AMR Corp. reports smaller loss in fourth quarter

Posted Thursday, Apr. 18, 2013  comments  Print Reprints
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The parent of American Airlines narrowed its first-quarter loss as the carrier shrank its labor costs by $300 million as part of the bankruptcy process.

AMR, which filed for Chapter 11 bankruptcy in November 2011, renegotiated union contracts with its pilots, flight attendants, ground workers and mechanics late last year. As a result, its labor costs declined 16.7 percent from the first quarter of 2012, according to results reported on Thursday.

The Fort Worth-based carrier posted a $341 million loss for the quarter, much smaller than the $1.7 billion loss it reported a year ago.

"We don't yet have all of the savings ground into our numbers from the restructuring. You'll see more coming online throughout the year," AMR Chief Executive Tom Horton said in an interview. "But I think we're very much on track and I think it's, in our view, a very quick and an effective restructuring of the company."

Revenues grew 1 percent to $6.1 billion for the quarter while unit revenues grew 2.6 percent from last year.

Although travel demand weakened toward the end of the quarter and into April, Horton said May and June bookings were running slightly stronger than the same period in 2012.

"We're going to have to wait and see," Horton said, referring to softness in the air travel market. "The industry dynamics are reasonably healthy and we've got GDP growth of a couple percent, which is not as fast as we think it should be. But industry capacity is relatively constrained."

American said its operations were strong in the first quarter, with 80.8 percent of its flights arriving on time. However, it was forced this week to ground flights for several hours after a computer outage shut down its reservation system.

Horton declined to provide specifics of what caused the outage but said the company is continuing to evaluate and test its systems. He added that he believed the outage was an isolated issue.

Excluding $349 million in one-time accounting items and reorganization costs, AMR said it would have reported a profit of $8 million for the quarter. The charges and reorganization fees include $45 million related to an increase in workers' compensation claims and a $160 million loss for professional fees and an adjustment in claim amounts for special facility revenue bonds.

Jet fuel costs increased slightly as AMR paid $3.26 per gallon, up from $3.24 per gallon in the first quarter of 2012, an increase of $14 million in its quarterly fuel bill.

The carrier ended the quarter with $4.2 billion in cash and short-term investments, which does not include $853 million in restricted cash.

AMR plans to merge with US Airways as part of its restructuring in bankruptcy.

The merger deal still needs the approval of government regulators, US Airways shareholders and AMR creditors.

Horton said the merger process is on track and expects the deal to close in the third quarter. The carrier has a confirmation hearing of its reorganization plan filed with the bankruptcy court scheduled for Aug. 15.

Andrea Ahles, 817-390-7631

Twitter: @Sky_Talk

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