UPDATE 1-Citigroup downgrades AMR Corp, ups price target

Aug 27 (Reuters) - Citigroup downgraded AMR Corp AMR.N to
"sell" from "hold" on the recent run up in the shares, but
raised its price target along with JetBlue Airways (JBLU.O) and
Southwest Airlines (LUV.N), citing a drop in oil prices.

The drop in fuel prices improves AMR's risk profile as it
adds more liquidity breathing room. However, the shares look
expensive at current levels as they rose as much as 125 percent
since July 15, Citigroup said in a note dated Aug. 26.

A $30 drop in crude oil last month has also led to Citi's
lowering of crude oil assumptions to $115 per barrel from $135
per barrel.

Legacy airlines are still not out of the woods and further
equity raises are expected to cap share prices, analyst Andrew
Light wrote, adding that a 10 percent capacity reduction in the
fourth quarter should help supply/demand dynamics.

"U.S. airlines have yet to see a severe consumer downturn
despite gloomy economic data," Light said.

International flying is showing signs of weakness and
cannot be relied upon to generate profits should domestic
performance deteriorate, he said.

Citigroup maintained its "hold" rating on Southwest and
JetBlue shares.

The following are the price target changes by Citigroup on
the three stocks:

Company Name Price Target (in $)

Current Previous

AMR Corp AMR.N 9.00 6.70

JetBlue Airways (JBLU.O) 6.50 4.65

Southwest Airlines (LUV.N) 15.50 14.50

Shares of AMR, the holding company of American Airlines,
were down 63 cents at $8.98 in late morning trade Wednesday on
the New York Stock Exchange. They fell more than 8 percent
earlier in the session.
(Reporting by Arup Roychoudhury in Bangalore; Editing by
Gopakumar Warrier)