American Airlines Shareholder Suggests Spinning Off Loyalty Program

One of American Airlines largest shareholders is urging the company to spin off its loyalty program to boost shareholder value.

The shareholder, FL Group, wrote a letter last week to the board of AMR Corp. asking the company to consider “strategic alternatives” including the separation of AAdvantage, the world’s oldest and largest frequent flyer program.

The group said that AMR’s share price had fallen close to 50% since January 2007. It said that the “unbundling” of the frequent flyer program could increase shareholder value by more than $4 billion. However, that valuation was based on “conservative assumptions” since it was given limited financial information on the program, FL Group said.

FL Group holds 8.25% of the company’s outstanding common shares.

American Airlines acknowledged that it had received the letter, but declined to comment specifically on the suggested spin off of AAdvantage.

“Our board and senior management regularly give careful consideration to the best use of our strategic assets and the impact that those decisions might have in the long run for our shareholders,” spokesman Tim Smith said. “We generally don’t comment publicly on the actions of our communications with shareholders or what we may or may not do in the future.”

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