AMR stock plunges on bankruptcy rumors

The inaugural American Airlines non-stop flight to Shanghai, China, is towed from its gate during festivities at Los Angeles International Airport April 5, 2011 in Los Angeles, Calif.

Kai Ryssdal: It's never a good thing when trading in a specific company's shares is halted on one of the major exchanges. So it follows that being halted twice or more is bad. Try being halted seven times and you're up to speed on American Airlines today.

Rumors of bankruptcy have been swirling all day -- at one point shares were off 41 percent to lows not seen since September 2001.

Marketplace's Sarah Gardner explains the turbulence.


Sarah Gardner: Rumors that American might file for a Chapter 11 bankruptcy have been in the air for some time. The airline is carrying loads of debt, but unlike its rivals, has no dance partner to help pay the bills.

Finance professor and airline expert Richard Gritta.

Richard Gritta: You know while the music was playing, United and Continental merged, and so did Delta and Northwest. And American is sitting there alone and now the music stopped and they have a problem.

Today, an industry group said traveler demand had fallen off since July and the industry is "bracing for tough times ahead." Gritta says an American Airlines bankruptcy could have real effects.

Gritta: If they disappear, if there were an outright bankruptcy or they were sold off, you would see prices go up.

American isn't commenting on its stock price but says a bankruptcy filing is "certainly not our goal or our preference."

I'm Sarah Gardner for Marketplace.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.

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