AMR Corp.’s (AAMRQ.PK) American Airlines and US Airways (NYSE:LCC) began trading as a merged entity when markets opened on Monday, and investors have some big expectations for the company that is now the world’s largest airline.
Many analysts believe the stock will rise in coming months and that American and US Airways are likely to avoid the pitfalls that plagued other recent mergers in the airline industry, according to a report from Bloomberg. US Airways completed a successful merger with America West Holdings Corp. in 2005, and analysts seem to believe that the knowledge gained from that transaction will help the company undergo a smooth merger with American.
American Airlines Group now trades on the Nasdaq under the ticker AAL. An analyst from Wolfe Research Inc. told Bloomberg that the stock could reach $39 by 2015, while an analyst from JPMorgan Chase placed the figure at $37. Shares of US Airways closed trading at $22.55 on Friday.
The Wall Street Journal reported on Friday that for those who purchased shares of American Airlines back when AMR Corp. filed for bankruptcy, the merger will be one of the best investments in the past several years. Investors who bought shares in the company at its lowest closing price two years ago will see an increase of more than 40 times their original investments.
The merger faced some opposition this summer when the U.S. Department of Justice sued to block it, saying that the deal would cut down too much on competition and raise the cost of airfare for consumers. The parties reached an agreement last month in which the airlines agreed to give up slots at New York’s LaGuardia airport and Ronald Reagan National Airport outside Washington, D.C. Those slots will go to low-cost carriers like JetBlue (NASDAQ:JBLU) and Southwest Airlines (NYSE:LUV).
While the Justice Department said it believes the merger and those concessions will help stimulate competition in the airline industry, many have criticized the agreement, and some consumer advocacy groups have said they believe the merger will lead to higher airfare costs as the market continues to shrink.
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