S&P says AMR unchanged

Standard & Poor's said AMR Corp.'s ratings are unchanged including its corporate credit rating at B- with a negative outlook after the company reported a second-quarter pretax loss before special items (mostly a credit for federal airline aid) of $357 million, about half the $720 million pretax loss in the second quarter of 2002.

Operating results improved sharply during the quarter, driven by a recovery in traffic as the Iraq war wound down and phasing in of labor cost concessions, S&P said. Cost per available seat mile improved sharply for American, to 9.5 cents in June from about 11 cents in April. Still, the industry revenue environment, while improving, remains weak.

Liquidity also improved during and after the end of the quarter, with unrestricted cash currently over $2.1 billion, much better than $1.2 billion at March 31, 2003. Debt and capital lease payments in the second half of 2003 total $560 million (including a $200 million mandatory put on an airport revenue bond), with required pension contributions $120 million, and cash (i.e., not prefinanced) capital expenditures of $250 million.

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