You need to learn to read between the lines better. Yes, AA's $436M loss is an inprovement over a $505M loss when you consider the fact that fuel prices were up between 30 and 40%. Hedging absorbed some of it, but so did cost control.
Had fuel not been up, AA might have actually posted a positive number.
people on this forum need to go back to school for basic math.....fuel increased by 351M over 2010, therefore, with all the cost controls in place AMR would have lost 85M. For those that don't know...351- 436=(-85). Still lost money and highly leveraged adding an additional 1.5B to an already crushing debt level. Not a good way of running a company, and I didn't attend business school.
somehow you math majors forgot that the fare increases would not have gone through if fuel had not gone up.... AA like other airlines increased fares BECAUSE of fuel and the revenue increase would not have occurred absent the increase in fuel.
Further, AA DID cover its increased cost of fuel as did most carriers who have reported.
The sole reason why AA's loss narrowed was because they increased capacity - essentially using their employees and fleet more productively and thus generated revenue faster than the increase in fuel prices... other carriers have done the same thing. AS was up almost 7% in productivity.
Ok, fuel was only up 24% in 1Q. Reading the reports on a Blackberry is a bit difficult.
Yet, when you look at things like revenues being up 9% (cargo was up 10%), maintenance expense being down 11%, the numbers are an improvement, especially if you factor out all of the out-of-AA's-control items like:
1) fuel farm fire
2) ice storms before the Super Bowl
3) blizzards in Chicago and the northeast
4) Japanese tsunami
5) Japanese nuclear accident
And you can guarantee that softness in anyone else's numbers are going to focus in on any combination of those five items...
It's a loss, but look beyond just the math, and it's not as bad as a lot of people expected.
Borrowing to pay salaries is always a bad idea. AA's not borrowing to pay salaries as far as I can tell. It looks like they're refinancing existing debt for the most part. But that game can only go on so long as well. At some point, people won't be willing to refinance it. But I think that's a long ways off.
spare us.... the NE and SE was far harder hit by repeated bad weather than the midwest which got wallopped by not near as often.
What was the date for the fuel farm fire... ? seems like it was only a couple weeks ago, not in March.
Try again on Japan.... UA which has a much larger Japanese operation managed to INCREASE RASM in the 1st quarter -by double digits.
Japan is an insignificant part of AA's network? Those six flights probably account for half a billion dollars or more of revenue in a good year. In 2011, the revenue from those flights may be cut by a substantial percentage. Delta has already announced that the Japan disaster will probably cost it $400 million or more this year. AA is much smaller in Japan than DL but the disruption in Japan will easily cost AA a hundred million dollars or more this year.
This past winter's storms caused more disruption in Chicago and New York than the typical winter.
AA flies 4% of its capacity across the entire Pacific - and that includes China. Only US which doesn't serve the Pacific has a smaller percentage of revenue from Japan.
..
As expected now that multiple carriers have reported including most of AA's competition except for DL, the story is RASM, RASM, RASM.
AA UNDERPERFORMED on RASM for yet another quarter. Most other carriers recoreded RASM growth of 9-15%... which isn't hard to do considing how many fare increases were pushed through. AA's domestic yield increase was 40% of UA's and less than 1/4 of the yield increase UA got on international.
.
The cruel reality is that AA has become the least capable airline in the US at increasing its revenues... it has been the lowest performing in RASM production for a number of quarters and this quarter's numbers only continue the trend. The only thing that could BAIL out AA is if DL completely blows its previously stated projections of around 10% RASM growth for the quarter - and that guidance was issued post-Japan earthquake/tsunami/nuclear disaster.
.
What is most notable about AA's RASM performance is that the only region where AA has met industry RASM growth is in Latin America, the only region where AA remains the dominant carrier.
This further confirms the long-standing theory in the airline industry that size DOES translate into revenue premiums. AA's major domestic competitors, network and LFC all recorded nearly double the RASM growth that AA did. on the Atlantic and Pacific, AA was RASM growth negative while UA managed to be positive even recording double digit RASM growth. The Atlantic is clearly the weak spot and that is precisely where most other carriers plan to pull capacity - but AA hasn't committed to doing so.
.
AA's business model is unsustainable... it is that simple. They continue to keep capacity in the system in order to keep their CASM from going up and putting an even larger difference between them and the rest of the industry, which only makes it easier for other carriers to raid AA markets.
.
But AA's capacity is not delivering the RASM that other carriers are and the incursion of other carriers into AA's key markets is clearly hurting AA's revenue generating capabilities.
.
Yet AA continues to borrow money to sustain industry leading losses emboldening AA's labor unions that AA isn't serious about cutting costs or allowing BK to be a viable threat - and they are right.
.
There will be more and more analysts asking how AA can continue with its current business strategy that seems only to put off inevitably doing what must be done to turn the company around.
