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AA Posts Operational Profit With Loss $161MM 1stQ  
User currently offlineIncitatus From Brazil, joined Feb 2005, 4014 posts, RR: 13
Posted (9 years 5 months 21 hours ago) and read 3474 times:

http://biz.yahoo.com/prnews/050420/daw019.html?.v=6


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18 replies: All unread, jump to last
 
User currently offlineLMP737 From , joined Dec 1969, posts, RR:
Reply 1, posted (9 years 5 months 20 hours ago) and read 3417 times:

Now where did I put that number for the truck driving school I saw on TV?  Wink

User currently offlineLightsaber From United States of America, joined Jan 2005, 13111 posts, RR: 100
Reply 2, posted (9 years 5 months 20 hours ago) and read 3356 times:
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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."
Wow. It looks like AA is doing well improving RASM and CASM. Not enough to overcome oil:

Well done to the AA crew. Another important paragraph from the link:
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.
wow! Building cash... That's critical to get through the next two years. And not defaulting on the pensions.

I came "this close" to duplicating this thread. Only the auto "duplicate thread" search stopped me.
Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17493 posts, RR: 45
Reply 3, posted (9 years 5 months 20 hours ago) and read 3334 times:

Am I missing something? AA posted a loss; there was no "operational profit" at all.


E pur si muove -Galileo
User currently offlineIncitatus From Brazil, joined Feb 2005, 4014 posts, RR: 13
Reply 4, posted (9 years 5 months 20 hours ago) and read 3290 times:

Quoting MaverickM11 (Reply 3):
Am I missing something? AA posted a loss; there was no "operational profit" at all.

Operational profit/loss accounts for cashflows related to the operation only, excluding interest cash flows, positive or negative - and some one-off items.

In the case of AA, the operation generated $23 MM, but with a big interest bill the final result was a loss.

That compares to CO, where the operation incurred a loss of $171 MM. I find that surprising. CO also had a hefty interest bill of almost 100 million, but a share disposition of COEx generated 50 million.



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User currently offlineAA7573E From United States of America, joined Nov 2003, 475 posts, RR: 2
Reply 5, posted (9 years 5 months 19 hours ago) and read 3254 times:

Yes you are missing something.

Operational profits come before net losses.



See you up front!
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 5 months 19 hours ago) and read 3241 times:

Two notes.

1 ) They generated positive cash flow from operations in what's expected to be the worse Quarter of the year.

2 ) Their loss margin is 4.8% compared to Southwest's non-hedging 2.9%.

That is great news.


User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17493 posts, RR: 45
Reply 7, posted (9 years 5 months 19 hours ago) and read 3213 times:

My bad. It mentions nowhere in the article that there's an operational profit and I stopped reading at the legal investor diarrhea...didn't notice the spreadsheet on the bottom.


E pur si muove -Galileo
User currently onlineMAH4546 From Sweden, joined Jan 2001, 32778 posts, RR: 72
Reply 8, posted (9 years 5 months 19 hours ago) and read 3186 times:

American Airlines is going very strong. It is great to see them doing well. They still have some time before they are totally in the black, but their situation is something United, US Airways, and Delta could only dream of.

Their reorginization plan has been wonderful.

With their route network, they have really "trimmed the fat" by:

1) Simply cutting routes that don't make money (Lauderdale-Boston, JFK-Phoenix, Boston-San Jose)
2) They have decided to stop fighting jetBlue and other LCCs by dumping capacity (JFK-Long Beach, JFK-Oakland, Raleigh-Philadelphia)
3) They have entered new small, high-fare, strong yielding markets through Eagle (Savannah, Pensacola, Fort Walton Beach, Lexington, and Mobile)
4) They have opened new international sectors (Miami-Manchester, O'Hare-Dublin, Dallas-Osaka, Los Angeles-San Salvador)
5) They have reduced frequencies on certain routes to increase yield (Miami-Nassau, San Juan-Santo Domingo)
6) They have further connected the dots in their hub network (Dallas-Buffalo, Miami-Norfolk, Chicago-Colorado Springs).
7) They have reduced their point-to-point network (Lauderdale-Caracas, Boston-Richmond, Los Angeles-Palm Springs), though still have the largest PTP network of any cartel carrier and continue to place an emphasis on it.



a.
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 5 months 18 hours ago) and read 3139 times:

I don't see Delta dreaming about having an almost all union airline near the end of their cost cutting initiatives.

Now the bad news.

