AMR posts $238 million third-quarter loss; profit seen with exclusions

By Caroline Salls

Pittsburgh, Oct. 17 - AMR Corp. reported a third quarter net loss of $238 million, compared to a $162 million net loss for the third quarter of 2011, according to a company news release.

Excluding reorganization items and special charges, the company posted a net profit of $110 million for the third quarter of this year, representing a $272 million improvement compared to the same period of 2011.

"These results were driven by the best revenue growth in the industry in each month of the quarter and by record load factor as we continue to make progress in our restructuring for a successful future," chairman and chief executive officer Tom Horton said in the release.

Revenue results

AMR reported record third quarter consolidated revenue of $6.4 billion, up 0.8% compared to the third quarter of 2011 on 2.3% less capacity than in the quarter ended Sept. 30, 2011.

The company said consolidated passenger revenue per available seat mile grew 4.3% compared to the third quarter of 2011, and mainline passenger unit revenue increased 4.5%.

In addition, AMR said consolidated passenger yield, representing average fares paid, increased 3.5% year-over-year in the third quarter, and mainline passenger yield increased 3.7%.

According to the release, the company's revenue performance was driven by year-over-year yield improvement and a record high consolidated load factor of 84.7%.

Domestic unit revenue improved 3.8% in the third quarter versus the same period last year and, for the third consecutive quarter, the company saw unit revenue increases across all five of its hubs.

AMR said international unit revenue increased 5.3% in the third quarter, driven by increased load factors across all entities and improved yield performance.

"Strong yield and record load factors generated unit revenue growth that topped the industry in each of the three months, continuing a trend of outperforming the industry that we've seen throughout the year," chief commercial officer Virasb Vahidi said in the release.

Cost reduction progress

Chief financial officer Bella Goren said in the release: "We have made excellent progress in both increasing revenues and in reducing costs this quarter.

"As a result of having consolidated operating expenses, excluding special charges, of $6.2 billion, or 2.7% lower than the third quarter of last year, we saw considerable improvement.

"We were able to achieve operating income and margin of $262 million and 4.1% respectively, excluding special charges.

"As our restructuring efforts move forward, we will continue to realize increasingly greater cost savings in the coming quarters, and we are on track to achieve our targeted savings."

The company said the third-quarter results include $348 million in special charges and reorganization items.

Cash

AMR ended the third quarter with $5.1 billion in cash and short-term investments, including a restricted cash balance of $847 million, compared to a balance of $4.8 billion in cash and short-term investments, including a restricted balance of approximately $474 million, at the end of the third quarter of 2011.

The company said it experienced operational challenges because of flight cancellations and delays during the second half of September, but the net impact of these disruptions to third-quarter financial results was not significant.

AMR Corp., the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29, 2011 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 11-15463.

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