Tomi Kilgore and Claudia Assis
Equity distribution agreement comes after stock surged in wake of earnings, 'de-risking' by short sellers
American Airlines Group Inc. took advantage of the recent surge in its stock price, by setting on Friday a new plan for the sale of up to $1.1 billion worth of shares.
The new plan comes after the air carrier's stock (AAL) surged 9.3% on Thursday after fourth-quarter results, and 17.3% over the past three days. Some analysts suggested the relatively oversized gains () was related to the recent trading frenzy ( ) in stocks with a high number of bearish bets against them.
American's shares dropped 5.1% to close at $17.17 on Friday, while the U.S. Global Jets exchange-traded fund (JETS) lost 3.1% and the S&P 500 index slid 1.9%.
Kudos to analyst Helane Becker at Cowen, who said Thursday the company could take the opportunity of the recent rally, which she didn't believe to be fundamentally driven, with an equity offering.
Don't miss: American Airlines stock soars after Q4 results but is 'dislocating with fundamentals,' analyst says ().
On Friday, American Airlines disclosed in an 8-K filing () with the Securities and Exchange Commission that it entered into "a new equity distribution agreement" for the issuance and at-the-market (ATM) sale from time to time of up to $1.12 billion worth of shares. The agreement was made with Goldman Sachs, Citigroup, Barclays and BNP Paribas.
Separately, American said it terminated on Thursday the previous $1 billion equity distribution agreement, which was entered into on Oct. 22, 2020. As part of that agreement, American said it raised $882.4 million, through the sale of 68.56 million shares of common stock at an average price of $12.87.
The airline also said it has new Boeing Co. (BA) planes to be delivered by the end of this year or in 2022, including new 737 Max jets. The aircraft was grounded world-wide for nearly two years after two deadly crashes, and cleared to fly again in the U.S. in November. Earlier this week European aviation authorities followed suit. ( )
The company said it had accepted delivery of five Max aircraft so far this year, with six more to be delivered in 2021 and 10 in 2022. American also expects the delivery of 19 "Dreamliner" 787 planes for 2021, and of several Aibus' A321Neo this year and the next.
Shares of American Airlines have run up 52.2% over the past three months but has lost 38.1% in the past 12 months, contrasting with the S&P 500 gains 13.6% the past three months and 13.1% the past year.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 30, 2021 10:04 ET (15:04 GMT)
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