Less than a year after filing for bankruptcy, AMR Corp. has boosted its revenue and improved its cash balance, thanks to higher fares, fewer flights and fuller planes.
But even though the Fort Worth-based carrier has bolstered its financial results, industry analysts say the parent company of American Airlines still lags its top competitors.On Wednesday, AMR said that absent restructuring charges, it would have posted a $95 million profit in the second quarter -- its first operating profit for the April-June period since 2007.Overall, it had a $241 million net loss, largely because of reorganization fees the company paid in bankruptcy. That was still an improvement over last year, when it reported a $286 million second-quarter loss.Revenue grew 5.5 percent to $6.4 billion, up from $6.1 billion last year."AMR's revenue growth outpaced the industry in each of the three months of the second quarter and these domestic and international results underscore that our plan is working and the restructuring momentum both on the revenue side and the cost side is certainly building," Bella Goren, the company's chief financial officer, said in an interview Wednesday morning.AMR said its quarterly results include $336 million in special charges and reorganization fees. About $106 million was associated with severance costs to laid-off passenger service agents and managers and included changes to the Transport Workers Union contracts that were ratified in May, Goren said. Some $230 million was related to restructuring aircraft leases and finances, rejecting facility bonds and paying professional consulting fees in bankruptcy.Industry analysts said the carrier's improved performance has come while its cost structure is still relatively high. AMR is in the process of negotiating new contracts with its labor unions. The court is scheduled to rule on the company's request to reject existing contracts and impose new concessionary agreements next month.Still, they say it is too early to determine whether AMR's revenue improvement will continue through the rest of the year, particularly since the second quarter is considered one of the strongest for airlines as consumers book their summer trips."Three months does not a trend make, so it is really incumbent on them to be able to do this across the entire business cycle," said MIT airline researcher Bill Swelbar. "No longer are they on the bottom of the industry, but certainly despite the revenue performance, they are kind of in the middle of the pack."Analysts have predicted the industry could post $2 billion in profits for the second quarter as lower-than-expected fuel prices have helped reduce costs. Most domestic carriers are scheduled to report earnings next week. Southwest Airlines is scheduled to post its earnings today. AMR still paid $3.24 per gallon of jet fuel in the quarter, about $81 million more than in the second quarter of 2011.The company has also improved its cash balance, ending the quarter with $5.1 billion in cash and short-term investments. The company entered bankruptcy in November with $4.1 billion in cash.Domestic capacity was reduced by 1.9 percent and international operations by 3 percent, mostly on trans-Atlantic routes. Goren said the drop in trans-Atlantic capacity was caused by discontinuing American's Chicago-New Delhi route on March 1.AMR said its unit revenue -- a measure that tracks how much money an airline collects for every seat-mile flown -- grew 9.1 percent compared with the previous year's second quarter."American got rid of a lot of deadwood and they reduced their capacity where they had some money-losing routes so it was easier to get their unit revenues up," said AirlineFinancials.com founder Bob Herbst. "The question is, why didn't they do this two or three years ago?"Andrea Ahles, 817-390-7631Twitter: @Sky_Talk
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