Expense Cuts Help AMR Post Narrower 4th-Quarter Loss
Wednesday January 21, 11:08 am ET
FORT WORTH, Texas -- AMR Corp. (NYSE:AMR - News) narrowed its loss in the fourth quarter as the operator of American Airlines continues to trim costs.
The world's largest air carrier Wednesday reported a net loss of $111 million, or 70 cents a share, compared to a net loss of $529 million, or $3.39 a share, a year earlier. Revenue rose 3.9% to $4.39 billion from $4.23 billion.
Excluding several items in the latest and year-earlier quarters, AMR had a loss on a pretax basis of $95 million, or 59 cents a share, compared to a pretax loss of $828 million, or $5.31 a share, in the fourth quarter of 2002.
Analysts were expecting a loss, minus items, of $1.01 a share in the latest quarter according to Thomson First Call (News - Websites) .
AMR said it recorded an $80 million tax benefit in the latest quarter to reduce previously accrued income tax liabilities.
Revenue passenger miles -- or one paying passenger flown one mile -- rose 0.4% during the quarter, and load factor increased to 71.6% from 69.8% a year earlier.
Operating expenses fell 5.8% in the quarter to $4.62 billion. Unit costs -- expenses spread over each available seat mile -- fell 11.9%, excluding items. Operating expenses per available seat mile, excluding charges and regional affiliates, fell to 9.45 cents from 10.73 cents.
Cost cutting remains a key part of AMR's turnaround plan as it and other rivals struggle to emerge from the industry's downturn. In a prepared statement Wednesday, President and Chief Executive Gerard Arpey noted the company's progress in achieving its goal of $4 billion in annual capacity-independent cost savings. The efforts were given a huge boost when employees last year agreed to a restructuring that added $1.8 billion a year in labor-cost savings to savings of $2 billion a year from strategic initiatives and another $200 million from vendors, suppliers and creditors.
AMR on Wednesday said costs, "while still not as low as our low-cost competitors, are continuing to improve to help us compete vigorously for every customer." Earlier this month, the company signaled its willingness to compete with low-cost carrier JetBlue Airways Corp. (NasdaqNM:JBLU - News) in key markets with a free- ticket promotion.
Meanwhile, American has added seats to two fleets and plans to continue expanding code-share agreements with other airlines, such as Alaska Airlines and British Airways. In the latest, AMR said it would launch a partnership in April with Mexicana, a Mexican airline. For American, it will mean flight availability to 21 additional cities in Mexico and the ability to offer service in 27 new nonstop, transborder markets.
The company also announced plans to retool its Miami hub, its principal gateway to Latin America and the fourth hub AMR has restructured since avoiding filing for bankruptcy last year.
AMR plans to increase the number of daily flight banks in Miami to 13 from seven as of May 1. The carrier said the move would enable it to operate more flights in and out of Miami using fewer aircraft, increasing the hub's efficiency. The company has already tweaked schedules in Chicago and Dallas in a similar way.
For the year, AMR had a loss of $1.23 billion, or $7.76 a share, compared to a loss of $3.51 billion, or $22.57 a share, in 2002. Revenue rose slightly to $ 17.44 billion from $17.42 billion.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
SESGDL From United States of America, joined Jan 2001, 3384 posts, RR: 11 Reply 2, posted (9 years 4 months 1 day 11 hours ago) and read 1882 times:
It's also a sign showing that AA is going nowhere. DL hasn't made concession agreements with its pilot's union, and only lost slightly less. Where does AA go from here? They're in serious trouble, I still think that BK filing with occur sooner or later, cost cutting alone rarely works, and competitions not getting any smaller or easier.
AA7771stClass From United States of America, joined Jun 1999, 292 posts, RR: 6 Reply 3, posted (9 years 4 months 1 day 11 hours ago) and read 1847 times:
Delta is also a smaller airline. You can't really compare the two fairly unless you create some sort of index to equalize them. You say that DL might have posted a slightly larger loss sans cutbacks but how big is their fleet, or payroll?
EA CO AS From United States of America, joined Nov 2001, 12559 posts, RR: 64 Reply 4, posted (9 years 4 months 1 day 11 hours ago) and read 1833 times:
It's also a sign showing that AA is going nowhere.
