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AA 3Q Loss

aa73

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AMR Corporation Reports A Third Quarter Loss Of $153 Million

American’s Financial Performance In the Quarter Was Undermined By Record High Fuel Prices, The Impact Of Growing Low-Cost Carriers And Airlines Restructuring In Bankruptcy



FORT WORTH, Texas -- AMR Corporation, the parent company of American Airlines, Inc., today reported a net loss of $153 million for the third quarter, or $0.93 per share fully diluted. The loss includes a net $58 million negative impact of two special items – an $80 million charge for a contract termination and a $22 million credit for the reversal of an insurance reserve. Without these special items, AMR would have recorded a net loss of $95 million, or $0.58 per share. The current quarter results compare to a net loss of $214 million, or $1.33 per share fully diluted, in the third quarter last year. Excluding a special item of $18 million, the net loss in the third quarter of 2004 would have been $232 million, or $1.44 per share fully diluted.

"It is certainly disappointing to have swung to a loss after recording our first quarterly profit (without special items) since 2000 in the second quarter of this year,” said AMR Chairman and CEO Gerard Arpey. “The fact that we were unable to sustain profitability despite robust customer volumes says a lot about our inability to pass on fuel-price increases to consumers. This underscores the need to accelerate our cost-cutting initiatives across the board under our Turnaround Plan.”

Arpey also pointed out that Hurricanes Katrina and Rita, in addition to driving fuel costs significantly higher, adversely impacted results by temporarily reducing air travel, disrupting airline operations and increasing other costs.

American’s revenue performance during the third quarter was marked by record high load factors and significantly improved yields. The mainline load factor – or percentage of total seats filled – was 81.2 percent, an increase of 3.3 points compared to a year ago. Yield, which represents average fares, was up 8 percent.

“Strong demand, combined with capacity restraint, enabled us to gain some traction on the revenue side of the ledger,” Arpey said. “We saw our first significant yield increase in some time. But there is still a disconnect between the price of fuel and the price of air travel. Just to cover the increase in fuel costs over the past two years, American would have had to raise fares nearly $75 per roundtrip ticket. During this time period, our average fare increased by only $15.”

During the third quarter, the Company paid $525 million more for fuel than it would have paid at last year’s fuel prices – and $204 million more than it would have paid using the average price from the second quarter. American’s mainline cost per available seat mile in the quarter was up by 9.7 percent year over year. Excluding fuel and special items, the mainline unit cost was down by 2.4 percent year over year.

“The progress we have made in reducing our non-fuel expenses is a big reason why we are in better shape than some of our competitors,” Arpey said. “But to assure our future, we must accelerate our rate of progress, and bring our costs to levels that will allow us to compete fully with both the low-cost segment of the industry and the carriers in, or emerging from, bankruptcy reorganization.”

Arpey noted that American produces a product people truly enjoy. “Our challenge, as always,” he said, “is to leverage the public’s love of travel in a way that is as rewarding to our shareholders as it is to our customers. The people of American Airlines are working collaboratively to make that happen.”

Arpey pointed out that despite the Company’s challenges, AMR contributed $75 million to its various defined benefit plans in the third quarter and another $22 million on Oct. 14, bringing its total contributions to the plans this year to $310 million. AMR ended the period with $3.9 billion in cash and short-term investments, including a restricted balance of $499 million.

Looking forward, the Company expects to post – at the current level of fuel prices – a significant loss in the fourth quarter.
 

Dangerkitty

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ironspud said:
Happy for my wallet.

My wallet has been very very happy since I was furloughed from AA. I guess we both aren't coming back.

Question though. Why do you wish ill will on the 80,000 employees that still owe their livelihoods to American Airlines. Wishing AA doom is only wishing doom for the people who have poured their blood, sweat, and tears into AA.

If AA were to go under, the people that decided to buy TWA and then slowly dismantle it will be gone with their golden parachutes. They will be off to screw up some other company. The ones that will really suffer are the people who had nothing to do with this TWA mess in the first place.

