AMR considers new initiatives to stay profitable
09:31 AM CDT on Thursday, September 23, 2004
By SUZANNE MARTA / The Dallas Morning News
NEW YORK__Battling high fuel prices and industry overcapacity, American Airlines parent AMR Corp. is looking to further trim costs and eke out more productivity as a way to keep the world’s largest airline competitive.
“There are simply too few passengers willing to pay the prices we need to be profitable,†said chairman and chief executive Gerard Arpey in a breakfast meeting with the Society of Airline Analysts Thursday.
Mr. Arpey outlined a wide range of initiatives that the Fort Worth-based carrier is considering, including making maintenance operations more efficient, keeping pilots with aircraft to reduce potential scheduling delays and eliminating “More Room Throughout Coach†on additional routes.
Despite slashing $4 billion in annual costs, the Fort Worth-based carrier’s finances remain tenuous. At least one analyst said bankruptcy may still be a possibility as American fights to remain competitive with its peers, particularly if other carriers use reorganization as a way to eliminate expensive labor contracts and pension programs.
“(American) would be at a disadvantage not to,†said Helane Becker, an analyst with The Benchmark Company LLC.
American revealed after the market closed Wednesday that high fuel prices, intense competition and hurricanes would cause it to miss some of its loan requirements and it would need to refinance a $834 million credit line.
The company also said it now expects to pay an average of $1.20 per gallon of jet fuel for 2004 – up from an earlier estimate of $1.17.
Mr. Arpey said on Thursday that the 3 cent increase would cost the company an additional $111 million. Overall, American’s fuel bill is expected to be more than $1 billion higher than last year.
"Our cost structure just isn't low enough for that reality,†Mr. Arpey said.
09:31 AM CDT on Thursday, September 23, 2004
By SUZANNE MARTA / The Dallas Morning News
NEW YORK__Battling high fuel prices and industry overcapacity, American Airlines parent AMR Corp. is looking to further trim costs and eke out more productivity as a way to keep the world’s largest airline competitive.
“There are simply too few passengers willing to pay the prices we need to be profitable,†said chairman and chief executive Gerard Arpey in a breakfast meeting with the Society of Airline Analysts Thursday.
Mr. Arpey outlined a wide range of initiatives that the Fort Worth-based carrier is considering, including making maintenance operations more efficient, keeping pilots with aircraft to reduce potential scheduling delays and eliminating “More Room Throughout Coach†on additional routes.
Despite slashing $4 billion in annual costs, the Fort Worth-based carrier’s finances remain tenuous. At least one analyst said bankruptcy may still be a possibility as American fights to remain competitive with its peers, particularly if other carriers use reorganization as a way to eliminate expensive labor contracts and pension programs.
“(American) would be at a disadvantage not to,†said Helane Becker, an analyst with The Benchmark Company LLC.
American revealed after the market closed Wednesday that high fuel prices, intense competition and hurricanes would cause it to miss some of its loan requirements and it would need to refinance a $834 million credit line.
The company also said it now expects to pay an average of $1.20 per gallon of jet fuel for 2004 – up from an earlier estimate of $1.17.
Mr. Arpey said on Thursday that the 3 cent increase would cost the company an additional $111 million. Overall, American’s fuel bill is expected to be more than $1 billion higher than last year.
"Our cost structure just isn't low enough for that reality,†Mr. Arpey said.
