AMRCostUnit said:
Here is the part I like: $3.9B in cash. Up 300m. 75m pension contrubition.
Here is the part I don't like: Regional Affiliates -66m
Unit
Financial numbers can be spun whichever way you need to spin them to keep your shareholders and financiers happy. In general Wall Street and the banks only care about how AMR is doing. They don't care if Eagle made the profit or contributed to the loss on the BGR-BOS leg or whether AA made the profit or contributed to the loss on the BOS-MIA leg. All the money people want to know is did AMR make money or lose it flying Joe Public on a ticket from BGR-MIA.
It's the employees who get into the details and look to see who's carrying who and where to point the finger of blame. The problem with this is we are never given that information because it can disrupt the spin that AMR wants for the bankers and shareholders. A classic example of this is the line in the most recent SEC filing that attributes a $66 million loss to "regional affiliates." By my count there are 5 regional affiliates. Eagle and Trans States may have contributed $X to the bottom line and Chautauqua, Corportate and Executive could have lost $Y which resulted in a $66 million loss. Who knows? It's just not broken down further to determine what is going on here.
So is it hopeless to expect to untangle the financial web? No, not if you know where to look. The key is finding the matrix where the truth can be found. The answer is that common denominator that you never hear from managements lips when they talk about how the company is doing financially, that is the Department of Transportation's Bureau of Transportation Statistics. The BTS requires the airlines to complete a document each quarter called the FORM 41. The BTS then compiles that information and puts it out so that you, the taxpayer, has an indication on how the US airline industry is performing.
Now to the heart of the matter.... We all keep hearing how bad Eagle is doing. How we're a money pit. Costs are out of control. We're going down the bankruptcy tube, etc.
Let's take a look at the information that American Eagle reported on their Form 41's for 2004
2004 Total Operating Revenue = $1,445,784,000
-- ( In comparison to 2003 = +28.2% )
2004 Total Operating Expenses = $1,226,598,000
-- ( in comparison to 2003 = +28.9% )
2004 Operating Profit = $219,196,000
2004 Net Income = $48,804,000
No matter which way you cut it Eagle was profitable in 2004 or they lied to the US Department of Transportation and the Securites Exchange Commission.
Granted, it was a tougher year in 2004 then it was in 2003 when American Eagle reported an Operating Profit of $177 million which resulted in a Net Income of $60 million.
So how's 2005 going for Eagle? The April issue of Eagle’s company newspaper
Connections claimed a "record first-quarter onboard loss" and that "cost per departure has risen and is now higher than the amount of revenue Eagle generates per departure." Sounds pretty bleak, huh? Well, let's take a look at what American Eagle reported to the DOT on it's Forum 41 for the first-quarter of 2005...
Click Here:
http://www.bts.gov/press_releases/2005/bts027_05/html/bts027_05.html
In the first-quarter of 2005 Eagle reported a $54.6 million Operating
PROFIT. Only Southwest airlines had a larger Operating Profit for the first-quarter of 2005, but yet all we heard was the doom and gloom in the
Connections article. Things that make you go hmmmmm!
The regional affiliates of AMR may actually have a $66 million loss but I can assure you that it wasn't because of American Eagle. I suspect a large portion of it is due to the American Connection agreements. AMR has paid a $23.2 million dollar fine to APA for violating their scope clause with the American Connection reverse code sharing scam. AMR has also paid APA $500,000.00 through June 30, 2005 and is continuing to pay an additional $30,000 per day going forward because of the scope violation due to Chautauqua flying EMB-170's for United Airlines.
It's all about the numbers and how you want them spun!
TC
TC
