AMR (AMR) Heads Toward Airline Dead Pool

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AMR (NYSE: AMR) hit the market with two pieces of bad news after the close. The parent of American Airlines announced that it fuel costs would rise well above projections made by the company two months ago. AMR’s new forecast projects the firm will have a 2008 fuel bill of $9.29 billion — more than $1 billion above what it was expecting earlier in the year — assuming prices don’t rise even further than planned, according to an SEC filing.

AMR was also hit with a downgrade from S&P. According to MarketWatch, the ratings agency changed the company’s "long-term ratings of B/Negative/B-3 and its subsidiary American Airlines Inc. to negative from positive. S&P also lowered AMR’s short-term rating to B-3 from B-2."

AMR’s shares, which traded at $40 at the beginning of 2007 now change hands at $9.62 and dropped further after hours.

Douglas A. McIntyre