While I don't work for AA, I wholeheartedly disagree with your statement.
The 4th Quarter is historically VERY weak for airlines, so a loss is not unexpected. Furthermore, AA's cost-cutting measures are ongoing, so it's not like they've come to the end of their rope when it comes to reining in costs.
Another thing to keep in mind is that their excess capacity (at STL) is being pared, and the savings they'll realize have not been reflected in their earnings yet. It will take at least 2 more quarters for that to be factored in.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
Luv2fly From United States of America, joined May 2003, 11957 posts, RR: 51 Reply 5, posted (9 years 4 months 1 day 10 hours ago) and read 1788 times:
Again I agree with EA CO AS and AA is making progress and heading in the right direction. Change is never easy and does take time. The important thing to keep in mind is there are trying to get there costs in line and make changes that will allow them to remain competitive and flying. Good luck.
B777fa From United States of America, joined Aug 2003, 246 posts, RR: 0 Reply 6, posted (9 years 4 months 1 day 10 hours ago) and read 1774 times:
Abviously the cost cutting is working for AA.On the other hand DL has doubled its losses from $90 million (same quarter last year) to $180 million (past quarter). AA's loss same time last year was $529 million compared to $111.Hardly a sign of "going Nowhere".
Thrust From United States of America, joined Sep 2003, 2673 posts, RR: 11 Reply 7, posted (9 years 4 months 1 day 10 hours ago) and read 1758 times:
There's no question the airlines are recovering from the damage of 9/11 (with the exception of Delta, who has just taken a turn for the worse). Only problem is, while AA may have made a huge difference in its losses, it still has quite a lot of expenses to go in order to break even...
Sean-SAN- From United States of America, joined Aug 2002, 752 posts, RR: 1 Reply 8, posted (9 years 4 months 1 day 9 hours ago) and read 1710 times:
If AA can continue to improve effeciency by cutting fat from their opperations (get rid of the F100's, complete the planned closing of some maintanence operations) and maintain revenue, they will probably be profitable next year.
Labor can't take too much more of a hit, AA pilots already make less than Southwest pilots (for example).
Big777jet From , joined Dec 1969, posts, RR: Reply 10, posted (9 years 4 months 1 day 7 hours ago) and read 1612 times:
Workbench~
Apparently AA is definitely moving in the right direction. The fact that they only lost $111 million (excluding special items $95 million) is a significant progress, not to mention Q4 is the worst for the airline industry. With all the cost cutting, sacrifices, hard work, and improvements AA has done since Arpey has taken helm this is obviously good news. With the restructuring of DFW and ORD hubs last November and MIA underway profits should be right around the corner. AA has some a long way. These things take time and I'd say that in 2 Quarters or so you will see significant profit's to come.
Workbench: Why don't you do us a favor and stop posting these ridiculous remarks? You are what 13-15 years of age? Incapable to even comprehend the dynamics of the airline industry much less know what's good for it. I dare you to say these things to an AA employee, you wouldn't last 5 seconds. I suggest you discover your role in life. When you have discovered your true nature come back and post more coherent thoughts!
Airways6max From United States of America, joined Aug 2003, 494 posts, RR: 0 Reply 11, posted (9 years 4 months 1 day 7 hours ago) and read 1609 times:
It's clear that AA has turned the corner. Hopefully, they'll post a profit by this time next year.
727LOVER From United States of America, joined Oct 2001, 5717 posts, RR: 20 Reply 12, posted (9 years 4 months 1 day 7 hours ago) and read 1593 times:
AMR plans to increase the number of daily flight banks in Miami to 13 from seven as of May 1. The carrier said the move would enable it to operate more flights in and out of Miami using fewer aircraft, increasing the hub's efficiency. The company has already tweaked schedules in Chicago and Dallas in a similar way.
I thought MIA only had 4 banks??? Southbound leaving around 11:00-12:00, Northbound leaving 1:00-2:00, Southbound leaving 4:30-6:00, Northbound leaving 7:00-8:00.
StevenUhl777 From , joined Dec 1969, posts, RR: Reply 13, posted (9 years 4 months 1 day 7 hours ago) and read 1586 times:
Nice to hear more good news coming from the airline sector. While a loss, things are turning the corner and hopefully the trend will continue for AA and other major network carriers.
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