American Airlines parent reports $262 million fourth-quarter profit

BY D.R. STEWART World Staff Writer
Thursday, January 17, 2013
1/17/13 at 7:03 AM

AMR Corp., the bankrupt parent of American Airlines, reported on Wednesday 2012 fourth quarter net income of $262 million, or 69 cents per share, compared with a net loss of $1.09 billion, or $3.27 per share, in 2011's fourth quarter.

Fourth quarter revenue was $5.94 billion, down 0.3 percent from 2011's fourth quarter revenue of $5.96 billion. Excluding bankruptcy reorganization savings of $350 million and special items, AMR's fourth quarter net loss was $88 million, company executives said.

For the full year of 2012, AMR posted a net loss of $1.88 billion, or $5.60 per share, compared with 2011's net loss of $1.98 billion, or $5.91 per share.

AMR's full year 2012 results include $1.7 billion of net negative reorganization and special items, the company said.

Revenue in 2012 was a company record $24.85 billion, up 3.7 percent from 2011's $23.98 billion.

AMR Chairman and CEO Thomas Horton said the company is rebounding from a tough fourth quarter operating environment and is anticipating its emergence from bankruptcy in the near future.

"We have made enormous progress towards building the new American," Horton said. "It is remarkable what the American team has been able to accomplish, including generating record revenue and a return to an operating profit for the year while restructuring every aspect of our company.

"Our momentum is growing toward emerging as a strong, healthy and vibrant competitor. In fact, with what we have accomplished, we expect to show strong results beginning in the first quarter of 2013."

Since AMR filed its Chapter 11 bankruptcy reorganization petition in November 2011, the company rejected its collective bargaining agreements with its unionized pilots, mechanics and flight attendants and reduced labor costs 17 percent for all work groups, all of which ratified six-year contracts, officials said.

In addition, during the past year the company:

Renegotiated the financing terms for more than 400 mainline and regional aircraft and negotiated more than 95 percent of American's 725 facility leases.
Evaluated and/or renegotiated more than 9,000 vendor/supplier agreements.
Netted more than $400 million in fourth quarter restructuring related savings, including renegotiated aircraft leases, reductions in management and support staff positions, freezing of pension plans for all work groups and ending the retiree medical program for active employees.

"Throughout 2012, we have executed on all aspects of our business plan - streamlining our organizational structure, increasing unit revenues, reducing unit costs and restructuring our balance sheet," said AMR Chief Financial Officer Bella Goren. "The strong financial foundation we are building gives us the ability to deliver returns to our financial stakeholders and make investments that create enhanced value for our customers and our people."

AMR executives said weather and labor problems in the fourth quarter cost the company net income of $142 million.

The weather events included the negative impacts of Hurricane Sandy and an early November snow storm in the northeastern United States.

A contract dispute with its Allied Pilots Association produced a sharp increase in mechanical and equipment write-ups by pilots in September, leading to hundreds of flight delays and cancellations and a 2 percent reduction in American Airlines' flight schedule in September and October, company executives said.

In August, AMR and US Airways signed non-disclosure agreements that permit the two airlines to exchange confidential financial information.

Some industry analysts believe a merger of American and US Airways could come in the first quarter.

"Within 90 days, you will hear an official announcement that the two airlines are merging," said Robert Herbst, a former American pilot who follows the airline industry at Airlinefinancials.com. "It has to happen for the two airlines to be long-term competitive with either Delta (Air Lines) or United (Airlines). It will happen in bankruptcy."

Herbst said Delta will report 2012 net income of $1.7 billion, United will post close to $1 billion in earnings and US Airways will report about $400 million in net profit.

AMR shares, which are traded over the counter under the ticker symbol AAMRQ, closed Wednesday at $1.50, up 1 cent.

US Airways shares closed Wednesday at $14.63, up 32 cents.

AMR Corp.’s 2012 fourth quarter and full year financial results

Fourth quarter

Net income: $262 million, or 69 cents per share

Revenue: $5.94 billion

Bankruptcy reorganization costs: $441 million

Full year 2012

Net loss: $1.88 billion

Revenue: $24.85 billion

Bankruptcy reorganization costs: $2.2 billion

Source: AMR Corp.

Original Print Headline: AMR's profit is $262 million

D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com