incitatus
Posts: 2700
Joined: Wed Feb 09, 2005 1:49 am

AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 12:43 am

Stop pop up ads
 
LMP737
Posts: 4810
Joined: Wed May 08, 2002 4:06 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:00 am

Now where did I put that number for the truck driving school I saw on TV?  Wink
Never take financial advice from co-workers.
 
User avatar
lightsaber
Crew
Posts: 11830
Joined: Wed Jan 19, 2005 10:55 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:28 am

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
"They did not know it was impossible, so they did it!" - Mark Twain
 
MaverickM11
Posts: 15263
Joined: Thu Apr 06, 2000 1:59 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:38 am

Am I missing something? AA posted a loss; there was no "operational profit" at all.
E pur si muove -Galileo
 
incitatus
Posts: 2700
Joined: Wed Feb 09, 2005 1:49 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:50 am

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.
Stop pop up ads
 
AA7573E
Posts: 468
Joined: Wed Nov 05, 2003 11:34 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:00 am

Yes you are missing something.

Operational profits come before net losses.
See you up front!
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:03 am

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.
 
MaverickM11
Posts: 15263
Joined: Thu Apr 06, 2000 1:59 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:17 am

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
 
MAH4546
Posts: 24557
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:47 am

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.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:57 am

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.
 
galapagapop
Posts: 861
Joined: Sat Feb 26, 2005 2:15 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 3:05 am

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...
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 3:17 am

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.
 
RogerThat
Posts: 505
Joined: Wed Dec 17, 2003 12:13 pm

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 3:39 am

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.
 
n844aa
Posts: 1266
Joined: Fri Jul 18, 2003 10:38 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:09 pm

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
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 1:18 pm

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.
 
galapagapop
Posts: 861
Joined: Sat Feb 26, 2005 2:15 pm

RE: AA Posts Operational Profit With Loss $161MM 1

Thu Apr 21, 2005 1:27 pm

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.
 
burnsie28
Posts: 5035
Joined: Mon Aug 02, 2004 1:49 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 2:50 pm

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.
 
n844aa
Posts: 1266
Joined: Fri Jul 18, 2003 10:38 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Thu Apr 21, 2005 3:36 pm

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
 
incitatus
Posts: 2700
Joined: Wed Feb 09, 2005 1:49 am

RE: AA Posts Operational Profit With Loss $161MM 1stQ

Fri Apr 22, 2005 12:28 am

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.
Stop pop up ads