AMR Corporation Reports a First Quarter Loss of $162 Million on the Impact of High Fuel Costs
Wednesday April 20, 11:36 am ET
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American Performing Well in Several Important Areas; Continues Intense Focus Under the Turnaround Plan to Cut Costs and Increase Revenues
FORT WORTH, Texas, April 20 /PRNewswire-FirstCall/ -- AMR Corporation (NYSE: AMR - News), the parent company of American Airlines, Inc., today reported a net loss of $162 million for the first quarter, or $1.00 per share, which included a benefit of $69 million related to certain excise tax refunds. Without this tax credit, AMR would have recorded a net loss of $230 million, or $1.43 per share. This compares to a loss of $166 million, or $1.03 per share, in the first quarter last year.
"In many ways, the story for the first quarter is very similar to what we have seen the past several quarters," said AMR Chairman and CEO Gerard Arpey. "The combination of extraordinarily high fuel prices and low fares continues to take a heavy financial toll." Arpey pointed out that because of higher fuel prices, excluding the tax credit received this quarter, the company paid $346 million more for fuel during the first quarter of 2005 than it did during the same period the year before.
"On the other hand," Arpey said, "while the financial environment remains very difficult, we are nonetheless performing well in many other important areas. Our employee and aircraft productivity are at historically high levels, more customers are choosing American, and our on-time performance has improved significantly."
American's passenger revenue per available seat mile increased 3.7 percent year over year, to 8.96 cents, driven by strong load factors and a series of network adjustments the airline has implemented in recent months. "We made a number of changes to our network last year," Arpey said, "reducing our overall domestic capacity, strengthening our hubs and adding new international routes, to name a few. And we are starting to see those changes bear fruit in our revenue performance. Regrettably, that silver lining does not come close to offsetting the impact of oil at 50-plus dollars per barrel."
Although American's mainline cost per available seat mile increased 3.3 percent, including the tax credit, and 4.6 percent, excluding the tax credit, Arpey noted that American's success in reigning in costs was illustrated by the 3.2 percent drop in the airline's fuel-neutral unit costs, excluding the tax credit. "Our people continue to do a great job in finding ways to reduce costs," he said. "Their efforts are even more impressive, and more important, when you consider that in addition to much higher fuel costs, we are facing significant upward pressure in airport rents, landing fees, health care -- for both active and retired employees -- and a variety of other areas."
Even in the face of the current fuel and revenue environment, AMR was able to contribute more than $138 million to its various defined benefit pension plans. AMR also was able, during the quarter, to further build on its cash balance, ending the period with a balance in cash and short-term investments of $3.5 billion, including a restricted balance of $483 million.
"American clearly still has a lot of work to do to reach its goal of sustained profitability," Arpey said. "Despite fuel, and despite fares, however, we are making progress. The key to our progress has been -- and will continue to be -- working together to identify the changes necessary to ensure our future."
Arpey pointed to the recently announced initiative to transform American's Maintenance and Engineering Center in Tulsa, Okla., into a future profit center as evidence of what can happen when management, employees and their representatives work together to find creative solutions to the company's challenges. Arpey also noted the joint position taken by the company, on behalf of its employees, and with its labor unions on pension legislative reform as another example of how the company and its unions are addressing key issues as business partners.
"We need to be realistic about the headwinds we are up against," Arpey said. "But even more importantly, we need to remember that by working collaboratively and imaginatively, we will control our own destiny and complete the turnaround we have begun."
http://biz.yahoo.com/prnews/050420/daw019.html?.v=6
Not too shabby, cosidering the excess domestic legacy capacity and the much higher fuel costs, but still a long way to go.