Why do you hate the AA employees so much? They have done nothing to you.
 

pylut

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Why do you hate the AA employees so much? They have done nothing to you.

A few years ago that question could have been asked to the aa folks regarding the TWA employees.

as you sow.......you know the rest
 

AA717driver

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Do a search on posts from CSY and me if you want to enjoy a pi$$ing contest.

Read the report by the consultants hired by APA if you REALLY want to feel good about AA's future as a non-Ch.11 carrier... NOT!

Enjoy---

http://www.stlapa.org/pdf/ACAReview.pdf

(Sorry, cut and paste to a window.)TC
 

aa73

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Dangerkitty said:
Why do you hate the AA employees so much? They have done nothing to you.

Dangerkitty,

APA screwed' em. Plain and simple. Not you, not me, APA. Don't take it personally.
 

Dangerkitty

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aa73 said:
Dangerkitty,

APA screwed' em. Plain and simple. Not you, not me, APA. Don't take it personally.

I am not taking anything personally. Heck I have been furloughed for almost 2 years now. I got over "taking things personally" a long time ago in regards to the AA/TWA merger.

I do however take issue with someone wishing ill will on a group of people who had nothing to do with the whole AA/TWA integration debacle. There are plenty of people still left at AA who are just trying to eek out a living and DEPEND on the health of American Airlines to survive.

If Ironspud really wants to lay blame then he should start with Carl Ichan.

Stating "Rock On" when an ailing airline posts a substantial loss is tasteless and idiotic.

It's douchebags like him that I am very very glad I am away from the airliner cockpits. He has nothing to contribute. When challenged all he can say is that his wallet is happy. Well, so is mine but I am not delighting in the fact that AA is not doing well. He is really showing how classless he is with that statement.
 

Dangerkitty

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AA717driver said:
Do a search on posts from CSY and me if you want to enjoy a pi$$ing contest.

Read the report by the consultants hired by APA if you REALLY want to feel good about AA's future as a non-Ch.11 carrier... NOT!

Enjoy---

http://www.stlapa.org/pdf/ACAReview.pdf

(Sorry, cut and paste to a window.)TC

TC,

Hope things are going well for you.

As for CSY I wouldn't pay him much attention. He was in my newhire class. A very very very nice guy but a little misguided in my opinion. He is a harmless salty dog with a love of the ocean. He almost quit AA during newhire training but his wife made him come back. (True Story I heard it with my own ears.)

As for the ACA review I really have my doubts. I am beginning to think that some of the folks at the PDP may be on to something. Looks like Ralph et al will do anything to keep their retirement. The concession stand is open and AMR will be able to take what they wish. All this while the AE Stew's get a 50%+ pay raise.

Lets you and I be very very very very very thankful this Thanksgiving that we are both far away from this mess and this oncoming train wreck.

One question though. Have you sold your options yet. I am close but am a little gun shy. Should I pull the trigger?
 

Jeff Helgeson

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Dangerkitty said:
As for CSY I wouldn't pay him much attention. He was in my newhire class. A very very very nice guy but a little misguided in my opinion. He is a harmless salty dog with a love of the ocean. He almost quit AA during newhire training but his wife made him come back. (True Story I heard it with my own ears.)

I think he is more than just a little misguided. The AA-types don't even jump in at his BS. Too, much distortion and negative vibes!!!

As for the ACA review I really have my doubts. I am beginning to think that some of the folks at the PDP may be on to something. Looks like Ralph et al will do anything to keep their retirement. The concession stand is open and AMR will be able to take what they wish. All this while the AE Stew's get a 50%+ pay raise.

I assume you meant APA review. They are priming the rank and file for concessions. I think they should grandfather the current retirement and adapt a Direct Account Plan (DAP), much like the Air Tran 10.5%. TWA adapted a DAP that was 14.3% of the monthly groos income before taxes. Once the contribution was made, the company can't touch it.

