Parent of American Airlines reports small second-quarter profit

Wednesday, July 21st 2004, 10:01 am
By: News On 6

DALLAS (AP) _ The parent of American Airlines, the largest U.S. carrier, said Wednesday it earned $6 million in the second quarter, helped by a one-time $31 million gain related to restructuring.

AMR Corp. said Wednesday that it earned 3 cents per share in the April-June period, compared to a loss of $75 million or 47 cents per share a year earlier.

Excluding one-time items, AMR lost $25 million, or 15 cents per share, in the second quarter. Analysts had expected AMR to lose 10 cents per share, according to a survey by Thomson First Call.

In trading Wednesday morning, AMR shares were up 19 cents at $9.56 on the New York Stock Exchange. Shares of AMR had climbed all the way from $1.25 when bankruptcy looked imminent in spring 2003 to hit $17.65 in January.

Revenue was $4.83 billion, up 11.7 percent from $4.32 billion a year ago, as miles flown by paying customers jumped more than 10 percent. Analysts had forecast revenue of $4.74 billion.

American, like other major carriers, reported that its planes carried more passengers than a year ago _ the average plane occupancy was 69.7 percent in the second quarter, nearly back to the levels before the September 2001 terror attacks.

However, AMR spent 42 percent more on fuel than it did a year ago, up to $917 million. That was partly offset by a 9 percent reduction in wages, salaries and benefits _ the continuing result of layoffs and wage concessions that the biggest U.S. carrier won from employees last year as AMR teetered on the brink of bankruptcy.

``Compared to a year ago, we ran a much more efficient, more productive and smarter airline in the second quarter,'' chairman and chief executive Gerard Arpey said in a statement.

Arpey said operating earnings _ before what the company called one-time costs to shed workers and airplanes _ were the highest in four years, despite high fuel costs.

American spent an average $1.11 per gallon of jet fuel in the quarter, up from 83 cents a gallon in the same period last year. Fuel is an airline's second-largest cost. Arpey said the higher fuel costs ``are not an excuse,'' and that the carrier still needed to cut other costs.

AMR's report came two days after Delta Air Lines, the No. 3 U.S. carrier, reported a huge $1.96 billion loss that was even bigger than analysts had expected. Delta, however, is just beginning to come to grips with its bloated cost structure, a process that AMR began last year, when it was on the cusp of bankruptcy.

So far, Dallas-based Southwest Airlines, the oldest low-fare carrier, is the only major U.S. airline to report a second-quarter profit not related to one-time gains; $113 million. Houston-based Continental posted a $17 million loss.

Through the first six months of this year, AMR has lost $160 million or $1 per share on revenue of $9.34 billion, compared to a loss of $1.12 billion or $7.11 per share on sales of $8.44 billion in the same period of 2003.