AMR cuts loss to $241 million in 2Q

Second-quarter revenue was $6.45 billion, a 5.5 percent increase compared with 2011's second-quarter revenue of $6.1 billion
July 23, 2012
5 min read

Read all coverage of American Airlines, including bankruptcy issues. AMR Corp., the bankrupt parent of American Airlines, reported on Wednesday a second-quarter loss of $241 million, or 72 cents per share, as bankruptcy reorganization costs, legal and consultants' fees totaled $230 million in the quarter. In 2011's second quarter, AMR posted a net loss of $286 million, or 85 cents per share. Second-quarter revenue was $6.45 billion, a 5.5 percent increase compared with 2011's second-quarter revenue of $6.1 billion.

AMR Chairman and CEO Tom Horton said the company showed significant improvement in the quarter. "Our revenue performance has topped the industry for several months, leading to our first second-quarter profit in five years, excluding reorganization and special items," Horton said. "And this improvement reflects only a fraction of our ongoing restructuring progress. While there is still much to be done, we expect this momentum to build quickly as the new American re-emerges as an industry leader." The company's second-quarter expenses were $6.3 billion, an 1.9 percent increase from 2011's second-quarter expenses of $6.19 billion. AMR's second-quarter fuel costs were $2.2 billion, up 0.3 percent compared with last year's second quarter. The company's second-quarter fuel consumption was 604 million gallons, down 3.7 percent from 2011's second quarter, at an average per-gallon price of $3.24, a 4.1 percent increase from the $3.11 price of a year ago. AMR's second largest expense in the second quarter, wages, salaries and benefits, totaled $1.78 billion, a 0.8 percent rise from last year's second quarter. Consolidated passenger revenue per available seat mile for both American Airlines and American Eagle Airlines, its regional airline affiliate, increased 9.1 percent compared with last year's second quarter, while American's passenger unit revenue rose 8.7 percent. Consolidated passenger yield, representing average fares paid, increased 7.1 percent year-over-year in the second quarter, while American's passenger yield increased 6.8 percent. American Airlines' seating capacity in the second quarter decreased 2.4 percent compared with the same period a year ago. American's second-quarter load factor - the percentage of seats filled - was 85.1 percent, a record for any quarter in company history, officials said. Second-quarter bankruptcy expenses included $230 million in estimated claims associated with restructuring financing for certain aircraft and rejecting certain facility revenue bonds, as well as fees for lawyers and consultants. AMR also spent $106 million in the second quarter related to a special charge, primarily associated with employee severance costs, company executives said. Excluding bankruptcy reorganization costs and special charges, AMR posted a net profit of $95 million, a $381 million improvement over 2011's second quarter, company executives said. "Our improved financial results were driven by strong unit revenue performance, with growth outpacing the industry in each of the three months of the second quarter," said Bella Goren, chief financial officer. "Our consolidated unit revenue rose 9.1 percent, with increases across all five of our hubs (Dallas/Fort Worth, Chicago, New York, Miami and Los Angeles) and across all international entities. "These industry leading year-over-year revenue increases reflect the strength of our network and alliances, our focus on the customer and the effectiveness of our overall strategy." AMR filed for bankruptcy Nov. 29, listing assets of $24.72 billion, liabilities of $29.55 billion and $4.1 billion in cash. At the close of the second quarter, AMR had $5.8 billion in cash, up from $5.57 billion at the end of the first quarter, company documents show. AMR in bankruptcy KEY DEVELOPMENTS The company filed for bankruptcy on Nov. 29, 2011, after losing more than $10 billion in the past 10 years. On Feb. 1, the company announced a plan to cut 13,000 jobs, including 2,100 Transport Workers Union jobs in Tulsa. Since then, the estimates have been reduced to 9,740 jobs cuts companywide. US Airways is actively pursuing a merger with American Airlines. In April, US Airways CEO Doug Parker reached tentative contract agreements with American's Allied Pilots Association, Transport Workers Union and Association of Professional Flight Attendants. The tentative agreements would become effective with the merger of American and Tempe, Ariz.-based US Airways. A merger would result in layoffs of 450 TWU members in Tulsa and 4,900 mechanics, baggage handlers and other ground workers companywide. American negotiators have reached contract agreements with five TWU work groups. TWU mechanics and stock clerks and the Allied Pilots Association will conduct ratification votes on tentative contract agreements in the next three weeks. KEY DATES Approximately one month from now: The TWU is expected to complete a vote on a new contract with AMR. The tentative contract agreement includes 15 percent wage increases over six years, improved health-care coverage, market wage readjustment - based on industry compensation, after 36 months - and a provision to reopen full contract negotiations after four years. The company has not provided revised layoff numbers. Any day now the bankruptcy judge is expected to rule on AMR's request to delay filing its reorganization plan to Dec. 28. Right now, the deadline for filing the plan is Sept. 28. The judge also is expected to rule on the company's request to delay approval of its reorganization plan by a creditors committee until Feb. 28. Right now, the deadline to gain approval from its creditors committee of the reorganization plan is Nov. 29. KEY FIGURES 2,100: Most recent number of proposed job cuts in Tulsa $75 million: Money AMR had spent through June on bankruptcy costs. $10 billion: AMRs losses in the past 10 years. $1.25 billion: The money AMR hopes to save in labor expenses on an annual basis.

D.R. Stewart 918-581-8451 a class="ArticleLink" href="mailto:[email protected]"[email protected] SUBHEAD: Second-quarter revenue rises to $6.45 billion, up 5.5 percent from a year ago.

Copyright 2012 The Tulsa World

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