1) The Southwest build up in MDW. It will be their largest hub.
2) A sub par Alliance compared to Skyteam's market share in the US, and by the limitations put on it because of US/UK air treaty.
3) The continued presence of an ill United Airlines, that doesn't need to pay the bills. AA must compete against this.
4) Union contracts contain step raises.
5) Continued deterioration of Transcon market share/yield.


User currently offlineGalapagapop From United States of America, joined Feb 2005, 910 posts, RR: 4
Reply 10, posted (9 years 5 months 18 hours ago) and read 3107 times:

AA is the best of the Big 6. No question about it, even with even higher fuel costs they ilk out an operational profit, wait until summer....
Wait until the UA fans come on...


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 5 months 18 hours ago) and read 3079 times:

One other note. This is the first time I have seen in years that American has outperformed Continental in the "lost less" category....LOL.

And one thing that surely helped that you don't see mentioned. Delta pulled out of DFW and yield/load factor really went up at AA's largest market DFW.

That helped not only AA but Delta.


User currently offlineRogerThat From United States of America, joined Dec 2003, 566 posts, RR: 0
Reply 12, posted (9 years 5 months 18 hours ago) and read 3042 times:

They could make even more operating income if they start selling the turkey wraps on the long but less- than-transcon routes. I'd glady pay AA rather than the Au Bon Pan for my inflight meal. While they're at it, sell the honey roasted almonds and chocolate chip cookies too.

Nobody's worried about the price of turkeys going over $50 per barrel.


User currently offlineN844AA From United States of America, joined Jul 2003, 1352 posts, RR: 1
Reply 13, posted (9 years 5 months 8 hours ago) and read 2840 times:

This is no doubt an easy question for anyone with a business/finance background, but could someone please explain to me how AA managed to increase its cash reserve while running a loss?


New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 14, posted (9 years 5 months 8 hours ago) and read 2824 times:

Depreciation expense is not a cash expense. Just a write down of assets.
So you could have a net loss of 100 Mil and if your depreciation was 300 Mil you really generated 200 million in cash flow.


User currently offlineGalapagapop From United States of America, joined Feb 2005, 910 posts, RR: 4
Reply 15, posted (9 years 5 months 8 hours ago) and read 2806 times:

Quoting N844AA (Reply 13):
This is no doubt an easy question for anyone with a business/finance background, but could someone please explain to me how AA managed to increase its cash reserve while running a loss?

Because it only went down based on the fact that they paid $500+ million during 4Q for fuel hedging down the road (man did that pay off...) It didn't show in 4Q loss because it technically was not a 4Q expense, it was more of a deposit. They didn't obviously spend as much money on fuel seeing as they already paid for it (well some if it). But the fuel pre-paid for is factored in 1Q operational profit(or the amount they actually used at that pre-set rate), and will be factored into every Quarter from here on (until that deal runs out) expect to see AA's cash go up all year with this year.


User currently offlineBurnsie28 From United States of America, joined Aug 2004, 7545 posts, RR: 8
Reply 16, posted (9 years 5 months 7 hours ago) and read 2754 times:

Quoting Galapagapop (Reply 10):
AA is the best of the Big 6. No question about it, even with even higher fuel costs they ilk out an operational profit, wait until summer....
Wait until the UA fans come on...

I disagree, NW financial state is still better then that of American. I think CO is even up there.



"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineN844AA From United States of America, joined Jul 2003, 1352 posts, RR: 1
Reply 17, posted (9 years 5 months 6 hours ago) and read 2722 times:

Quoting Padcrasher (Reply 14):
Depreciation expense is not a cash expense. Just a write down of assets.
So you could have a net loss of 100 Mil and if your depreciation was 300 Mil you really generated 200 million in cash flow.

Excellent, thank you. I appreciate the explanation.



New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
User currently offlineIncitatus From Brazil, joined Feb 2005, 4014 posts, RR: 13
Reply 18, posted (9 years 4 months 4 weeks 1 day 21 hours ago) and read 2616 times:

Quoting Burnsie28 (Reply 16):
I disagree, NW financial state is still better then that of American.

Care to elaborate?

Northwest is about 55% the size of American. So relative to its size, Northwest's cash reserves are greater than American's. The measure I like to use is profit/loss per 1 million asm's(*). American's was 3780 USD loss/1Masm's, Northwest's was 19550 USD loss/1Masm's. Cash reserves may be higher at NW but risk being depleted at a faster rate.

(*) 1 million asm's are generated by flying 200 seats over 5000 miles, so it's roughly one longhaul departure on a 767. It is also equivalent to ~ 7 domestic narrow body departures (140 seats) over 1000 miles. Thus, in general it is fair to state Northwest lost ~ $19k per week on every typical daily domestic departure.



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