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David Tepper Loses Big on AMR Bankruptcy

November 29, 2011 | About:

Hedge fund manager David Tepper was one of the big losers in the AMR Corporation (AMR) bankruptcy.

Shares of AMR are down 80% on the announcement.

Tepper was purchasing shares of AMR as recently as the first quarter of 2011. It was reported that Tepper owned 5,799,104 shares of AMR at prices over $6.

Tepper made a sector bet on the airlines industry. He had $92 million worth of United Continental (NYSE:UAL), $20 million worth of Delta Airlines (NYSE:DAL), and a $110 million position in US Airways (LCC).

AMR had too much debt with a higher cost structure than other airlines like Southwest (NYSE:LUV). Over the last 10 years the company lost $12 billion. The company was on pace to lose $1.1 billion in 2011 and another $500 million to $1 billion in 2012.

The main problem with AMR appears to be a labor showdown as labor contracts are past due.


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