Persistent Rumors Prompt AMR to Ask for SEC Probe
AMR Corp., parent of American Airlines, Friday asked the Securities and Exchange Commission and the New York Stock Exchange to investigate recent Dow Jones press reports regarding the company.
An American spokeswoman, Mary O’Neill, declined to identify any specific report that appeared either on the Dow Jones news service or in the Wall Street Journal that triggered the AMR request. The Wall Street Journal and the news service are owned by Dow Jones & Co.
Rumors have swirled around AMR for several weeks, growing in intensity during the last few days. One of them had New York hotel magnate Donald J. Trump buying stock in American; another had the wealthy Bass family of Texas and Dallas-based American’s unions discussing a possible deal; a third had AMR discussing some kind of an equity exchange transaction with West Germany’s Lufthansa Airlines, and finally, there was a report that members of AMR management were considering an employee stock option plan that would place as much as 15% to 20% in the hands of airline employees in an effort to thwart any hostile takeover.
A Lufthansa spokesman in New York said: “We do not know anything about the rumors. We are waiting to hear from Frankfurt,” where Lufthansa is headquartered.
A Dow Jones spokesman, Roger May, said his company knew of AMR’s request but that he did not know to which reports the company was referring. “We’re not investigating,” he said. “We know about their announcement, but that’s not a lot to go on, is it?”
Mary McCue, a spokesman for the SEC said in a telephone interview: “As a matter of policy, we do not comment on what we may or may not be investigating.”
Stock Price Rises
Richard Torrenzano, senior vice president/communications of the New York Stock Exchange, said the Big Board, as a matter of course when a stock moves up or down significantly or is traded unusually actively, initiates its own inquiry. “We had started the process even before AMR asked for an investigation,” he said.
AMR stock rose $4.75 Thursday and $2.75 Friday, closing Friday at $86.50, and volume was very heavy. On Thursday, 2,051,700 shares were traded, and 2,647,800 changed hands Friday, making AMR Thursday’s third most active NYSE stock and Friday’s second most active.
The speculation that Trump was buying up AMR stock was triggered by financial columnist and broadcaster Dan Dorfman.
Dorfman said in a telephone interview Friday that he had said in his column in USA Today on Sept. 11 that Trump had purchased AMR shares and that “the reason was uncertain.” Dorfman did not specify the number of shares Trump was said to have purchased.
Then on Thursday night, during his regular appearance on Cable News Network’s “Moneyline” program, Dorfman said Trump “likes the company” and had increased his holdings in it. Dorfman said Trump had declined to comment on the report. The columnist also noted that Trump often buys stocks and then sells out when their price rises.
Analysts Speculate
Trump already owns an air shuttle service, formerly owned by Eastern Airlines, that flies between New York and Boston and New York and Washington.
Industry analysts interviewed Friday said they do not believe the rumors and that AMR had asked for the investigation because it wanted to put an end to all the talk.
One analyst who asked not to be identified said: “Robert Crandall (AMR’s chairman and chief executive) is a feisty man, and he probably has had enough. He probably asked for the investigation because he is sick and tired of Wall Street putting the company into play.”
Another analyst said AMR had asked for the SEC and NYSE probes for one of two reasons: “Either the rumors are true, and they want to know where the leaks are coming from. Or they are unhappy that somebody is spreading such significant false rumors.”
