Merrill Adds AMR Corp. to Focus One List

Analyst Michael Linenberg is impressed with the airline's cost-cutting program, and sees positive momentum continuing into 2004

Merrill Lynch added AMR Corp. (AMR ) to its Focus One list.

Analyst Michael Linenberg says the parent of American Airlines is in the midst of a major restructuring program, targeting about $4 billion in annual cost savings. He says American Airlines has been outperforming industry unit revenue since late spring; he expects this will continue as the airline further rationalizes its network and fleet.

Linenberg sees positive momentum carrying into 2004. He narrowed the $12.00 2003 loss estimate to an $11.05 loss, and cut the $4.50 2004 loss to a $3.50 loss. Also, he sees AMR returning to profitability in 2005. Linenberg raised the $13 12-month target to $16, and reiterates his buy rating.

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