Deutsche Bank suspended its recommendation, price target and estimates on AMR Corp. (NYSE:AMR) after the parent of American Airlines filed for bankruptcy in a move to cut costs and debt and remain competitive in the airline industry.
"The read through for the rest of the industry is that today's bankruptcy filing is specific to AMR and a reflection of the company's struggles to achieve a more competitive cost and debt structure," Deutsche Bank said in a note.
"In that regard, the US airline industry is on track to generate a net profit in the seasonally weak December quarter, something that we have observed only twice during the past decade," the brokerage added.
Furthermore, Deutsche Bank said it expects that AMR's restructuring will include further rationalization of its network which likely means some capacity cuts.
AMR was the only major U.S. airline to avoid Chapter 11 after terrorist attacks in 2001.
The company said it has around $4.1 billion in unrestricted cash and short-term investments. AMR listed assets of about $24.72 billion and $29.55 billion in debt.
On Wednesday, AMR shares are up 42.3 percent to $0.370 at 1.56 pm EST. The stock has been trading in the 52-week range between $0.20 and $8.89.
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