Bloomberg News

NYSE Reviews AMR Listing on Bankruptcy Filing; Shares Plunge

November 30, 2011

(Updates trading in second paragraph.)

Nov. 29 (Bloomberg) -- NYSE Euronext is reviewing the listing status of AMR Corp. stock, which plunged today after the company filed for bankruptcy.

AMR declined 84 percent to 26 cents at 4 p.m. New York time. It was halted for more than three hours after the company announced the filing. Swings in the stock triggered at least 16 more five-minute pauses under exchange circuit breakers designed to limit volatility, data compiled by Bloomberg show.

While shares are trading today, the NYSE said it may move to suspend AMR should it receive evidence that the price will be “abnormally low,” according to a statement. It may also stop trading if NYSE Regulation gets “authoritative advice that the securities are without value,” or fall below the exchange’s listing requirements, the statement said.

American Airlines parent AMR Corp. filed for bankruptcy today after failing to secure cost-cutting labor agreements and sitting out a round of mergers that dropped it from the world’s largest airline to No. 3 in the U.S. The shares fell 96 percent in 2011 and are down 99 percent from their 2007 high of $40.66, data compiled by Bloomberg show.

“Normally NYSE delists companies that go bankrupt very quickly,” James Angel, a professor of finance at Georgetown University’s McDonough School of Business in Washington, said in a telephone interview. “The real question is, what should be done with the stock’s trading?”

NYSE Rules

The New York Stock Exchange’s rules give NYSE Euronext the discretion to delist companies once they file for bankruptcy. Companies can remain listed by the market should they demonstrate “sound financial health despite the bankruptcy proceedings,” according to the NYSE’s website.

MF Global Holdings Ltd. never traded at the New York Stock Exchange after the brokerage filed for bankruptcy on Oct. 31. Over-the-counter transactions in the shares began on Nov. 2.

Delta Air Lines Inc. and Northwest Airlines Corp. both filed for bankruptcy on Sept. 14, 2005. Nasdaq Stock Market delisted Northwest 12 days later, and NYSE removed Delta in 29 days, according to data compiled by Bloomberg. UAL Corp., the parent of United Airlines, filed for Chapter 11 on Dec. 9, 2002, and was delisted by NYSE in 115 days, the data show.

US Airways Group Inc. went into bankruptcy on Aug. 11, 2002, and Sept. 12, 2004. NYSE delisted it the first time after three days, and Nasdaq took action after 10 days the second time, Bloomberg data show.

‘Ragged’

The 16 trading halts in AMR shares show “how ragged our system of trading halts is” and provide a case for refinements to the rules implemented last year, Angel said. The Securities and Exchange Commission, Financial Industry Regulatory Authority and U.S. stock exchanges are working to revise the system of trading halts for individual stocks.

“It’s easy to second-guess others, but in the fog of trading, and especially in a market where the dominant ethic is to keep the market open no matter what, that’s what some people want,” Angel said.

OTC Markets Group Inc. is prepared to quote the shares as soon as they’re delisted and receive a five-letter symbol from Finra, R. Cromwell Coulson, president and chief executive officer, said in a phone interview. The New York-based firm offers a quotation system for securities not listed on exchanges.

‘Helps Those People’

“People have positions they want to be able to risk- manage,” Mike Bleich, chief executive officer of Scout Trading LLC said in a phone interview. The market-making firm hasn’t traded AMR today, he said. “There are probably people who have a good idea about how much the stock is worth and people who own it who want to get out at any price,” he said. “If there’s any bid, that helps those people.”

Trading in AMR encountered glitches today as transactions occurred when shares weren’t allowed to be bought and sold. NYSE Arca, a stock exchange owned by NYSE Euronext, canceled 42 transactions totaling about 31,000 shares after trading in AMR was halted at 7:02 a.m. The trades took place from 7:02 a.m. until 7:13 a.m.

Nasdaq OMX Group Inc. canceled all transactions in AMR shares across its three exchanges that occurred between 10:08 a.m. and 10:19 a.m. and between 10:19 a.m. and 10:24 a.m., when trading wasn’t supposed to occur, according to a notice. Transactions in the company’s preferred securities between 10:08 a.m. and 10:14 a.m., 10:15 a.m. and 10:20 a.m., and 10:22 a.m. and 10:27 a.m. were also canceled, the statement said.

--Editors: Nick Baker, Michael P. Regan

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.


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