-of-aamrq-stock.html/ 

Yes, thank you for chiming in. This is what I was saying in my last 2 posts. For anyone that is still feeaking out, do your own research! Don't rely on on your broker to provide you with all the info, because a lot of times they know the same if not less than you.

if you take the time and effort to research it, the terms of the equity distribution will become clear
post #19 of 98

All the information is right here all thanks to Aubrey64 :Thumbsup: 

 

 

chart.ashx?t=LCC&ty=c&ta=1&p=d&s=l
post #20 of 98
I just found out the same. I'm told by Etrade that my original holding of 1500 shares which had a value of $17,500 prior to the merger is now only valued at $2,450. I'm told all I got is 0.065 of AAL shares for every 1 shares I held of AMR.
Head spinning, trying to get answers. Not happy. Can't believe this is even legal
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