UPDATE: AMR 3Q Net Soars On Record Plane Loads
October 17, 2007: 11:42 AM EST
DOW JONES NEWSWIRES
AMR Corp.'s (AMR) third-quarter net income soared as its planes held more passengers than ever amid capacity cutbacks.
The world's biggest airline by passenger traffic posted net income of $175 million, or 61 cents a share, compared with $15 million, or 6 cents a share, a year earlier. The latest quarter's results included a compensation-related charge of $40 million, or 13 cents a share, while the prior year was hurt by a $ 99 million fuel-hedge charge.
The Fort Worth, Texas, parent of American Airlines said revenue rose 1.7% to $ 5.95 billion.
The mean estimates of analysts surveyed by Thomson Financial were for earnings of 73 cents a share on revenue of $5.96 billion.
At American, revenue passenger miles, or one paying passenger flown one mile, dipped 0.3% as capacity fell 2.8%. Load factor, or the percentage of available seats filled, rose 2.2 percentage points to a record 83.9%.
Revenue per available seat mile, considered the best measure of revenue for airlines, climbed 5%. AMR said last month that it projected growth on that metric of 4% to 5%; the news was below some expectations and sent AMR shares slumping the day after its release.
At the same time, AMR cut its fuel-cost projection to $2.21 a gallon; the actual figure came in at $2.165. The year-earlier average was $2.158. In an attempt to pass some of its high fuel costs on to passengers, AMR last week raised fares $5 each way for most domestic routes.
Looking ahead, American Airlines capacity is expected to rise 0.9% in the fourth quarter, with unit costs rising 4.5%. Excluding fuel, such costs are seen falling 1.7%. AMR sees average companywide fuel costs of $2.27 a gallon in the period.
AMR, which managed to cut costs while avoiding bankruptcy, is in the midst of employee contract negotiations, adding to expectations that labor costs will rise.
Recently, the head of American Airlines' pilots union sent AMR Chief Executive Gerard Arpey a letter that threatened picketing and litigation over benefits complaints. The letter threatened to see American's chief executive "on the picket line" and in court after the carrier's management has failed to meet the union's demand for a bigger share of the company's profits.
AMR also is facing investor pressure to boost its share price by spinning off assets. In late September, Icelandic investment fund FL Group, a 9.1% shareholder, urged the company to consider strategic alternatives, including a possible spinoff of its AAdvantage frequent-flier program.
Earlier this month, AMR unveiled a plan to reduce interest expense by prepaying $545 million in aircraft debt in the fourth quarter. The move will cut annual interest expense by $25 million and release 16 aircraft used to secure the loan. The company said the payment will be in addition to the $1.3 billion already scheduled for this year.
A conference call is set for 2 p.m. EDT. AMR shares were recently up 40 cents, or 1.7%, at $24.52.
October 17, 2007: 11:42 AM EST
DOW JONES NEWSWIRES
AMR Corp.'s (AMR) third-quarter net income soared as its planes held more passengers than ever amid capacity cutbacks.
The world's biggest airline by passenger traffic posted net income of $175 million, or 61 cents a share, compared with $15 million, or 6 cents a share, a year earlier. The latest quarter's results included a compensation-related charge of $40 million, or 13 cents a share, while the prior year was hurt by a $ 99 million fuel-hedge charge.
The Fort Worth, Texas, parent of American Airlines said revenue rose 1.7% to $ 5.95 billion.
The mean estimates of analysts surveyed by Thomson Financial were for earnings of 73 cents a share on revenue of $5.96 billion.
At American, revenue passenger miles, or one paying passenger flown one mile, dipped 0.3% as capacity fell 2.8%. Load factor, or the percentage of available seats filled, rose 2.2 percentage points to a record 83.9%.
Revenue per available seat mile, considered the best measure of revenue for airlines, climbed 5%. AMR said last month that it projected growth on that metric of 4% to 5%; the news was below some expectations and sent AMR shares slumping the day after its release.
At the same time, AMR cut its fuel-cost projection to $2.21 a gallon; the actual figure came in at $2.165. The year-earlier average was $2.158. In an attempt to pass some of its high fuel costs on to passengers, AMR last week raised fares $5 each way for most domestic routes.
Looking ahead, American Airlines capacity is expected to rise 0.9% in the fourth quarter, with unit costs rising 4.5%. Excluding fuel, such costs are seen falling 1.7%. AMR sees average companywide fuel costs of $2.27 a gallon in the period.
AMR, which managed to cut costs while avoiding bankruptcy, is in the midst of employee contract negotiations, adding to expectations that labor costs will rise.
Recently, the head of American Airlines' pilots union sent AMR Chief Executive Gerard Arpey a letter that threatened picketing and litigation over benefits complaints. The letter threatened to see American's chief executive "on the picket line" and in court after the carrier's management has failed to meet the union's demand for a bigger share of the company's profits.
AMR also is facing investor pressure to boost its share price by spinning off assets. In late September, Icelandic investment fund FL Group, a 9.1% shareholder, urged the company to consider strategic alternatives, including a possible spinoff of its AAdvantage frequent-flier program.
Earlier this month, AMR unveiled a plan to reduce interest expense by prepaying $545 million in aircraft debt in the fourth quarter. The move will cut annual interest expense by $25 million and release 16 aircraft used to secure the loan. The company said the payment will be in addition to the $1.3 billion already scheduled for this year.
A conference call is set for 2 p.m. EDT. AMR shares were recently up 40 cents, or 1.7%, at $24.52.
