Financial thoughts

AMR Corp.’s American Airlines, once the world’s largest carrier by traffic, may pursue alliances to win more passengers as rivals’ mergers erase its advantage, analysts said.

Possible alliance partners include US Airways Group Inc. and JetBlue Airways Corp., the sixth- and seventh-largest U.S. airlines, said Jeff Straebler, a fixed-income strategist at RBS Securities Inc.

Alliances such as AMR’s Oneworld let members sell seats on each other’s jets, a benefit in an industry where the breadth of airlines’ networks attracts corporate fliers. American, now the second-largest U.S. carrier, would be No. 3 under the United-Continental merger, and said Monday that it is studying a "range of alternatives."

"American helped originate the whole idea of alliances and partnerships," said George Van Horn, an analyst at IBISWorld Inc. "If somebody should be good at it, you could make the argument they should be."

Straebler and Van Horn said an alliance might appeal to AMR by providing many of the benefits of a merger, such as adding passenger revenue and avoiding flight duplication, without the risks and expense of meshing fleets and unions. Ties to US Airways or JetBlue might help American in New York, the world’s busiest travel market, they said.

AMR was under pressure even before the United-Continental deal emerged. The company is the only major U.S. airline that may lose money in 2010, and has the lowest margins and highest costs among its peers, according to Jamie Baker, a JPMorgan Chase & Co. analyst. American and unions representing about 77 percent of its work force are in contract talks, with the pilots’ negotiations dating to 2006.

American’s last merger came in 2001, when it bought Trans World Airlines for $2.8 billion.

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