AMR to Sell Its Global Services Units at Auction
AMR Corp., the parent of American Airlines, plans to sell its AMR Global Services aviation services and telemarketing units to focus on its airline and travel reservation businesses.
The second-largest U.S. airline company hired investment bankers to auction its AMR Services, AMR Combs and TeleService Resources by the first quarter of next year. The units have about 13,600 employees and combined annual revenue of $451 million.
“It’s a good business move” because it lets AMR narrow its business focus, said Julius Maldutis, an analyst with CIBC Oppenheimer, who has a “buy” rating on the stock.
AMR will be able to fetch the highest price by selling the units through an auction to the top bidder rather than a negotiated sale to a single buyer, analysts said.
“These businesses are all viable companies with good prospects for success, and thus we expect them to fetch a good price,” AMR Chairman Donald Carty told a group of airline analysts in New York. He wouldn’t specify the amount AMR is seeking for the units.
The planned sales are a change in strategy for Fort Worth, Texas-based AMR, which bolstered its non-airline subsidiaries during the early 1990s to offset weak profit from the airline. The company is focusing again on its airline business after two years of record profit as a strong U.S. economy and low fuel prices boost airline industry earnings.
AMR will sell each of Global Services’ three main divisions separately, Carty said. AMR Combs, which provides airport services, already has attracted interest, Carty said.
AMR said it has no plans to change the ownership of American Airlines, American Eagle, its majority-owned Sabre Group airline and travel reservations business or its AMR Investment Services or AMR Airline Management Services units.
The company hired Credit Suisse First Boston for the sale of AMR Services and AMR Combs, and Merrill Lynch & Co. for the sale of TeleService Resources.
AMR shares fell $3.25 to close at $59.06 on the New York Stock Exchange.
