New York - Rumours that American Airlines parent AMR Corp will file for bankruptcy protection sent the company's stocks plummeting on Monday.
The company said there was no concrete news behind the rumours, but also said that a court-guided restructuring "is certainly not our goal or our preference".
At the closing bell the stock was down 33.1% at $1.98, as the airline continued to struggle with a high debt load and sluggish demand growth, according to analysts.
The sharp fall had triggered automatic trade halts designed to kick in during times of extreme volatility.
Morningstar analyst Basili Alukos said the seling comes after an "abnormal" number of pilot retirements in the past two months, with the pilots seeking to sell off their own stocks in the company out of fears it would fail.
"There is a lot of speculation that they were trying to sell their shares as fast as they could before the company faces more financial problems and file(s) for bankruptcy," Alukos said.
About 200 pilots have departed in recent months, compared to the normal average of 12 per month, he said.
The bankruptcy talk "is not a new speculation", Alukos added, saying that American Airlines has a disadvantage to its competitors on fuel and labor costs that management has not been able to overcome.
The union representing some 10 000 pilots admitted that a higher number than usual had retired in the last two months but denied that it was related to confidential information about the financial health of the company.
The union said it was not aware of any liquidity crisis at the company, and that many pilots may have taken the decision to leave based on concerns about general global market volatility and not because of any inside information.
AMR reported a loss of $286m for the second quarter, and the stock has lost three quarters of its vlaue this year.
Jim Corridore of Standard & Poor's Equity Research said they do not anticipate a bankruptcy filing.
"While we view AMR as the financially weakest US airline, it had $5bn in cash/investments at the end of Q2. Our Q3 forecast is for a loss of about $110m, and we do not think the company has been burning through an unreasonable amount of cash," he said.
"For this reason, we would be surprised by a bankruptcy filing in the next 12 months."
American Airlines, which with sister American Eagle has a fleet of 900 aircraft, announced in July the largest-ever single order for aircraft.
American said it would buy 200 Boeing 737s and 260 Airbus A320 jets, both more fuel efficient than the aircraft it currently operates.
AMR said on Monday that there was no company-driven news that would have sparked the price fall.
"Regarding rumors and speculation about a court-supervised restructuring, that is certainly not our goal or our preference," said AMR spokesman Andy Backover.
"We know we need to improve our results, and we are keenly focused as we work to achieve that."
AMR has said it should have a cash balance of $4.2bn on its books at the end of the third quarter. Last week the company moved to sell $726m in debt secured by aircraft known as enhanced equipment trust certificates, to be used to offset other debt coming due by the end of the year.