American Airlines' parent lost $1.7 billion in 1Q
FORT WORTH, Texas (AP) — The parent company of American Airlines says it lost $1.66 billion in the first quarter, mostly on costs related to its bankruptcy restructuring.
AMR Corp. said Thursday that excluding bankruptcy costs and other special items, it would have lost $248 million, compared to a loss of $405 million a year ago.
American, the nation's No. 3 airline behind United and Delta, boosted revenue by 9.1 percent, to $6.04 billion. Revenue for each mile that passengers fly, a closely watched number in the airline business, grew 10.3 percent, much faster than at Southwest Airlines.
AMR said that average fares on American and the American Eagle regional-flying affiliate rose 7.4 percent over a year ago.
Despite higher prices, American was able to fill 79 percent of its seats, up from 77.1 percent a year ago. The number of flights was virtually unchanged, as American and other airlines continued to limit the supply of seats to control costs and drive up fares.
Like other airlines, American was dogged by higher fuel prices. AMR paid $3.24 per gallon for fuel, up from $2.76 per gallon in the first quarter of last year. Its fuel bill rose by $323 million, to $2.17 billion.
Labor costs rose $60 million, to $1.78 billion. AMR has about 88,000 employees.
AMR executives did not hold the traditional earnings-day conference call with investors. In a letter to employees, Chairman and CEO Thomas Horton said he was encouraged by this year's smaller operating loss, especially with an 18 percent increase in the price of fuel.
Horton said the increased revenue showed that American's strategy of focusing on five big U.S. hubs and international flying was working. He said the company recorded its best marks in several years for on-time flights and fewer lost bags and maintenance delays.
Horton also said he expects takeover speculation "to continue and to escalate." US Airways is openly talking about a possible merger with American, and other potential bidders have been rumored. Horton has said he's open to a merger but not until AMR emerges from bankruptcy protection.
Most of AMR's $1.4 billion of first-quarter restructuring costs were related to renegotiating or walking away from aircraft leases. It set aside $45 million to pay advisers such as lawyers and consultants in the bankruptcy case.
The first-quarter net loss amounted to $4.95 per share, compared with a net loss of $436 million, or $1.31 per share, a year ago. Except for one brief spike, AMR shares have traded below $1 since the company filed for bankruptcy protection on Nov. 29, and they were taken off the New York Stock Exchange.
AMR had $5.6 billion in cash and short-term investments as of March 31, compared with $4.8 billion shortly after it filed for Chapter 11.
AMR is trying to reduce debt and labor costs by eliminating more than 14,000 jobs, freezing pensions and throwing out union contracts that it claims drive up costs with unnecessary work rules.