Midday Commentary: AMR convertible bonds, stock rise on news of Justice Department settlement

By Stephanie N. Rotondo

Phoenix, Nov. 12 - AMR Corp.'s convertible bonds were trending higher following news that the bankrupt airline and its merger partner, U.S. Airways, had reached a settlement with the Justice Department.

The 6.25% convertible notes due 2014 were pegged in a 135.5 to 136 range by a market source. That compared to previous trades with a 134 handle.

AMR's stock was meantime up as much as 33% in early trading, in well-above-average trading volume.

Trading in U.S. Airways' stock was halted.

In August, the Justice Department filed an anti-trust lawsuit against AMR and U.S. Airways over its plan to merge - a key component to AMR's bankruptcy plan. Chatter has been going on for weeks that the parties would come to some sort of settlement, which was expected to include giving up slots at Reagan National Airport in Washington, D.C.

If the settlement is approved by all involved, AMR and U.S. Airways will go on to create the world's largest airline.

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