AMR posts second-quarter profit for first time in years

Posted Thursday, Jul. 18, 2013  comments  Print Reprints
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Lower fuel and operating costs boosted AMR Corp. to a $220 million profit in the second quarter, the first time since 2007 that the carrier has made money in the quarter.

The Fort Worth-based carrier’s profit was an improvement over the $241 million lost in the second quarter of 2012, even though revenue remained the same, $6.45 billion.

AMR, the parent company of American Airlines, which has operated in bankruptcy since November 2011, is expected to exit after it merges with US Airways this fall.

“It was quite a good result,” AMR’s chief executive, Tom Horton, said in an interview. “It’s really just the growing momentum of our restructuring savings and you’re seeing that accelerate as we’re getting closer to the end of bankruptcy.”

The airline has cut costs aggressively in Bankruptcy Court by renegotiating aircraft leases and inking new contracts with its major unions. Spending for wages was 18 percent lower in the second quarter than a year ago.

The sluggishness in revenue was blamed on the effects of the federal budget sequester on the economy. However, unit revenue improved in June and advance bookings are in line with expectations for the third quarter, Horton said.

Excluding reorganization and one-time accounting items, AMR had a profit of $357 million. The carrier had $124 million in reorganization items for professional fees and claim amounts for special facility revenue bonds. In 2012, American posted a $95 million operating profit in the quarter, excluding one-time items and reorganization fees.

AMR said it expects capacity in the third quarter to increase 2.7 percent from the same quarter last year after adding routes to South Korea, Mexico and South America.

The carrier will also receive its first Airbus A319 this month. AMR is replacing older MD-80s and Boeing 767s with new Airbus planes and Boeing 737s.

Horton said he plans to fly to an Airbus factory in Hamburg, Germany, next week to receive the new A319.

The carrier also paid $70 million less for jet fuel in the quarter: $3.02 per gallon compared with $3.24 in the same quarter last year.

The company ended the quarter with $7.1 billion in cash, including a restricted cash balance of $863 million. It has increased its cash balance by $1.3 billion since the second quarter of 2012.

Last week, shareholders of US Airways voted overwhelmingly to approve a merger with AMR, which will create the industry’s biggest carrier.

After the merger, Horton will become chairman of the new American Airlines Group, and US Airways Chief Executive Doug Parker will become CEO.

The airlines still need antitrust clearance from the Justice Department, which is expected within weeks. Creditors are voting on AMR’s reorganization plan, which includes the merger.

A court hearing is set for Aug. 15 on the carrier’s plan to exit bankruptcy.

Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk

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