I would like to see the APA propose a 100-seat rate between the current AE RJ rates and the F100 (or B717, etc. rates at other carriers). This would allow furloughees to come back and the AE flow throughs to flow through.

Lets you and I be very very very very very thankful this Thanksgiving that we are both far away from this mess and this oncoming train wreck.

One question though. Have you sold your options yet. I am close but am a little gun shy. Should I pull the trigger?

I still have my 969 shares and holding. You will loose 1/3 of the amount you cash in to taxes and fees. I keep mine in a file next to my TWA ESOP certificates. I hope to wallpaper the powder room someday.

Let's all just get along!
 

mrvmo

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Hey dangeridiot Can't make up your own mind can ya?

Oh and nobody asked YOU about your wallet!
 
Last edited:

AAflyer

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Anyway

Back to the original title of the topic. We actually lost 95 million after those "cute" special items..... Remember when DAL lost 1.4 Billion in on the past quarters?

We kept our cash position around 3.4 Billion, and another 500 million in restricted cash (total 3.9) roughly what we had at the end of the 2nd quarter. Considering this has been a very trying year, and Jet A is at historical prices it is a pretty good performance.

Still not sure why some would like to see thousands of families out on the street because of personal feelings. Look at DAL and NWA, and look at how it is causing havok with their affiliate carriers, local economies etc.

Anyway, it could have been better, and certainly could have been worse.

AAflyer
 

AA717driver

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Kitty--I saw a price of $12 and I couldn't get rid of my options fast enough. I could have a really nice boat with the money I've lost on TWA and AA stock...:( :rolleyes:

AAflyer--Unfortuately, I've seen this type of thing before with APA and PDP. What is needed is a rational middle group that sees both sides. It didn't happen at TWA and probably won't happen here.

What we ended up with at TWA was an endless trench war with leaders being recalled every six months as one side or the other gained a small amount of leverage. This happened all the way up to the merger when we had exactly the wrong group running the union at exactly the wrong time.

The problem is you have 'line-in-the-sand radicals' like Sammy who won't compromise with anyone and people on the other side who are camping on Arpey's doorstep with bags of the employee's money waiting for him to come out and collect it.

I hope this can be worked out and everyone can prosper.

"What's in MY wallet?" Dust. ;) TC
 

Jeff Helgeson

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That about sums it up for Red and Blue!

AA717driver said:
Kitty--I saw a price of $12 and I couldn't get rid of my options fast enough. I could have a really nice boat with the money I've lost on TWA and AA stock...:( :rolleyes:

AAflyer--Unfortuately, I've seen this type of thing before with APA and PDP. What is needed is a rational middle group that sees both sides. It didn't happen at TWA and probably won't happen here.

What we ended up with at TWA was an endless trench war with leaders being recalled every six months as one side or the other gained a small amount of leverage. This happened all the way up to the merger when we had exactly the wrong group running the union at exactly the wrong time.

The problem is you have 'line-in-the-sand radicals' like Sammy who won't compromise with anyone and people on the other side who are camping on Arpey's doorstep with bags of the employee's money waiting for him to come out and collect it.

I hope this can be worked out and everyone can prosper.

"What's in MY wallet?" Dust. ;) TC

A very good post!

I think the middle ground should be over the 100-seat flying at mainline with pay between the CRJ at AE and the F100. Bring back the furloughees and let the AE flow-throughs flow on through! Give the LCCs a little competition with similar equipment, prices and ammenities connected to a global network and FF program.

In the end it will be about the most senior APA pilots protecting their A fund at all costs and AA management securing a Golden parachute and for the rank-and-file a golden ________. (You can fill in the blank!)

Where is that umbrella a bought at the Dollar Store?
 

LAXSaabdude

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Jeff Helgeson said:
I think the middle ground should be over the 100-seat flying at mainline with pay between the CRJ at AE and the F100. Bring back the furloughees and let the AE flow-throughs flow on through! Give the LCCs a little competition with similar equipment, prices and ammenities connected to a global network and FF program.
Can I nominate you for AMR CEO?

LAXSaabdude.
 
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