Company Watch - FL Group.

Oct 1, 2007

Iceland's FL Group a Reykjavik-based firm, which owns Scandinavian discount airline Sterling Airlines and formerly owned Iceland's flagship carrier, said its conservative analysis found more than USD$4 billion upside from unbundling the AAdvantage frequent-flyer program, though it does not believe American Airlines parent AMR should sell right away. AMR's market capitalization is USD$5.3 billion. Smarason said most investors and analysts cannot easily understand the profitability of AMR's individual business units because of its structure as a fully integrated legacy airline, which he blamed for weighing on the shares. The problem is compounded because AMR does not disclose detailed financial information, he added. Sep 27, 2007

Iceland's FL Group has written to the board of American Airlines parent AMR and urged it to consider a number of strategic alternatives, including spinning off its frequent-flyer program. FL Group, a private equity firm which owns 8.25 percent of AMR, said in the letter that changes at AMR are long overdue given the 50 percent drop in the share price since January. The letter was sent on Tuesday and disclosed on Sept 27. FL Group cited the success Air Canada parent ACE has had by spinning off its loyalty program. Sep 27, 2007

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